Crypto Art In Decline As Ethereum Gas Fees Skyrocket
In one of my previous articles with Cryptos.com, we talked about how Ethereum became a victim of its own success, mainly due to the excessive increase of gas fees used to promote various on-chain transactions, before concluding to the fact Crypto Art and NFTs, in general, are the biggest losers during such times and for a variety of reasons.
Although Crypto Art kept rising in parallel with the increase of the total value locked (TVL) in DeFi projects ever since we got the first trackers in the field, it appears that the digital art scene relying on public blockchains such as the Ethereum is now struggling to maintain its relevance, only thanks to the consensus mechanism currently utilized by the popular distributed ledger network.
In this piece, I’ll try to summon some reasoning as to why Crypto Art trends are in decline, as well as suggest what possible changes could keep the fire burning.
Before we start, you should keep in mind we’re solely focusing on the Ethereum-based sub-culture, and not EOS and/or other alternative NFT platforms. That for the simple reason, Ethereum accounts for more than 80% of all Crypto Art generated and stored on blockchains.
Crypto Art Lobbies
To understand how Crypto Art has become so popular so fast, we should pay a visit to some cliques, collectives, and ERC-721 minting houses that fuel the NFT revolution.
For me, the first encounter with NFTs was back in 2017 when I got my first CryptoKitty, to assess the popular breeding game and write about it.
Back then, I couldn’t even imagine we’d end up having VR galleries from where you can directly buy single edition Crypto Art pieces with your web3 compatible wallet, but somehow, I knew that this is the beginning for something besides trading, or simply sending and receiving Ether (Ξ).
Read More: From WWW To Web 3.0 And Beyond
Crypto Art Lobbies can be split in those backed by the Ethereum Foundation, like CryptoKitties, MarbleCards, and Ethereum Name Service (ENS), and those backed by the community or self-sustainable like algos, and smart contract generating tools and services.
The first category follows a typical business architecture, with ads, fixed pricing, although in some cases, secondary markets would sell a CryptoKitty for tens of thousands of dollars worth of Ether, and everything you’d expect from a regulated venture.
On the other hand, you have individuals or groups of Ethereum users who create their own rules, concepts, and price discrimination models to promote their NFTs to the broader network.
Some interesting mentions include but are not limited to SuperRare, the WhaleShark community, and of course our RareCandy3D.
That sounds democratic at first, but following up with some of these smart contracts, and their artificial clientele, you can tell most of them are short-term profiteers, trolls, scammers, and even money laundering schemes who’d claim they managed to make their regulated ETH by selling a Microsoft paint image for a six-figure sum.
Key Crypto Art Gears In The Ethereum Ecosystem
Despite the nature of each respective lobby and/or clique, some key elements act as the glue that holds everything together.
From personal experience, I can say with confidence that some of these key players include OpenSea, Roll, and Cent, as well as popular blockchain-powered metaverses of the likes of Decentraland, Cryptovoxels, and Somnium Space.
Since the platforms mentioned above would not discriminate or filter who’s a good actor and who’s a short-visioned profiteer, and for a good reason, it is difficult to do the necessary research before concluding what you should buy and what’s not to touch, especially for newcomers.
I mean, sure if someone wants to sell a picture of his teaspoon for $100,000 that’s ok with OpenSea, and I am not suggesting they should expand with an auditing department, but it just might be what’s missing from the yet unregulated scene, if not a complete and easily accessible ‘black market’.
Now when you give a crypto whale the ability to store his funds in a solid ERC-721 smart contract, you create an arbitrary opportunity, and of course a money laundering loop, since a collector of fine art pieces can hold his art in times of taxation, while selling them back to the gallery and/or other users, and for a higher price in most cases when expenses are settled.
Good or bad, it happens all the time, and again, I am not against it, just pointing it out for the sake of the paradigm.
Gas Fees Killed Every Model That’s Not Greedy By Default
All these hints to point at the fact gas fees specifically are the biggest enemy of Crypto Art, and modern times can prove it.
I am not a Crypto Artist myself, but I do run a small, packed publishing house on the Ethereum blockchain. Our pieces can barter anywhere between $50 and $400.
Sure, art pricing has no limits and standards, but analogize for a moment that I was eligible to sell something for $50 because the gas fees at the time I minted the piece were somewhere around $3 and $8, which already was too high if you’re in the scene for quite some time.
Today, I’d have to pay $90 to mint a new piece and therefore I can’t sell it for $50 even if I wanted to. What is a possible strategy to sell that piece for $50? There are none at the moment, and that is the biggest issue at this rate.
Of course, gas fees are not magically jumping to new heights as you read this, but they’re results of a consensus that relies on people’s willingness to pay the extra mile to secure their transactions, which in most cases are either DeFi scams, overpriced Crypto Art, or whales who want to move couple decades of millions worth of ETH in an instant, so naturally paying anything between $500 and $3000 is not a downer for these wallets.
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The problem is, guys like myself, and people who are real artists and excited to join the NFT wave, can’t find an entry point, only because some users are solely focusing on short term profit, giving zero rat’s asses about the real Ethereum users, those who understand the value of NFTs, seeking to utilize them because it essentially is a high-level of documentation protocol and not a “worthy” piece of code.
I am not proposing gas fees have climbed to kill the Crypto Art movement, but the later is on the decline thanks to increased gas fees.
SuperRare, one of the most popular high-grade NFT brokers showcased a decline in sales that one could even consider worrying during this period, while other popular NFT factories, publishing houses, and promoters are also sitting in silence.
The worst part for me is that nobody is talking loudly about it, similar to when Bitcoin fells at ridiculously low levels, indicating that they’re waiting for the right moment to start promoting their Crypto Art to potential buyers, and will never post anything that would make the scene look like damaged or not worth it.
Sure, I am a believer and huge NFT supporter as well, but I am not here to just pump and dump fancy pictures to whoever is willing to buy it, and if these people are part of this kind of “cliques”, if anything, I am glad gas fees have killed their models. 🙂
What’s disappointing is that you literally can’t mint anything that costs less than the gas fees spent during the token minting process, and if we’re talking about a for-profit business model, you’d have to sell it x2 the gas fees at least to create a small cap on top of it.
What happens tho, if you’re minting NFTs not to expand your money-laundering front, but to distribute birthday cards or a wedding invitation to your friends? What if you want to have a party in Cryptovoxels and attendants must have an NFT Club Card?
Relevant Article: Exploring NFTs Beyond Crypto Collectibles
Should these items by default cost $200 in terms of ETH or should we simply ditch these use-cases, even if they make up the majority of the ‘good’, ‘ethical’, and viable ways of using NFTs in our everyday life?
I hope the majority of users will do find the right answer and act accordingly, otherwise, I am afraid we’re not worthy of saving, and neither Ethereum, nor any other blockchain platform will be the catalyst for a better economic era, but rather a next-generation chain that enslaves us in in a fancier fashion.
Feel free to share your thought in the comments section below or hit me directly on Twitter.