Ethereum’s transition from Proof of Work to the Proof of Stake consensus mechanism cut the network’s energy requirements by 99.95%. This is great support to an expanding universe of apps developed by the next generation of Web3 developers and creators. To commemorate the transition, Murat Pak, a digital artist, created the Merge NFT and launched it on the Nifty Gateway NFT marketplace.
The Merge NFT generated more than $91.8 million during its brief 48-hour sale. This makes it the most expensive piece of art ever sold by a living artist on a public sale. In this article, we discuss the Merge NFT in detail.
What is The Merge NFT?
The Merge NFT is a dynamic and unique Ethereum-based NFT collection that hit the headlines after breaking NFT sales records in December 2021. After the conclusion of the sale, Nifty Gateway minted all the 312,686 purchased tokens, also known as units of “mass.”
The Merge NFT uses a very basic artwork, with each token represented by a simple white or yellow circle and a black background. Its visuals are produced fully on-chain based on formulas added to smart contracts and not stored off-chain as is the case with many other NFT collections.
What makes NFT the Merge collection different from other NFT collections is its concept, which uses a unique mechanism that causes the collection to develop or change over time. The smart contract for the collection prevents one address from holding many NFTs from the Merge NFT collection. Once two NFTs from the collection are held in the same wallet, the masses of the two tokens merge. This results in one newly minted NFT with the combined masses of the two pre-existing NFTs, which is shown by a bigger circle with a black background.
The Merge NFTs already in circulation diminish as they are transferred from one NFT wallet to another (NFTs purchased by someone who already holds an NFT from the collection), and their average mass increases. However, the total mass of the NFTs remains constant.
The Ethereum Merge
As stated above, The Merge NFT collection commemorates the Ethereum merge, a historic event in the history of Ethereum that saw the network transition from the Proof of Work to the Proof of Stake consensus algorithm.
Ethereum’s transition began with the upgrade of Ethereum 2.0, also called the Serenity upgrade, on December 1, 2021, after the activation of the proof-of-stake Beacon Chain. The proof-of-stake Beacon Chain currently serves as the central coordination layer for the Ethereum 2.0 network. The ETH 2.0 deposits were enabled shortly after the transition, but the proof-of-work and proof-of-stake consensus algorithms continued to operate simultaneously until September 15, 2022, when the transition concluded. This means that Ethereum has been secured by staking since then.
The transition to the proof of stake consensus mechanism helped Ethereum deal with its scalability issues, which causes the blockchain network users to incur huge gas charges. Additionally, the Ethereum network has become more energy efficient and environmentally friendly since energy consumption has been reduced by more than 99% by doing away with the proof of work consensus mechanism.
Impact of the Ethereum Merge on NFTs
Before the merge, Ethereum was home to tens of millions of NFT collectibles, profile pictures, and pieces of artwork. Some of these had commanded eye-popping sums during the NFT bull market run. The news of the merge left many wondering what could go wrong, and whether it will change anything about their owned digital assets.
Nothing changed with the NFTs, but they remained in the users’ NFT wallets and they worked the same on NFT marketplaces and DApps. Thus, NFT holders were not required to do anything to prepare for the merge. Everything was handled on the developer side to provide for a smooth transition.
While most of the Ethereum users were happy with the transition and its potential benefits, there were some detractors. Some Ethereum supporters did not want the network to shift from proof-of-work mining, either because of the rewards earned by miners running the computer rigs or the security benefits of the energy-intensive process.
To show their support for the merge, Yuga Labs, the company behind the Bored Ape Yacht Club, announced that only owners of their NFTs running on the merged Ethereum proof of stake will be eligible to benefit from the Yuga communities. Only such owners would be allowed to commercialize their images for derivative artwork and projects.
“In line with the broader Ethereum community, in the event of a viable [proof-of-work] fork, Yuga intends to only recognize NFTs on the PoS ETH chain as subject to the relevant NFT license and eligible for Yuga-offered utility,” Yuga Labs tweeted on August 17, 2022.
The Merge NFT Sale
The open edition sale of the Merge NFTs was done from December 2 to December 4, 2021. Open edition style is the opposite of the limited edition sale. The starting price for the public sale was $575 per unit, with the price set to increase by $25 after every 6 hours. This means that those who bought the NFTs during the last few hours of the sale had to part with $750 per unit. There was no limitation to the number of tokens that a participant could acquire.
29,983 unique address owners took part in the Merge NFT sale, buying a total of 312,686 tokens. This Merge NFT sale generated $91.8 million. This makes it the most expensive NFT the Merge sale by a living artist.
However, this is a bit controversial record since it is only valid if we consider the entire collection as a single piece of art. Although the Merge NFT is claimed to be a collection of artworks, it could become one NFT and therefore one single unique art piece if all its NFTs are merged into a single wallet.
The Merge NFT Price
The price of the Merge NFT has fallen significantly since its initial sale. At the time of writing, one unit mass had a floor price of 0.06450 ETH, which is equivalent to about $118.75. This floor price puts the total market capitalization of the NFTs in circulation at below 20000 ETH. This is more than a 96% drop in the value of the Merge NFT.
However, some tokens in the collection are sold above the floor price, meaning that the total value of the collection could likely be higher in the end. Additionally, the price of the NFTs in the collection also depends on their mass. Currently, 8,003 unique addresses are holding the Merge NFT, meaning those are the distinctive NFTs in circulation, with many of them having a mass larger than 1.
The Merge NFT is not as valuable as it was when it was first dropped on the Nifty Gateway NFT marketplace, but the sale of this NFT collection is still a record-breaking event in the history of digital art and art in general. The collection sold for $91.8 million, surpassing “Rabbit”, Jeff Koon’s sculpture, which sold for $91.1 million by a hair’s breadth. This made it the most expensive piece of art sold by a living artist.
The Merge NFT also features in the list of the most expensive NFTs ever sold. However, the Merge NFTs have not entered the list of the most expensive single NFTs ever sold. Unique NFTs from collections such as the Bored Ape Yacht Club usually spike higher as far as the price of a single NFT is concerned.
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