80% Of All Ethereum NFTs Since April Are Owned By 17% Of The NFT Holders

The NFT craze of 2021 can now be examined more deeply, as a report from open-source blockchain analytics firm Moonstream reported that around 17% of addresses control more than 80% of all NFTs on Ethereum’s blockchain.

Moonstream‘s report, published on October 21, examined over 7 million NFT transactions on the Ethereum blockchain between April 1 and September 25, 2021, showing that 16,71% of addresses – mostly NFT platforms and exchanges - own 80.98% of NFTs on Ethereum. The rest of the NFT-holding addresses currently hold only “a handful of tokens'' during that time frame.

“This latter statistic does require a little more nuance in its interpretation, however, as many of those owners are marketplaces and clearinghouses like OpenSea, Nifty Gateway, and other platforms of the same ilk,” Moonstream noted.

The figures closely resemble the Pareto principle, which states that 80% of consequences come from 20% of the causes. Historically, the principle became a common factor across different markets and sectors.

Reddit user “xddemonesque” replied to Moonstream’s report, stating that it is “fascinating to see the Pareto principle more or less hold in a market as avant-garde and traditionally ‘irrational’”.

However, Moonstream’s report only focuses on ERC-721 tokens, and excludes any information from Layer 2 networks such as Polygon, for example. Furthermore, the report also neglects data from centralized APIs.

“Our scan of these 1,145,767 blocks yielded transfer activity for 7,020,950 tokens from 9,292 NFT contracts across 727,102 addresses. These mints and transfers form the core of the dataset,” the report from Moonstream shows.

Furthermore, the paper showcased a “great inequality” of NFT ownership on Ethereum, but also that the NFT market is still open to small-scale investors and enthusiasts. The report pointed out that the majority of NFT holders are small traders, which found it easy to join the NFT race.

“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.”

Meanwhile, the report also cited some analysis improvement points, such as the narrow time margin, included in it. For a future version of the report, Moonstream plans to gather information at frequent intervals from 2016 to the date of the report.

Also, the report will open the door to analysis of ownership entropy and transform it into an analysis of ownership information gain, which is the change of ownership of a given NFT over time.

Further improvements include adding information about the addresses, which funded NFT transfers, as well as NFT valuations from centralized APIs and examining ERC-20 tokens.