The state of cNFT adoption on Solana

cNFTs have fundamentally altered the digital collectibles landscape from the rarity of NFTs and expensive fees to an abundance of NFTs and almost zero fees.

9 min readDec 17, 2023

Non-fungible tokens (NFTs) allow for censorship-resistant ownership of digital assets and are considered the second most adopted blockchain utility after DeFi.

Web3 is blossoming with a wide acceptance of NFTs, which have grown from zero to $19.3 billion market cap between 2017 to date, and over $1.1 billion paid in gas fees alone.

NFTScan reports that over 123.9 million NFT sales have been made using 106.4 million wallets. Even with the high gas fees and rarity of NFTs, these figures are steadily rising, meaning there are more users and of course, more gas fees for NFT transactions.

Aside from the high gas fees and rarity of NFTs, developers battle with the challenge of optimizing data storage onchain.

NFTs often come with sizable file footprints that strain storage capacities and hinder seamless transactions. This challenges developers, artists, and creators aiming to showcase their work.

Solana has unveiled state compression, a pioneering method of on-chain data storage that drastically reduces costs through significant economies of scale.

State Compression is like creating a unique “replica” of data that’s not on the main system and putting it on the system to make sure it’s safe. It uses the security of Solana to double-check if the external data hasn’t been messed with or changed.

Compressed NFTs (cNFTs) are the first application of state compression on Solana.

What are cNFTs?

So, a compressed NFT isn’t like your usual compression that messes with the quality or size of its data. It’s more about tweaking how the Solana blockchain manages info tied to an NFT.

It bundles several accounts (NFTs) into one neat package called a Merkle root, which is stored in the ledger.

This cool method slashes storage costs while keeping things legit — and the best part? It doesn’t mess with the quality or cool features of the art, music, or details that come with the NFT. It’s like getting the benefits without any drawbacks

In simple terms, cNFTs are a new wave of NFT creation only possible on Solana #OPOS.

Why do cNFTs exist?

Traditionally, compression is used to reduce the size of files and data. Its primary goal is to store or transmit data in fewer bits than its original file but compressed NFTs are different. They have three main goals:

Reduce cost: cNFTs provide creators with a budget-friendly approach to content production on a large scale. By minimizing expenses, creators can explore new ideas more freely and effortlessly.
Create abundance: cNFTs serve as an accessible entry point for newcomers to explore the world of NFTs. Facilitating the creation of content on a grand scale opens doors for new collectors to enjoy low-risk, enjoyable, and affordable NFTs.
Create fun: cNFTs open up avenues to reintroduce the element of fun into the NFT space, allowing us to explore new and entertaining aspects of the NFT experience.

cNFTs are bringing fun back to NFTs while minimizing costs and creating abundance.

cNFT Tooling

cNFTs harness Solana’s state compression, facilitating the minting of NFTs for very low fees.

Solana’s state compression uses something called concurrent Merkle trees. These trees are like super-fast processors that can handle lots of transactions at once. It’s like they have a fast-forward button for proofs, making everything speedy and efficient!

Alright, here’s the scoop! Unlike regular Merkle trees that throw a fit every time you update something, Compressed NFTs (cNFTs) are like the cool kids on the block. They use state compression and fancy concurrent Merkle trees to save space and cut down on storage costs.

Instead of stashing every NFT in a usual Solana account, cNFTs keep their metadata on the ledger itself. It’s like storing the important stuff in one central spot. This not only cuts down on storage costs but also keeps things super secure and unchangeable, thanks to the awesomeness of the ledger. Smart, right?

cNFT Tooling with Underdog Protocol

Underdog Protocol allows users to seamlessly create and manage cNFTs on Solana via their API. You don’t need to know the technicalities, just connect and mint your cNFTs.

Visit https://app.underdogprotocol.com
Connect your wallet.
Access API Keys and generate a fresh one.
Follow by selecting “Create Your Initial New Project.”
Provide the necessary information and click “Create Project.”
Move on to the Mint NFT section and input the required details.
Click on “Create NFT.”

cNFT Tooling with Metaplex

Metaplex is an open protocol and toolset for NFT creators and developers on Solana that allows top creators and game studios to use Metaplex to create, grow, and engage their communities.

Metaplex reported that 125M+ NFTs have been minted through Metaplex, including ~90M cNFTs.

