Report: More Than 17% Of Ethereum Addresses Control Over 80% of NFTs
According to a report, more than 80% of NFTs on Ethereum since April are owned by just a few wallet addresses.
A new report has revealed that a significant portion of all Ethereum-based non-fungible tokens (NFTs) is in the possession of a small number of addresses on the network.
Ethereum NFTs have gained the most clout in the crypto space. These NFTs have recorded sales of up to 69.3% for a single piece of artwork. Investors are moving towards owning NFTs as a form of long-term investment in addition to their cryptocurrency holdings. Although other blockchains are coming up where NFTs can be minted, the majority of it still happens on Ethereum.
The recent Moonstream report, focused solely on NFTs with the ERC 721 token standard, and looked into more than 7 million NFT transactions on the Ethereum blockchain between April 1 and September 25, 2021.
Whales Lead The NFT Market
The study found that over 80% of all non-fungible tokens are held by only 17% of wallets. Leaving less than 20% of NFTs for the rest of the market. NFT platforms, exchanges, and most importantly, whales, have been grabbing up non-fungible tokens at an increased rate over the past six months, putting them at an advantage over the rest of the market. This is mirroring the cryptocurrency market which shows similar figures for volume held by whales and smaller investors.
It also noted that the 16.71% represents the several NFT platforms and exchanges that deal with thousands of these digital tokens at a time.
“There is also a great inequality in the Ethereum NFT market in the sense that the top 16.71% of NFT owners control 80.98% of the NFTs.”
Seeing such a high percentage among addresses handling NFTs on the Ethereum network in control of more than 80% of the total available supply leaves about 83.29% of the remaining holders to share a meager 19.02% of tokens within the timeframe of the analysis.
NFT Offer Low Entry Barrier, But There Are Inequalities
Although the paper pointed out the inequality in the distribution of the NFTs, it also noted that the market is still open for all, both small-scale and large-scale investors.
“What this data shows us is that the Ethereum NFT market is open in the sense the vast majority of its participants are small-time purchasers who likely make their purchases manually. There are few barriers to entry for those who wish to participate in this market.”
The NFT market has exploded in recent months and millions of interested parties, including investors, collectors, developers, and exchanges are quickly jumping on the trend.
Excitement is rising as institutional investors join the NFT mania and sales are climbing to record highs. Between July and September alone, the NFT market raked in a whopping $10.7 billion in sales.
In the report, Moonstream explains that more nuance is needed in the interpretation of the data presented, “as many of those owners are marketplaces and clearinghouses lie OpenSea, Nifty Gateway, and other platforms of the same ilk.”
Nevertheless, just like in any market, there are always stark inequalities. A small percentage usually controls the largest market share and given the barriers to entry in the non-fungible token market, small-time investors will control an insignificant portion of the market.
