Solana and its cryptocurrency SOL is a blockchain perfectly suited to the NFT industry.
It can handle hundreds of thousands of transactions a second, and gas fees are incredibly low.
Despite the major benefits of Solana for NFTs, and it being second only to Ethereum for trading, it has yet to see the major uptake and popularity of its major competitor.
Having recently read through the entire Solana Whitepaper, and their unique Proof of History algorithm, the Solana blockchain may have more to offer the NFT space.
The largest Solana NFT trading platform, Magic Eden, is now a billion-dollar company and the largest NFT marketplace, OpenSea, has started allowing Solana NFTs on to its platform.
Instagram has also announced recently it will start showing and showcasing NFTs, including those minted on the Solana blockchain.
The real worth in Solana NFTs may not be within its current value, but the long-term potential it may hold.
In this article we will look at the current Solana market, the NFT collections within as well as how the introduction of Solana NFTs on OpenSea and Instagram are likely to impact its overall value over the next year and beyond.
What are Solana NFTs?
NFTs minted on the Solana blockchain share similar characteristics to those minted on other blockchains, such as Ethereum and Polygon MATIC.
Although the term ‘the blockchain’ is often used in a way to denote singularity, what is less understood is there are many different blockchains.
Each blockchain has been created by different developers, led by different teams under different brand names, and using different coding logic and algorithms.
Solana is such a blockchain and uses the Proof of History algorithm to validate and process transactions on to the network in a series of connected data blocks.
NFTs are created using smart contracts held on a blockchain.
An NFT creator and their team will develop a smart contract, which essentially is a small piece of coding, and mint this to the blockchain.
Each time one of the NFTs in their collection are minted it does so by calling the smart contract which follows the instructions within the code, creates the NFT, and allocates it to the digital wallet it was minted from.
Solana NFTs are minted specifically on the Solana blockchain using a Solana smart contract.
An NFT can have the same features, accessories, utility, and artwork regardless of the blockchain it has been minted from.
Therefore, Solana NFTs are generally no better or worse than other NFTs from other blockchains.
How Solana NFTs are Valued
Solana NFTs are valued based on supply and demand.
The higher the demand the higher the price.
As NFT selling prices are based on a free market, it means owners can set any price they choose, from a fraction of a cent to many millions of dollars.
Although an NFT owner can set the price of their Solana NFT to $1 million, it doesn’t mean it’s worth it.
Valuing an NFT can be done in one of two ways:
The fastest and easiest way to determine the value of an NFT collection is to look at its overall floor price.
The floor price is simply the lowest priced NFT in the entire collection.
Whether the NFT collection has 100 NFTs or 10,000 NFTs, the lowest listed selling price of any NFT in the collection becomes the floor price.
The moment another NFT in the collection undercuts the lowest price the floor price changes.
For example, if the lowest priced NFT in a collection is listed for 1.5 SOL then the floor price is 1.5 SOL. If another owner of an NFT in the collection decides to undercut the cheapest price looking for a buyer, and reduces their NFT to 1.2 SOL, then the floor price instantly becomes 1.2 SOL.
The higher the floor price of any NFT collection the more value the NFTs in the collection holds.
An increasing floor price usually means demand is high, and a reducing floor price means demand is low, or lower than it was.
Using the floor price is one way to determine the value of an NFT.
Rarity and Utility
Although the floor price in an NFT collection could be falling, there are some NFTs in the collection that could be holding value or even increasing.
The floor price is one method to determine value, but it needs to be combined with other factors such as the rarity of the NFT, or the utility it holds.
For example, many of the Solana NFT collections are based on gaming and Play2Earn.
An NFT can be a character or provide a boost or benefit in the game. Playing the game can also increase the value of the NFT if rewards are given and attached to the NFT.
Rarer NFTs may yield greater utility and therefore will be higher in demand and sought after by other players invested in the game.
Therefore, a combination of floor price, and the rarity of the Solana NFT, should be used to determine its overall value.
The Limitations of Solana
Solana is a proven blockchain with millions of successful validations to date.
The transaction fees on Solana are incredibly low and the volume of transactions it can handle per second surpasses that of even Visa.
With so many positives it can be hard to see any negatives that could be lurking.
There have been a few factors so far that have affected Solana reaching even further heights and have kept the worth of Solana NFTs down further than they should be.
In general, blockchains are generally stable and do not often face outages like websites do.
Unfortunately, Solana has been plagued with many outages and lengthy downtime’s over the past two years.
This has surely affected people’s overall perception of the Solana blockchain, which in turn would have a negative effect on any dApps or NFTs using its ecosystem.
Although some outages have been caused internally, some are a result of bot and spam attacks on the Solana blockchain.
Outages need to be much fewer going forward for people’s confidence in the network to be restored.
Low Transaction Fees
The bot and spam attacks happen to all blockchains, but Solana is particularly vulnerable due to its low transaction fees.
Low fees should be an advantage to the network, and it has certainly helped Solana NFTs grow, but security is one of the reasons that blockchains have high gas fees.
