The non-fungible token (NFT) market has been soaring in value over the past couple of years. The sales volume of NFTs that provide proof of ownership of unique digital assets reportedly totalled $24.9 billion in 2021, compared to just $94.9 million the year before, according to data from market tracker DappRadar released in early January.
However, one significant hiccup with NFT projects is that they are usually minted and developed on one or two blockchains at the most. This approach has led to several constraints such as a lack of interoperability--the sharing and access of data between two networks. Fortunately, these issues can be resolved by creating NFT multi-chain platforms. These platforms can help nurture innovations and remove restrictions in the NFT space that have hindered the trade of these digital assets so far.
An example of the limitation of the single blockchain approach would be NFTs developed on the Ethereum network. As of now, it is one of the most popular NFT platforms. However, the constraint here is that one can only use Ether (the native currency of Ethereum) to buy NFTs. Moreover, Ethereum is known for its exuberant gas fees (transaction fees), leading to users spending a substantial amount of their NFT budgets on transaction fees alone. This is where multi-chain NFT platforms can help.
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What are multi-chain NFT platforms?
Currently, NFT marketplaces face the same limitations as the network they are built on does. However, multi-chain platforms are spaces where NFTs can be developed using various blockchain technologies. These platforms require significant resources, capital, and time, but they can give NFTs more exposure by allowing cross-chain capabilities. Users will be able to mint, buy and sell NFTs using any non-native currencies that suit their needs.
So, are multi-chain NFT platforms the future?
Slowly but steadily, decentralised finance (DeFi) companies that focus on developing multi-chain NFT platforms are beginning to emerge. They are addressing various facets of the NFT space, such as interoperability, sustainability, and energy consumption.
NFT Alley is a company that wants to empower the multi-chain NFT marketplace. The mission statement on their site says, “We at NFT Alley are here to redefine NFT Marketplaces. We are an avant-garde multi-chain marketplace for minting(creating), selling, and trading crypto-collectibles seamlessly.”
In an interview with Yahoo! Finance, Alex Salnikov, Co-founder of Rarible--an Ethereum-based multi-chain NFT marketplace--said, “The future of the NFT space, and the broader blockchain space, will be strongly reliant on a multi-chain structure. This means that NFT projects will need to expand and adapt their underlying technological infrastructure to accommodate multiple blockchains, enabling users to engage with various projects across the broader blockchain ecosystem and enjoy cross-chain collaborations between many different projects.”
Which blockchains support a multi-chain ecosystem?
As of now, three blockchain networks are being used for a multi-chain ecosystem, they are:
Ethereum
The most contributions to NFT development come from the Ethereum network. It uses its exclusive smart contracts and token standards to aid the creation of NFTs. The network has been responsible for the success of various NFT projects, and NFT enthusiasts rank Ethereum as one of the most reliable networks in the industry.
Binance Smart Chain (BSC)
BSC’s ability to run parallel with the Binance chain gives it the advantage of scalability. Binance Smart Chain also has one of the lowest transaction fees in the industry and provides swift transaction processing. It also uses the proof of stake consensus mechanism, which is more environmentally sustainable.
Polygon
Polygon is not the typical definition of a blockchain. Instead, it is a layer two protocol of the Ethereum network. Even so, it is perfectly capable of performing all the tasks that a conventional blockchain does. Polygon has the edge over other blockchains because of its immense scalability and the ability to process thousands of transactions every second.
From retailers like Nike to gaming spaces like Decentraland, everyone is in a mad dash to incorporate NFTs in their business model in some fashion. There are currently more than 100 NFT projects on the Ethereum network alone. And with the advent of multi-chain NFT platforms, the outlook seems bright.
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