Solana NFTs: Everything You Need To Know

Solana NFTs: Everything You Need To Know

Nansen takes a look at the Solana NFT ecosystem, breaking down the basics for beginners

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Introduction: Solana NFTs

The bulk of NFT trading happens on the Ethereum network, in many ways mirroring the liquidity allocation within DeFi where Ethereum also comfortably leads. But Ethereum faces competition, and in the same way that alternative layer one blockchains have gradually sucked liquidity from the giant, a similar trend has been established in the realm of NFTs.

This article provides an overview of the budding Solana NFT space, currently Ethereum’s greatest competitor.

What Is Solana?

Understanding Solana’s rapid growth requires a basic understanding of a problem proposed by Vitalik Buterin, known as the Blockchain Trilemma. It is widely understood that a blockchain can only optimize for two of three concepts: decentralisation, scalability, and security. Since 2016 layer one blockchain projects have launched attempting to solve this issue by creating chains that can maintain some degree of credible decentralization and security as well as scalability.

Solana is one such network that introduced a hybrid consensus model integrating a novel PoH (Proof of History) algorithm with PoS (Proof of Stake), giving the network a throughput claiming to rival TradFi payment processors such as Visa. Solana boosters say it represents a blockchain project capable of scaling to global demand; in numbers, Ethereum averages 13 transactions per second, whereas Solana has a theoretical throughput of 65,000 transactions per second. Solana arguably sacrificed decentralization in favor of scalability, but this has been the core factor driving the network’s popularity as greater scalability equates to faster transactions at lower costs.

Solana has risen to prominence, and a portion of the activity on the Ethereum network has migrated to this blockchain with lower gas fees and less congestion. A key growth area is the NFT space, and this article provides the reader with everything they need to know to become an active participant in the Solana network and begin minting, trading, and selling NFTs.  

What are Solana NFTs?

In short, a Solana NFT is simply an NFT created on the Solana blockchain.

But what does that mean, exactly? An NFT or Non-Fungible Token is a blockchain-based certificate verifying ownership. These cryptographic assets and the contained metadata are unique and, therefore, non-fungible. The concept of fungibility relates to the quality of interchangeability; a dollar can be exchanged for another dollar, a bitcoin can be exchanged for another bitcoin, and a SOL can be exchanged for another SOL; hence these items are fungible. Something which is non-fungible cannot be exchanged, and many (but not all, such as ERC-1155s) NFT are unique and individual; therefore cannot be exchanged for another. Nansen provides a full overview: Everything You Need to Know About NFTs.

How do Solana NFTs Work?

Solana differentiates itself from the majority of alternative layer one projects given that it is not EVM (Ethereum Virtual Machine) compatible. Solana uses a unique coding language Rust, as opposed to Solidity. Subsequently, Solana has a different token standard.

Returning to Solana’s hybrid consensus mechanism, it must be remembered that Solana was designed centrally around the belief of mass adoption, and therefore speed and scalability lies at its heart.

Any blockchain consists of four main elements: a peer-to-peer network, cryptography, a consensus algorithm, and punishment and reward. To deliver incredible throughput, Solana blends PoS and PoH. Proof of Stake refers to nodes in the network committing tokens for a time period in exchange for the opportunity to be selected to validate the next block of transactions and earn a reward. Proof of History refers to the method of validating the order or sequence of transactions. Solana’s blockchain is segmented into periods of time, slots; the period in which each leader ingests transactions and produces a block. Leader nodes keep track of the passage of time. This time stamping solution allows transactions to be verified as valid by the rest of the network without filling an entire block, reducing latency and boosting throughput.

Nansen provides a fuller overview of the Solana Blockchain and its mission here: Solana: Scalability Through Speed.

How Popular are Solana NFTs compared with NFTs on Ethereum?

Ethereum continues to dominate the NFT space ranked by all-time total volume, with NFT sales teetering close to $30 billion at the time of writing, whereas Solana has recorded just over $2.5 billion. But this data can be construed as misleading; looking at the total NFT volume for the past 30 days shows $375 million on the Ethereum Network and $88 million on the Solana Network. Digging further into the same time window there were close to 900,000 transactions on the Ethereum Network and more than 2,220,000 transactions on the Solana network.

The Ethereum Network remains dominant graded by total volume, but Solanais  rapidly closing the gap. The Solana blockchain thanks to its improved scalability, sees a growing number of creators minting their NFTs on the blockchain and judging via trends, Solana also attracts less well-capitalized market participants.

For a greater understanding of the top NFT blockchains, read this guide: Top NFT Blockchains to Buy and Sell.

How to buy Solana NFTs?

Purchasing an NFT on the Solana blockchain remains a straightforward procedure; all that is required is a Solana wallet, sufficient SOL to pay the asking price and gas fees, and the desired NFT. For a broader overview of NFT investment, read the attached guide: How to Invest in NFTs.  

Getting a Solana Wallet

Users have several options and can opt for a browser or mobile-based app wallet that supports Solana, and more advanced users can utilise command-line wallets. A highly popular choice is Phantom, a browser extension and mobile-supported application that makes buying, swapping, and collecting NFTs on the Solana blockchain simple.

Installing Phantom is the same as installing other non-custodial wallets; download the extension, take special care to note the secret recovery phrase, never share it with anyone, and create a password.

