Where are cNFTs in their journey to on-board billions to Solana?
The State of Compressed NFTs on Solana — the adoption so far and what lies ahead for the future of Compressed NFTs.
Mint — 1 Million Solana NFTs
Cost — 5.35 SOL (~$350)
That’s the best pitch for compressed NFTs on Solana!
Solana’s cNFTs have shattered the barriers, making digital art and collectibles accessible to everyone — DRiP being the best example. It’s not just about affordability; it’s about a powerful cycle of experimentation, innovation, and community. The cNFTs also make it simple to track activities on the blockchain, opening doors to observe fascinating user behaviors in the wider web3.
Let’s move beyond the buzz and dive into the core of these applications, creators, and communities, leveraging cNFTs and uncover the real essence of cNFTs.
The Pre-cNFT landscape on Solana.
Imagine shrinking a car into a matchbox, retaining all its functionality but with a fraction of the cost and footprint. That’s the magic of state compression, the tech powering the cNFT explosion on Solana.
Before the arrival of state compression and compressed NFTs, the NFT landscape on Solana looked quite different:
- Scarcity and Exclusivity: The dominant narrative revolved around limited-edition, high-value NFTs. PFPs (profile picture NFTs) were considered supreme, often representing membership in exclusive clubs or communities. Minting costs at scale were significant, often exceeding hundreds or even thousands of dollars, creating a barrier to entry for creators and consumers. Further,
- Static Experiences: Traditional NFTs mostly functioned as digital collectibles, limited in their interactive potential. The focus was on ownership and potential for appreciation rather than utility or dynamic experiences. Further, early NFT platforms on Solana grappled with scalability issues, especially when dealing with large-scale minting or complex on-chain interactions.
- Limited Use Cases: The NFT landscape on Solana was still nascent, with use cases primarily focused on art, collectibles, and gaming. Real-world integration and broader adoption were in their early stages.
Particularly, on the cost side, minting 1 Million traditional NFTs took a whopping 12000 SOL or ~$800k, which makes most of the use-cases unfeasible.
Enter State Compression — The Tiny Engine Powering the cNFT Revolution
Solana has built a reputation for its cost-effective infrastructure, especially concerning NFT minting, which typically stands at 0.012 SOL — a notably lower cost compared to other blockchains.
Before compression, storing large NFT projects on Solana felt like filling a bathtub with sand — expensive, slow, and ultimately futile. Every piece of data, from detailed descriptions to complex smart contracts, needed its own costly on-chain real estate. Under normal circumstances, the fee structure for minting NFTs followed a linear increase pattern. This implies that collectors had to pay 0.012 SOL for each NFT minted. This limited scalability choked user experience with high fees and slow transactions and ultimately slowed innovation.
But then around Q2 of 2023, Solana Labs introduced state compression, the tiny engine that transformed everything. It works like a clever magician, shrinking mountains of data into bite-sized Merkle roots, and unique fingerprints that unlock the original information without the hefty storage burden. These roots are then neatly stored in Merkle trees, efficient structures that allow anyone to verify data integrity without needing the whole picture. This tree acts like a compressed archive, storing only the essential information on-chain and referencing additional data off-chain.
Metaplex pioneered the creation of the compressed NFT standard (Bubblegum Program) using state compression that drastically brought down the cost of minting 1 million NFTs from 12,000 SOL to only 5.35 SOL for minting 1 million cNFTs and 500 SOL for minting 1 billion of them (24,000x cheaper).
So if we compare cNFTs to regular Token Metadata NFTs, cNFTs are:
- Cheap — Cost and storage effective
- Scalable — Unlock new possibilities with user experiments at a bigger scale.
- Secure: — Use of Merkle tree and hashes ensures that the NFTs can be verified easily.
Think of it like this: with regular NFTs, you’d pay full price for a mansion to store your digital artwork. With state compression, you get a cozy, efficient studio apartment at a fraction of the cost. This affordability unlocks a virtuous cycle.
(For more technical gibberish, check out cNFTs blog by Helius)
State of Tooling — Building Consumer Products with State Compression
Affordability fuels experimentation, attracts attention, and fosters a thriving ecosystem of tools, communities, and use cases.
Experimentation: Artists and developers are no longer limited by high costs. They can experiment with new ideas, create dynamic and interactive cNFT experiences, and test unconventional use cases without the fear of breaking the bank. For example, Artists in DRiP can experiment with drops that are catered to a mass, which could lead to a bigger distribution and community.
