Brands seem to choose different types of blockchains to publish their NFTs. Addidas, Budwiser, CoCa-Cola, and Gucci all chose Ethereum. But other blockchains are also available like Burger King used Polygon, Chicago Bulls used Flow, Citröen used Immutable X, Fox used Eluvio, Getty Images used Palm, Golden State Warriors used Solana, and so on. Why are there so many of them and how are they different from Ethereum blockchain? In this blog post, we will answer just that!
If you have tried to buy an NFT or mint an NFT, you most likely already know that most NFT projects are on Ethereum blockchain. Because of its highly secure network, Ethereum became the leading blockchain for the decentralized finance (DeFi) market. Moreover, NFT was born in the Ethereum blockchain.
But many quickly started noticing the limitation of this blockchain. This is how Polygon, Immutable X, and Palm were born as secondary Ethereum backed ecosystem to facilitate large number of transactions more efficiently. There are also Flow, Eluvio, and Solana. These are completely separate blockchains from Ethereum. So let's have a look at each one and understand the differences.
Ethereum: The second most popular blockchain after Bitcoin and it is gaining popularity because of its improved features compared to Bitcoin. This is one of the most stable and secure blockchain platforms available in today's market. Ethereum offers great benefits in security however, it has limitations in handling high transaction volume which leads to a high price for creators and buyers to buy and sell NFTs.
Due to the high requirements of resources, it can only process 13-15 transactions per second
Average gas fee: The gas fee depends on how many people are using the network at a given moment. For example, if many people are wanting to mint their NFTs using Ethereum at the moment you are trying to mint yours, the gas fee also goes up. Generally speaking, Gas fees can be pretty expensive. It has been reported that it reached $500 per transaction.
Polygon: Polygon is the layer-2 protocol built on the Ethereum blockchain. The network recorded more than $800M in daily transaction volumes.
It can process 30.9 transactions per second (TPS)
There is almost no gas fee for Polygon
Immutable X: Immutable X is another layer-2 protocol built on the Ethereum blockchain. Immutable X compared to Polygon was developed specifically for NFT trading usage hence it can handle bulk minting at a high speed with maximum security.
It can process 9,000 transactions per second
There is no gas fee for Immutable X
Palm: Palm is a new ecosystem for NFT projects built with Ethereum that features fast transactions, low gas fees, and is 99% more energy-efficient than proof of work systems.
The proof of work system (PoW) describes the decentralized consensus mechanism that prevents thieves and hackers from tricking the system. PoW is what allows cryptocurrency to be used safely without having a central authority. PoW is used widely in cryptocurrency mining: validating and recording transaction history to new tokens at peer to peer basis. In other words, information once recorded in a block is protected and irreversible since this information is not only recorded in one block, but rather in multiple blocks that are connected to this transaction, and these blocks together are connected with a ledger that becomes blockchain. So, for one to complete a successful transaction, this transaction needs to be validated by their peers. See the amount of work and hence computing power & energy this complex system may require? So proof of Stake (PoS) was created as a more energy-efficient alternative consensus mechanism. PoS achieves this by relying on a pool of known validators instead of peer-to-peer validators to secure the network.
Cuts environmental cost otherwise caused by PoW system
The official site claims to lower gas fees and transaction speed but the actual indicator was not available.
Non-Ethereum blockchains
Flow: Flow is a blockchain developed by Dapper Labs specifically designed for NFTs, crypto games, apps, and DAOs. Unlike more general blockchain like Ethereum, Flow was built as an optimal and efficient solution for trading NFTs at scale with potentially billions of people interacting with NFTs in Metaverse. As we described earlier, the Ethereum blockchain faces a congestion problem that when it’s loaded with too many transactions at once, the system handling & processing time can be very long and costly. This is why Flow is created but as a whole another blockchain than Ethereum.
And by the way, Dapper’s NBA top shot list was another great successful NFT project example that we can talk about in another blog post.
Flow can process 100 transactions per second
Flow charges two types of fees: variable transaction fees and storage fees. Transaction fee happens at the time of transaction each time and it is currently set at a flat fee of 0.00001 FLOW. The storage fee is the one-time account setup fee that is asked when an account is created. The account fee starts from 0.001 FLOW.
Eluvio: As we mentioned, this blockchain was used by Fox and they are the biggest investor for the Series A round for this platform. What makes this platform unique is that this blockchain is built specifically to empower the creator economy. So more than anything, Fox is using this platform for its potential.
What is Eluvio? Eluvio is the world’s first blockchain-backed 4K video streaming, ticketing, and full-service media marketplace. Eluvio lets creators go on live streaming that is viewable on mobile phones, Apple TV, or Roku, mint NFTs, and sell tickets with NFTs. People can also purchase tickets to live streaming with cryptocurrency.
Solana: Solana is another blockchain name that I see quite often next to Ethereum when people talk about NFT trading. Solana is a blockchain that empowers developers to create crypto apps that scale. Solana also has its own coin. Solana bloackchain is possibly a big threat to Ethereum as it offers secure, faster, and cheaper transaction handling capability.
It can process 2,564 transactions per second (TPS)
The fee is subject to change but one source sites that the average gas fee with Solana ends up with $0.00025 per transaction
Final Thoughts
So there you have seven different types of blockchains used by big brands when minting NFTs. I think Palm is an especially remarkable one as it reduces significant amount of energy cost for minting an NFT. As a creator, I am also very interested in learning more about Eluvio's vision and plan for advancing the creator economy revolution. If you are considering buying or selling an NFT, which blockchain would you choose? Let me know in the comment!