High gas fees are a deterrent for attacks, as any validation – including those from bots – require a fee to pass through the network.
On average the transaction gas fees on Solana are less than a cent, compared to Ethereum which averages closer to $25 per transaction.
A bot attack on Solana is considerably cheaper than the same attack on Ethereum’s blockchain.
The Solana developers are working behind the scenes tirelessly to improve security, reduce outages whilst retaining the low fees which will help not only NFTs thrive, but also provide a stepping-stone in to the multi-billion-dollar DeFi industry.
OpenSea’s Exclusivity with Ethereum
OpenSea became the first NFT platform to go mainstream in the media thanks to high profile NFT collections such as Crypto Punks and Bored Ape Yacht Club.
Anyone new to NFTs immediately turned to OpenSea as a source of information, and to see which NFTs are trading, and sometimes to buy in to.
This though caused a problem for Solana NFTs.
OpenSea’s media attention helped grow its platform significantly to become the largest NFT website, and by some considerable margin – but the problem for Solana is that OpenSea was Ethereum NFT exclusive.
This meant Solana NFTs would not be shown on the OpenSea platform, and Solana NFTs had to find a new place to be showcased and promoted instead.
This also meant Solana NFTs went unnoticed to the millions of OpenSea visitors every month.
As Ethereum NFTs took off, Solana’s NFTs were left behind.
Solanart became the biggest Solana NFT platform and has recently been surpassed by Magic Eden and their billion-dollar valuation, but Solana NFTs are still unknown to the general public, hence affecting their value.
This could change through a recent OpenSea implementation, and an Instagram announcement.
How OpenSea Integration will affect Solana NFTs
Solana NFTs have faced a steady uphill battle since their conception.
Not only continuing to be second place to Ethereum, but also not being visible on the largest NFT marketplace, OpenSea.
OpenSea launched in 2017 and strategically became the home of NFTs at the time. Almost all NFTs in 2017 were exclusively Ethereum based.
Money poured in, the media became interested, and people came looking, but 99% of those interested in the space went to OpenSea to see what all the fuss was about.
This excluded Solana NFTs from the eyes of the public and NFT newbies.
Despite the soaring costs of gas fees on the Ethereum blockchain which were up $500+ a transaction at times compared to just a cent on Solana, NFT creators and big brands feared losing out on all the people browsing on OpenSea.
NFTs continued to launch on Ethereum and use OpenSea as the marketplace. Not necessarily because it was the better marketplace or blockchain, but because this is where the people were.
Those heavily invested in to NFTs and frustrated by the high Ethereum gas fees decided to look elsewhere and a transition to Solana started, albeit slowly.
With OpenSea continuing to dominate, Solana NFTs took a back seat, until now.
OpenSea have started featuring Solana NFTs on its marketplace which is a huge positive for the blockchain.
Considering the growth and popularity of Solana NFTs in late 2021 and early 2022 it looks a strategic move by OpenSea to continue to be the number one NFT platform, especially as Solana exclusive, Magic Eden, is gaining ground fast particularly after recent investments gave it a current billion-dollar valuation.
As Solana NFTs become more mainstream and more accessible it may be just what’s needed for NFT creators and brands to switch across to the cheaper and faster Solana blockchain.
How Instagram integration will affect Solana NFTs
Despite conversations about NFTs seemingly happening everywhere today, only 1.5 million people have bought one.
It may sound a lot, but this means less than 0.01% of the population of the planet own an NFT, or to look at it another way 99.9% of people don’t know how to buy one.
Instagram with its 1 billion audience could help change that.
Meta, formerly Facebook and parent company of Instagram, announced that NFTs will soon be available to be showcased on its platform by connecting a digital wallet.
The roll out will happen slowly, country by country and digital wallet by digital wallet, but Solana NFTs have been included in the rollout list.
Any adoption of NFTs from the masses is likely to be slow but any type of visibility from mass social media outlets can only be a positive thing for the network.
Recommended Reading: – if you are interested in buying a Solana NFT we have put together a full step by step guide here
The True Value of Solana NFTs
Solana NFTs are new but are growing at a relatively rapid place in an equally new industry.
The foundations have been laid, investors have bought in and NFT buyers paying eye watering Ethereum gas fees for every trade have started to take notice.
The average value of Solana NFTs are only a fraction of those of Ethereum NFTs, but with recent Degen’s plaguing the Ethereum space and creators trying to use every tactic possible to make as much money as possible, it has tarnished the reputation of the industry.
Solana NFTs have been quietly building traction as a Play2Earn and gaming niche network. There are other marketplaces such as SolanArt focusing on a more artistic side but it’s Magic Eden that has set off very fast from the gate and has the largest market share.
Credibility will play a huge part in the value of Solana NFTs in the next 12 to 24 months.
Gaming niche adoption is all very well but for Solana NFTs to be worth it in the future, tactics to grow to a more mainstream audience will be required.
Perhaps OpenSea and Instagram are the two keys needed to unlock the door to Solana NFTs success.