Get SOL Tokens

Phantom offers an inbuilt fiat ramp, and users can purchase SOL inside the application using a debit or credit card. Alternatively, users can purchase SOL on any centralized exchange and send it to their Solana address, and this public address can be found within the wallet.

Buy NFTs

Once a user has their wallet and has funded it with SOL, purchasing the NFT is easy. Simply visit the desired marketplace, find a suitable NFT, connect the wallet to the marketplace, and make the purchase. Nansen provides a definitive guide: How to Buy Your First NFT.

Solana NFT Marketplaces

The Solana blockchain hosts a variety of NFT marketplaces. OpenSea, the largest NFT marketplace on Ethereum, also supports the Solana chain, and there are plenty of Solana native marketplaces. Three native marketplaces that must be mentioned are Magic Eden, SolSea, and Solanart.

Magic Eden is the largest Solana native NFT marketplace with millions in daily trading volume and thousands of artists deploying content on the platform. SolSea boasts low fees and enables artists to embed licenses in their NFT projects stipulating how the owner can utilize the NFT. Solanart allows users to trade NFTs with zero fees and hosts the most popular Solana NFT collections.

Top NFT Projects on Solana

As the Solana NFT sphere matures, several blue-chip projects have emerged, and a developing focus on the utility application of NFTs remains present in the Solana ecosystem. Featured below are some of Solana’s best collections.

DeGods

Headed by Frank, the DeGods collection implemented many intriguing mechanisms and maintains a strong community. It introduced the PHBT tax, which punished people for selling their NFTs too early and listing below the floor price on secondary markets; this tax was later dropped. Parts of this collection are burnt; there was a secondary collection known as DeadGods and the $DUST token. DeGods continues to execute different strategies to provide value to investors and remains a mainstay of the Solana NFT space.  

Solana Monkey Business

A 5000 strong troop of pixelated monkeys derived from 99 unique traits. This collection has the second largest market cap and built a strong community around the idea of ‘‘Reject humanity, return to monke.’’

Degenerate Ape Academy

Another monkey-themed NFT collection and the third largest ranked via market cap. Owners retain intellectual property rights, and this 10,000 piece collection encourages brotherhood and rebellion. It also grants access to the Degen DAOO. The Degenerate Ape Academy website reveals a refreshing attitude towards creation only possible in the DeFi space.

Aurory

Aurory is a play-to-earn game taking place in the worlds of Antik and Tokané. This Japanese role playing game features magical creatures known as Nefties, which can be hatched, evolved, battled, and traded. Aurory represents a great entry point to crypto for gamers and offers exciting gameplay for users.

Want to see which NFTs top-performing Smart Money wallets are buying? Sign up for a Nansen plan today!

How to Sell NFTs on Solana

The process of selling an NFT on Solana varies depending on the secondary market chosen but follows a basic format. This guide will detail how to sell an NFT on Magic Eden using the Phantom Wallet.

Once a user has purchased an NFT on Magic Eden, it will automatically be stored in their Phantom Wallet. To sell an NFT, users simply visit Magic Eden, connect their wallet, and visit the sell tab on the webpage. A page displaying all the available NFTs in the connected wallet will appear, and the user selects the NFT they would like to sell.

Magic Eden provides price history, which can aid the user in deciding their sale price, further information such as the Royalty Fee and Transaction Fee are included so investors can include this in their calculations. Once the owner has determined a price, they enter it, and click list now. A transaction will appear in their Phantom wallet. Once this has been approved, the NFT has been successfully listed.  

How to Mint NFTs on Solana

Numerous methods exist for minting NFTs on the Solana blockchain, but this article will outline the most effortless manner. A brief distinction must be made at this point. When referring to the minting process, sometimes it is understood as whitelisting and participating in the primary sale of an NFT collection. In this scenario, the process is the same as buying an NFT, except the procedure is time-sensitive, and users will be competing against one another to mint first.  

The other more common interpretation is the process of converting digital files into digital assets stored on the blockchain. The best platform for this process is SolSea or OpenSea. Both follow the same format. Users navigate to the create tab, create a title and description for the collection, upload the desired image or file, decide on royalty payments if minting on SolSea, choose whether or not to embed a license, select Mint, and approve the transaction.

Future of Solana NFTs

Ethereum and Solana are the two blockchains under discussion when talking about the future of NFTs.

Ethereum possesses the first mover advantage and houses the most desired NFT collections. Still, Solana is opening the NFT space to a greater audience and, with lower gas fees, sees more interaction and participation than the Ethereum network. Given that most NFT trades are valued at less than $200, Solana’s grassroots approach may overtake Ethereum in certain elements. Ethereum’s role in the NFT space will gravitate towards stores of value. In contrast, Solana will become and, to some extent, already is the hotbed for trading, newer collections, and creators looking to access the global market.  

Conclusion

The true potential for NFTs remains untapped. For investors looking to get involved, this guide has outlined the basics. Nansen, a blockchain analytics firm, provides the best market alpha for investors who want to delve further into this nascent digital space. Nansen combines on-chain data with millions of wallets, coordinating colossal volumes of data into visualized dashboards that provide broad and specialist overviews of the NFT space. Delivering alpha and helping investors stay ahead of the market at large, Nansen remains an indispensable tool for those looking to outperform.

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