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NFTs have an image problem. While non-fungible tokens (NFTs) are increasingly popular, those who care about climate change balk at the vast amount of energy required to mint one of these digital collectibles. Indeed, one calculation suggested that an edition of 100 works was responsible for more than 10 tons of CO2, or more than the annual footprint of a person living in the EU.
Now, thanks to OneOf, Dapper Labs, Tezos, and others, the NFT market is becoming more sustainable, innovative, and expansive.
What is an NFT anyway?
Non-fungible tokens (NFTs) are digital collectibles ‘minted’ or created by artists for sale or trade. These can be images, videos, GIFs, or even music or other artwork. NFTs are created as digital assets that are encoded and can be authenticated and permanently tracked on a blockchain (a virtual ledger).
Not all blockchains are able to handle NFTs though. This is because some, like Bitcoin, are only designed to work with a single asset or token. Other blockchains allow developers to build apps on the network, and it is this versatility that paved the way for artists to create NFTs.
Most early NFTs were created on the Ethereum platform. Many still are. But now that the tokens are becoming more mainstream, other decentralized networks have also become popular with creators. Examples include Algorand, Tezos, Polkadot, and Hedera Hashgraph.
The beauty of all this innovation is that creators are no longer tied to the energy-intensive Ethereum network. This means that each NFT has the potential for a much lower climate impact. Some NFT marketplaces, such as SuperRare and Nifty Gateway, continue to operate on the Ethereum blockchain, however.
Want a deeper dive into the climate impact of NFTs? We covered that here. For now, though, let’s take a look at some of the big players helping to make NFTs more sustainable.
Tezos (XTZ), Dapper Labs, and OneOf
Tezos is an energy-efficient Proof of Stake (PoS) blockchain that is self-upgradable, scalable, and secure. Launched in 2018, Tezos has a great reputation for innovation and transparency. The open-source code is efficient and leading-edge, enabling developers to easily build apps, tools, games, and NFTs on the network.
Dapper Labs was also founded in 2018, securing huge amounts of investment through its success with the digital collectible Cryptokitties. The company specializes in blockchain-based games, especially sports, as well as NFTs. More recently, Dapper Labs brought out the popular digital basketball trading card platform NBA Top Shot.
Unfortunately, Dapper Labs became a victim of its own success. Up until quite recently, Dapper Labs used Ethereum for its creations. Minting this number of NFTs and processing so many transactions was a massive drain on the Ethereum network, however, slowing the system to a crawl and dramatically increasing cost per transaction. The Dapper Labs team determined that Ethereum was no longer the right place for its creations and has been searching for a solution since.
That solution comes in the form of Tezos, which offers much faster transaction times, and a much smaller carbon footprint.
Tezos also has another major advantage: no minting fees.
One of the problems with minting NFTs on Ethereum is that the high cost of transactions translates to a high cost for NFTs. Minting costs alone can run to well above $150 per NFT, meaning that creators have to price their NFTs at more than $150 to make any profit.
OneOf from Dapper Labs
Dapper Labs latest project, OneOf is an eco-friendly music-focused NFT platform with artists such as Doja Cat, Quincy Jones, and John Legend. OneOf will not run on Ethereum. Instead, it will run on Tezos.
By moving away from Ethereum and its high minting costs, creators can be much more flexible with their pricing. On the OneOf platform, instead of only producing one-of-one tokens, artists can offer several tiers of tokens at different costs, making music more accessible. For instance, tiers can incldue:
- Diamond – one-of-five to one-of-twenty NFTs
- Platinum – one-of-one-hundred to one-of-one-thousand tokens
- Gold – one-of-ten-thousand to one-of-one-hundred-thousand tokens.
This is not only good for music fans, it’s good for the artists too. Musicians aren’t charged for minting their NFTs and they can sell their NFTs at a price of their choosing. Lesser-known artists can, for instance, create low-cost NFTs in a bigger ‘mint run’, while more famous musicians can mint one-of-a-kind NFTs for a much higher price.
Other sustainable NFT marketplaces
A whole raft of eco-friendly NFT marketplaces has sprung up in the last year. The NFT marketplace Voice, for instance, was launched in September 2021 on the EOSIO blockchain. This blockchain is more eco-friendly than Ethereum and offers carbon-neutral minting and zero gas fees.
The EOSIO Delegated Proof of Stake consensus algorithm is energy efficient and doesn’t incentivize server farms to mine constantly. As such, NFTs built on this platform are much more sustainable.
Similarly, the NFT marketplace Abris.io is built on Algorand, a carbon-negative blockchain. The Lovada.art marketplace is built on the Cardano blockchain and provides a full breakdown of the platform’s energy consumption on its website.
Other NFT sustainability initiatives
The best-known types of NFTs are digital collectibles, artwork, music, and in-game items. These are not the only NFTs available though, and some innovative folks are even using the idea of NFTs to promote sustainability initiatives.
For example, the TreeDeFi platform mints NFTs that represent real-life trees that sequester carbon. Individuals and companies can buy these NFTs to offset carbon emissions, with a fun dashboard offering ongoing insights regarding carbon offsets. A third of all the transaction fees on the platform go towards planting real trees, meaning that the platform itself becomes carbon neutral or negative.
While the TreeDeFi project is still in its infancy, it’s a cool way to engage a wider audience in environmental issues, including one perhaps not typically concerned with climate change action. And, while I haven’t seen it yet, one might expect to be able to buy NFTs that represent wind turbines, solar panels, or other renewable energy projects soon too.
All in all, the use of networks such as Tezos, as well as Cardano and others, can make NFTs much more energy-efficient, but this isn’t the only way the sector can make NFTs sustainable.