Why the choice of the blockchain matters for NFT collections
When choosing a blockchain, consider the trade-offs and align it with your needs. Avoid risking your funds, time and community trust.
One of the fundamentals of launching an NFT collection is choosing where you’ll mint it to reach the moon. If everyone is choosing the Ethereum and Solana blockchain to mint their collection, does it mean it’s good for your collection too? Sometimes, less saturated blockchains like Ripple, Tezos and Polygon can turn out to be a blue ocean for your collections.
I’ve sold a client’s collection on Ripple. There are many other examples of brands that made their grand foray into less saturated chains. For example, McLaren did two successful launches on Tezos, Volkswagen deployed their NFTs on Polygon in April 2022 and Doodles 2 launched on Flow in January 2023.
On the flip side, there are brands that launched on the most famous chain Ethereum and failed. For example, Lamborghini launched on Ethereum in December 2022 and then we never heard of them again. Porsche launched on Ethereum in January 2023 and managed to sell out only 31% of their collection and eventually closed the mint.
Today, the majority of collections are launched on Ethereum but I usually tell my clients to not do this. Because there are already 150K+ collections on the platform (too crowded) and gas fees are high, which means people are less likely to buy. Also, market sentiment is negative on this chain so if you want to market your project, the cost will be astronomically higher.
The consequences of choosing the wrong chain
Selecting the wrong chain will result in wasted time, effort and money. It’s crucial to thoroughly research and consider the different aspects of a blockchain before selecting it as the foundation for your NFT collection. Otherwise, you’ll have to face these negative consequences.
Potential chain abandonment
The blockchain landscape is dynamic with new platforms emerging with the rise of NFTs. You should be careful while choosing a chain if it lacks long-term viability, loses developer support or ceases its operations over time, you and your users may face the risk of chain abandonment. This could make your NFTs obsolete or difficult to transfer to another reliable chain in the future.
Also, funneling users to a broken blockchain can impose a negative impact on your brand’s reputation. And failure in the NFT launch is difficult to recover from. It’ll hurt your brand value in the long term.
Lack of interoperability
The interoperability of a platform allows NFTs to interact seamlessly with other applications, platforms and wallets. If you choose the wrong blockchain that lacks interoperability, it can limit the exposure and accessibility of your NFTs and make it harder for potential buyers to discover and engage with your collection.
Negative perception of the platform
The choice of blockchain can influence how your NFT collection is perceived by the community. Certain blockchains may be associated with controversies, environmental concerns or unethical practices. Aligning your collection with such a blockchain could result in negative backlash, criticism and a decline in interest from potential buyers or collaborators.
Choosing the right blockchain: Factors you should consider
Figure out if a blockchain is PoW or PoS
PoW platforms have slower speeds and higher transaction costs, while PoS platforms are faster with lower costs. PoS networks are preferred due to their lower vulnerability. Different PoS mechanisms like leased proof-of-stake (LPoS), delegated proof-of-stake (DPoS), proof-of-history (PoH) and proof-of-stake- authority (PoSA) offer security and energy efficiency, requiring less processing power.
Look at the transaction speed
The transaction speed of a blockchain platform plays a significant role in the success of your collection and the associated transaction costs. If you choose a chain with low throughput, users may have to pay higher fees to miners to ensure their transactions are prioritized over others. Some blockchains have higher transaction speeds, allowing them to handle a larger number of transactions per second, while others may be slower.
Security is vital
It’s important to note that speed alone should not overshadow the importance of maintaining high levels of security when selecting the ideal platform for your NFT project. There are various attack vectors that can exploit vulnerabilities in blockchains, such as fifty-one percent (51%) attacks and man-in-the-middle attacks. These attacks can result in the loss of data, access or financial resources.
To ensure the utmost security and prevent such security breaches, choose a blockchain platform with a solid track record of prioritizing security or those that have undergone thorough peer review.
Affordable transaction costs are crucial for the widespread adoption of NFTs. Not all NFT artworks or assets are sold at astronomical prices. When selecting a chain for your NFTs, carefully consider the cost structure it offers — or if it provides cost-efficient transactions. Ideally, choose a chain that offers a feeless structure, as this can attract a broader audience to your collection.
Smart contract functionality
Solid smart contract functionality is vital for NFT platforms, establishing trade terms and ensuring platform security. Well-designed smart contracts instill trust and form a strong foundation for NFT transactions. Thoroughly test the smart contract for resilience and efficiency to enhance platform security.
Blockchain scalability involves achieving a high transaction per second (TPS) rate on a platform. Scalability on a chain is influenced by three key factors: decentralization, security and speed. However, getting all three qualities simultaneously is challenging so it’s important to prioritize two out of the three factors.
When choosing a blockchain, consider the trade-offs and align it with your needs. Avoid risking your funds, time and community trust. Popular networks matter for your target audience. Opt for blockchains favored by NFT users. Explore chains optimized for NFT projects, catering to specific customer bases, potentially benefiting your launch. Seek guidance from a native advisor to select the ideal chain, minimizing any negative outcomes.
Arvin Khamesh is the founder of soldoutnfts.io. He has incubated 50+ NFT projects with a high success rate.