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URL: https://forkast.news/ethereum-validators-win-short-term-as-blur-opensea-rivalry-drives-up-gas-fees/
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Published March 8, 2023 | 12:01 am HKT Last updated 8 months ago
By Timmy Shen
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ETHEREUM VALIDATORS WIN ‘SHORT TERM’ AS BLUR, OPENSEA RIVALRY DRIVES UP GAS FEES


ETHEREUM VALIDATORS ARE BENEFITING FROM THE INCREASINGLY HEATED COMPETITION
BETWEEN THE TWO LARGEST NFT MARKETPLACES THAT IS DRIVING UP GAS FEES, BUT THE
WINDFALL MAY NOT LAST MUCH LONGER.

Images: Blur, OpenSea

Ethereum miners, now referred to as validators after the Ethereum blockchain
“Merge” in September, are benefiting from the intense competition between
non-fungible token (NFT) marketplaces Blur and OpenSea that has driven up
transaction, or gas, fees on the network.

Ethereum gas fees, which typically rise when there is greater demand for network
blockspace, have been climbing from the beginning of the year, with recent
spikes mainly driven by the NFT market, according to data from on-chain data
firm Glassnode.

Ethereum validators earn rewards via gas fees by staking their own Ether to help
secure the network. Median transaction gas prices came in at 35 Gwei (a
denomination of ETH) on Monday, and exceeded 38 Gwei on Feb. 16, the highest
since June 2022, Glassnode data showed.

Play

“Miners are the clear winners right now, as they’re processing this massive
increase in transactions on Ethereum,” said Yehudah Petscher, NFT relations
strategist of Forkast Labs’ Cryptoslam.



“You’re reminded of that each time you go to transact, whether sending some ETH
between wallets or buying an NFT. That little warning pops up in MetaMask
telling you that the network is busy, and you can’t help but think of how well
the miners are doing,” Petscher added.

The Blur NFT marketplace, which launched in October, has gained traction as it
doesn’t charge transaction fees for users and recommends a low royalty rate
payment for NFT creators. The moves were seen as a clear challenge to NFT market
leader OpenSea, which responded by slashing its fees to zero for popular NFT
collections as it lost ground to Blur.


SHORT-TERM WIN?

Alice Kohn, an analyst at Glassnode, wrote in a report last week that the recent
market focus on Blur has “led to a surge in demand for blockspace, resulting in
increased fees for validators.”

Over the past seven days, the Blur NFT marketplace recorded US$410.93 million in
trading volume, more than seven times higher than OpenSea’s US$52.4 million,
DappRadar data showed.



Elsa Kong, head of research of Singapore-based NFT data firm NFTGo, told Forkast
that the high gas fees caused by the Blur token airdrop may be seen as
beneficial for Ethereum validators in the short term, but “probably it wouldn’t
bring any big changes in the long run.”

Kong said that it was not entirely accurate to call Ethereum miners the
“winners” in this situation, as the success of the Ethereum network depends on a
variety of factors, including user adoption, network security and developer
activity.

“It’s important to note that the Blur token airdrop is not directly related to
Ethereum miners, as the miners care more about the Ethereum upgrade such as (the
switch from) proof-of-work to proof-of-stake,” Kong said.


BIGGER STAKES

Nick Ruck, head of strategy of NFT intellectual property licensing firm
ContentFi, said smaller stakers may not see a big difference in their earnings,
adding he has been an active Ether staker since November.

“Obviously, higher gas fees aren’t great for everyday users, but you get more
fees for stakers anyway,” he said.

“Personally, the higher gas fees from my own day trading aren’t offset by the
increase in earned fees, but I’m also not staking a whole lot compared to a
larger staking-as-a-service firm,” Ruck added. “For most people staking in
pools, they might not see a big difference since they’re sharing in portions.”

Ruck said that there’s “a lot of maintenance” that goes into validating. “The
more industrialized your setup is, the more you’ll earn simply due to being more
efficient. If you do this at home, you’ll get penalized for going offline, for
example.”

Ruck agreed that validators will not be long-term beneficiaries from the Blur
and OpenSea fight for dominance “simply because I think it’ll be short-lived.”

“For now, they may earn more, but I think it’s too temporary,” Ruck said. “How
long can Blur and OpenSea go without earning those fees, or just earn minimally
compared to previously?”

Kohn of Glassnode wrote that the recent attention surrounding Blur has “yet to
have an appreciable impact on network adoption.”

Kohn said Blur and OpenSea may be fighting over the same pre-existing user base,
as the latest interest in NFTs “appear to primarily appeal to existing users,
and are as yet, unable to attract new users to the Ethereum network.”

Valida Pau contributed to this report.

Post Views: 305


AUTHOR PROFILE


TIMMY SHEN

Timmy Shen is a Taipei-based journalist at Forkast. Previously, he wrote for
Caixin Global and TechNode, covering topics ranging from fintech to fan economy.
He also cares about LGBT+ issues and is a shabu shabu fanatic. Timmy holds an MS
degree from Columbia Journalism School.

Author's email timmy.shen@forkast.news Author's profile on Twitter @timmyhmshen
Author's profile on LinkedIn Timmy Shen

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