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The volume of NFT sales swelled to unprecedented levels in January.
Data from Nansen Analytics released on Tuesday revealed that over $1.096 billion worth of Ethereum (ETH) was burned in January. The Ethereum Foundation introduced EIP-1559 in August 2021. Since then, ETH token burns take place for every transaction on the Ethereum blockchain.
While the gas fees for sending and receiving ETH are lower, the cost of minting non-fungible tokens (NFTs) via smart contracts is more expensive. With the rise in the minting of NFTs, it is not surprising that the amount of token burns on the Ethereum chain has also increased.
How the ETH Token Burns Happened
Ultra Sound Money estimates that ETH token burns due to NFT transactions amounted to 65,778 ETH in January. This was even as NFT transactions on OpenSea hit $3.5 billion. Token burns for Ethereum transactions came in second place with 35,696 ETH. In third place was token burns for activity on Uniswap amounting to 24,223 ETH.
Despite the large volume of token burns, the volume of issuance still exceeds that of tokens burned. Currently, the issuance stands at 5.4 million ETH. Compared to the 3.5 million ETH burned yearly, Ethereum remains inflationary. The only possibility of a change lies in the complete transition of ETH from POW to POS. The transition into Eth 2.0 (now consensus mechanism) will happen later in the year.
Swelling NFT Sales Volume on OpenSea and Other Platforms
Meanwhile, the volume of NFT sales swelled to unprecedented levels in January. Data from Dune Analytics revealed that NFT sales on OpenSea in January exceeded $5 billion. Whereas OpenSea recorded over $4.95 billion of ETH trading volume in January, Polygon recorded another $79 million in sales. Previously, Ethereum’s peak monthly sales volume on OpenSea was $3.4 billion set in August 2021.
On the new NFT marketplace, LookRare, an estimated $1 billion of legitimate sales were also made. Also, Magic Eden recorded more than $531 million in sales in January according to DappRadar.
The BAYC collection seems to be the biggest driver of NFT sales with over $311 million in secondary sales, t Closely following the BAYC are the Mutant Ape Yacht Club and Bored Ape Kennel Club.
Commenting on this upward trend, Dragos Dunica, co-founder and chief data officer at DappRadar noted the current dip in cryptocurrency prices provided an opportunity for investors. “As NFTs maintain their upward trend, this discount might turn into a neat return on investment as crypto prices pick up too,” said he.