Attention captures: Innovative projects like DRiP (free creative NFTs at scale), Solarplex (embedded art experiences), and Dialect (claim games) attract user attention, demonstrating the diverse potential of cNFTs.
Building momentum: The growing user base attracts unique use-cases such as:
- Dynamic experiences: cNFTs can be integrated into games, where their properties change based on in-game actions or achievements. For example, Superteam’s member NFT are dynamic NFTs where the XPs/reputation score keep changing based on the community contributions.
- Frictionless micropayments: TipLink enables seamless support for creators and communities to set up payments Infra.
- Easy tooling: Underdog Protocol democratizes access to creating NFT collections by offering easy-to-use no-code tools and APIs.
- Interactive experience: Dialect uses compressed NFTs (cNFTs) to enable users to mint and share collectible stickers within the platform.
- Embedded art experiences: Solarplex integrates art directly into websites and applications.
Let’s now take a look at those projects and creators using compressed NFTs, in detail.
Infra powering cNFTs:
- Metaplex — NFT Standard: The cNFT masterminds themselves, Metaplex lays the foundation for cNFT standards and tools, also known as the Bubblegum program. Controlling almost 100% of the NFT markets on Solana, they are a critical piece of NFT Infra on Solana.
- RPC Providers — Fetching data: Compressed NFTs use indexers to manage transaction data between RPCs (Remote Procedure Calls) and on-chain smart contracts. RPC (Remote Procedure Call) requests serve as an application’s entry point to the Solana cluster. These RPC nodes operate with identical software to a validator, yet they aren’t involved in the consensus process. Think of RPC providers as AWS equivalent for compressed NFTs, who are responsible for fetching cNFTs Data. The DAS APIs help in efficiently querying and retrieving the cNFT metadata.
Helius, Triton, and Hello Moon are some of the top low-latency RPC providers ensuring smooth cNFT transactions. The connecting dApps with off-chain data, efficiently organizing cNFT information. This enables developers to create innovative experiences and allows users smooth interaction with cNFTs, masking the complex data handling in the background. - NFT Minting as a Service: To make it easier for developers and creators to easily compressed NFTs, there are multiple no-code and low-code tools on Solana like:
- Underdog Protocol: Underdog Protocol is a platform offering users a centralized solution to manage their NFTs. It provides gas-free minting, comprehensive APIs, and customizable templates for minting, managing, and organizing Solana-based NFTs, and it especially supports cNFTs.
2. Crossmint: This is also a similar tool no-code solution for minting Solana NFTs. Crossmint has made it so that minting compressed NFTs is no more difficult than minting regular ones. — All it takes is a single API call. It’s one of the best suited tool for enterprises!
3. Shyft: It’s a complete suite for Solana that streamlines the overall development experience. Its tools like the Solana Explorer and APIs help view, create, and integrate cNFTs into collections and other projects swiftly and efficiently on the Solana blockchain.
4. Tiplink: It serves as a streamlined Solana wallet enabling asset transfer via shared links. Users generate a TipLink, sending it across platforms such as email, text, or Discord. This link itself functions as the wallet.
This permits crypto transfer to individuals without a Solana wallet, allowing them to claim assets like NFTs or tokens by simply clicking the link. One can also setup their own cNFT minting setup and publish their own QR code for anyone to scan and mint. This functionality positions TipLink as an excellent onboarding tool.
Consumer Apps
- DRiP — The biggest cNFT app on Solana DRiP is a playground for free art drops and community-driven growth. DRiP has become a bridge between emerging artists and curious collectors. It democratizes access to art and cultivates a community where anyone can be a patron, a creator, or simply a joyful participant in the ever-evolving world of NFTs. Think of it as Patreon/substack, but for artists and brands.
But free doesn’t mean low quality. DRiP curates diverse collections from promising artists, providing them with a platform for distribution and marketing. To prevent bots from spoiling the fun, DRiP employs an invite-only onboarding strategy. This exclusivity kickstarts a growth flywheel — those who experience the magic of DRiP’s free art are more likely to engage with the artists they discover, potentially converting them into paying collectors later on.
With over 1,652,383 wallets receiving DRiP NFTs and boasting 500k+ active weekly wallets, the cumulative mint exceeds 81.85M, highlighting its vast engagement and adoption.
DRiP has now evolved from just the cNFT minting platform to a consumer app (mobile app launching soon), tipping features, in-app currency like droplets and so on.
For more on DRiP, read this excellent essay on DRiP by Scriblooooor.
2. Dialect — the web3 messaging app
Dialect introduces a decentralized social messaging platform utilizing NFT stickers as a gateway to onboard users into the world of web3. With Solana, Dialect leverages state compression to drastically reduce minting costs and empower users to mint and share NFT stickers seamlessly within its messaging ecosystem.
It focuses on transforming familiar chat stickers into collectible NFTs, fostering social engagement, and making web3 experiences accessible to mainstream users. This is a great example of using cNFTs for expressions and communication.
3. Picoplay — Casual Gaming Proof of Play
It is a platform for solving daily chess puzzles to win fun rewards. It follows a similar user retention strategy just like DRiP to make users come back every day and win NFTs as a reward. So far it has been able to gather quite a user base who play daily with the introduction of Streaks and wager battles. The DRiP collection is currently subscribed by 32.8k+ people and gives a great example of how cNFTs can be used for user retention in a game to record on-chain activities.
4. Solarplex — Web3 Twitter
It’s a social media platform that allows for the creation of token-embedded NFTs. Solarplex's In-Post Minting feature allows users to quickly convert their ideas into NFTs. Another great example of using cNFTs to record on-chain activities, start communities, and inevitably a social graph!
5. Helium — DePIN x cNFTs
Helium is a decentralized wireless network project that has migrated to Solana, building its backbone on Solana. When subscribers opt-in to receive $MOBILE rewards on a Helium supported mobile, they are awarded a subscriber badge as a cNFT. So far 10k+ users have been rewarded! Further, cNFTs are being used to represent its 1 million hotspots, facilitating easier tracking and distribution of their HNT token.
cNFTs play a pivotal role as each Helium hotspot is now represented by a unique cNFT on the Solana blockchain. This links the real-world hardware to the digital realm, offering several benefits:
- Improved transparency and ownership: cNFTs provide clear, on-chain proof of ownership and location for each hotspot, streamlining network management and incentivizing participation.
- New revenue streams: Hotspot owners can earn rewards in the form of Solana tokens and potentially new tokens associated with the Helium network, with possibilities for fractional ownership and other innovative models thanks to cNFTs.
- Enhanced security: Leveraging the security of the cNFTs on the Solana blockchain helps protect the Helium network from potential attacks and ensures data integrity.
NFT collections and Creators
- Tensorians — the most valued compressed NFT collection
In August, Tensor introduced its exclusive Tensorian cNFT collection. To mint a Tensorian, users were required to have Tensorian Shards, which were airdropped to users as part of the Season 2 rewards. So far the combined trading of Tensorians and Tensorian Shards amounted to approximately $27.8 million in total trading volume.
Tensorians was the first major collection to launch a 10,000 collection as compressed NFTs and has a current market cap of whopping ~1 million SOL or $70 million, making it the second biggest NFT collection on Solana after Mad Lads.
2. Degen Poet — One of the first artists to pioneer cNFTs
Degen Poet is a Solana-based NFT artist known for crafting artwork by manually typing images on a vintage typewriter and digitizing them through scanning. Renowned for DRiP, his art has achieved sales of more than $1.9 million!
3. Other Notable collections with cNFTs
Oogy NFT collection: Several NFT projects have integrated cNFT technology into their collections, including Oogy. Earlier this year, Oogy gained recognition in the Solana NFT sphere by minting its Oogy pods, which are pre-revealed NFTs.
In less than a week they had over 65K spins and over 1.4K unique users. This is the power of cNFT which serves as a key component in the distribution and scale.
These were some of the collections and creators leveraging cNFTs, if want to explore more cNFT creators, do check them out on DRiP.haus.
Wallets
Wallets act as the gateway to user experience and enable mass adoption. So it becomes very crucial for them to support cNFTs. The seamless integration of wallets with cNFT platforms like DRiP enhances engagement and creates a smooth UX both on Mobile and on desktop.
Currently, the most famous wallets like Phantom, Solflare, and Backpack offer user-friendly interfaces that simplify minting, storing, and interacting with cNFTs for even the most tech-averse users. We might see more wallets supporting cNFTs in the coming time.
Marketplaces
- Tensor — the first major marketplace for cNFTs
Tensor functions as an NFT marketplace within the Solana ecosystem, offering features like bids, listings, and an NFT Automated Market Maker (AMM), akin to Sudoswap on Ethereum. It supports the standard token metadata NFTs alongside compressed NFTs (cNFTs), providing users with a versatile platform for engaging in NFT transactions.
In total NFT numbers — so far it has done more than $317 million in volume and has generated royalties over 294k+ SOL which is equivalent to ~$21 million at the time of writing.
If we look specifically at cNFTs, Tensor has generated a total volume of 294.8k SOL out of 485.59k trades, involving 24.7k+ unique sellers, with an average trade amounting to 0.607 SOL.
2. Magic Eden — the OG Solana marketplace, now supporting cNFTs
Magic Eden, launched in September 2021, is another leading NFT marketplace on Solana. Developers can use Magic Eden’s tools to add features to their own programs. Magic Eden keeps fees low and doesn’t charge creators to list their NFTs.
In September of this year, it started supporting cNFTs, allowing many cNFT-based collections to launch on its platform, allowing more affordability and scale.
The total cumulative volume currently stands at ~$345 million and has generated $19 million+ in royalties (266k SOL, on 17th Dec, 1 SOL = $72.82)
This is the current state of tooling on Solana. From user-friendly platforms like Dialect and Picoplay to innovative protocols like Underdog and TipLink, tools are springing up to cater to every aspect of the cNFT experience. Communities are forming around specific use cases like on-chain art with Solarplex and dynamic NFTs with DRiP. It’s a dynamic and evolving landscape, driven by the transformative power of state compression.
Alright now that you have a macro view of cNFTs, let’s get deeper and take a look at the numbers.
Quantifying the Impact: State of Adoption
The impact of cNFTs goes beyond anecdotal evidence. Cold, hard metrics paint a compelling picture:
- Weekly cNFT mints: By the number of NFTs, they are growing exponentially and eating all the market share of traditional NFTs.
- Unique cNFT holders: Powered by the likes of DRiP and Helium, cBFT weekly unique collectors are now grossing over 1 million!
Cost efficiency compared to regular NFTs: cNFTs unlock a variety of use-cases part from just 10k collections and this pie chart perfectly captures the minting happening from music category to DePIN to stickers to gaming!
Beyond the Numbers:
Communities that have formed around cNFT art and projects vs the ones around regular NFTs.
While some NFT collectors prioritize rarity and scarcity, driving price speculation, it’s essential to acknowledge the broader impact of NFTs in fostering communities and strengthening social connections among enthusiasts and friends.
The bad and ugly about cNFTs:
While cNFTs enable powerful experiences, they do have a darker side as well as it makes NFTs even more commoditised — eliminating the scarce aspect of NFTs, which are induced by 10k collections. Here are some problems created by cNFTs:
- Spam and Hack — With cNFT being incredibly cheap to mint, spammers, and hackers have started sending spam NFTs, which have malicious links. Since, sending NFTs are cheap, even with less than 0.01% probability of getting scammed, it’s economical for spammers to keep sending these scam NFTs.
The problem became so huge, that wallets had to disable the compressed NFT notifications!
2. No sense of community: Compressed NFTs being large in number haven’t been able to develop a sense of community, which is key to the essence of crypto.
3. Lack of value creation and transfer: The blockchains are all about creating hyper-leveraged financial infrastructure and compressed NFT collections due to their sheer size, fails in creating value and very few compressed NFTs are trading above $1, which also defies the purpose of NFTs as an asset.
Are cNFTs the key to driving product growth & adoption on Solana?
While the current 10k collections are great for the community and speculation, they aren’t scalable to millions of users and that’s what compressed NFTs solve the best. We have barely even scratched the surface and sectors like loyalty are waiting to be disrupted by compressed NFTs, where loyalty can be tradeable and composable. For instance, Airbnb can launch their loyalty program with the help of cNFTs — read this case study for more.
Integrating cNFTs and on-boarding big web2 brands would take some time, but that’s where the big opportunity lies and once that happens we will see an explosion of cNFTs both in terms of numbers and value, but till then we will wait and watch more crypto native experiments like DRiP showing us what’s only possible on Solana!
References
- Charts are sourced from Topledger. DRiP and Flipside crypto and mentioned in the respective image/section.
- Dilect Case Study by Solana
- All the respective links are hyperlinked in the texts itself.
If something is left by mistake please reach out :)
Disclaimer: This essay is for educational purposes only, and does not contain any financial advice.