Since July 2023, Metaplex has maintained over 30 million transactions monthly with an estimated volume of 200 million transactions in 2023 alone.

cNFT Use-cases

Dialect

Dialect is a Web3 messaging app, a bit like Telegram. Any good messaging app nowadays has to have chat stickers — but the team of Dialect came up with the idea of minting them as NFTs. This way your collection of stickers will truly be your own.

In a generous move, Dialect covered the fees for the inaugural release of cNFT stickers, ensuring a cost-free minting experience for its users. In April 2023 alone, an impressive 500,000 cNFT stickers were minted, marking a significant milestone in the convergence of digital art and blockchain technology within the Dialect community.

With Dialect’s cNFT stickers, users are no longer limited to mundane digital stickers; instead, they own unique, verifiable assets on the blockchain

Magic Eden

Magic Eden, as a prominent decentralized marketplace on the Solana blockchain, serves as a compelling platform for the adoption and utilization of compressed NFTs (cNFTs).

Cost-Effective Trading: As cNFTs significantly reduce storage costs on-chain, users on Magic Eden can enjoy more affordable transactions, making the platform even more attractive to both creators and collectors.
Scalability and Market Dynamics: The compressed nature of cNFTs allows for efficient scaling, enabling Magic Eden to accommodate a growing number of creators and collectors without compromising on performance.
Enhanced User Experience: The streamlined process of handling compressed data with cNFTs can contribute to an enhanced user experience on Magic Eden. Faster transaction times and lower storage costs make the platform more user-friendly, encouraging increased user engagement and satisfaction.
Diverse Content Offerings: Magic Eden’s marketplace thrives on diverse content offerings, ranging from digital art to virtual real estate. cNFTs, with their ability to compress various types of data without compromising quality, can cater to this diversity. This opens up opportunities for creators in gaming, music, virtual events, and other sectors to showcase and trade their content on Magic Eden.

Drip Haus

Harnessing Solana’s Compressed NFT standard, DRiP Haus provides a cost-effective solution for minting NFTs at a scale akin to Web2, distributing over 60 million collectibles minted to more than 500,000 collectors and reaching more than 1.2 million wallets.

Tensor

Tensor is Solana’s leading NFT marketplace with about 51.7% ($108.1 million) of Solana’s NFT volume in the last 3 months.

Tensor makes trading NFTs as fun as trading shit coins providing advanced trading features like real-time data on Solana.

Tensor created the first 10k cNFT Collection on Solana.

State of cNFT for Consumers

Since the launch of state compression, minting on Solana has exploded. Over 2.5 million cNFTs have been minted weekly since July 2023. Read here.

Solana has seen +100 collections of cNFTs launch weekly with most of these being collectibles, unlabelled cNFTs, and platform perks. With compression, NFTs are going from rarity to abundance and from the normal PFPs to art, memes, music, podcasts, games, stickers & comics.

Ethereum — mint about a billion NFTs = $30 billion

Polygon — mint about a billion NFTs = $50 million

Solana — mint about a billion cNFTs ~ $30,000.

This is the power of compression. No more expensive gas fees, just mint for cheap fees as a creator or claim for near-zero fees as a collector.

How cNFTs will drive Solana product growth and user adoption

Many new users have been onboarded on Solana since cNFTs came to live. cNFTs are poised to play a pivotal role in driving Solana’s product growth and fostering widespread user adoption. Here’s how:

Cost Efficiency: cNFTs make it more economically viable for creators and platforms to mint and trade digital assets. This cost efficiency attracts a broader range of creators, collectors, and users.
Scalability: As the demand for NFTs continues to surge, Solana’s ability to accommodate larger volumes of transactions and data becomes a key factor in attracting both creators and collectors.
Accessibility: cNFTs provide an entry point for creators who may have been deterred by high associated costs, as well as for users who are exploring NFTs for the first time.
Innovation in Content Creation: The use of cNFTs in content creation attracts forward-thinking artists, musicians, and developers to Solana, fostering a dynamic and creative environment.
User-Friendly Experience: The streamlined process of minting and trading cNFTs enhances the overall user experience on Solana, driving higher user retention and adoption rates.
Community Engagement: As the popularity of cNFTs grows, it creates a shared interest within the Solana community. Collaborative projects, partnerships, and community-driven initiatives centered around cNFTs can further stimulate engagement and strengthen the bonds among Solana users.

Suggestions and Conclusion

Educational Initiatives: Implement comprehensive educational initiatives to inform both creators and users about the benefits and functionality of cNFTs.
Developer Tools and Documentation: Enhance developer tools and documentation to simplify the process of creating and minting cNFTs on Solana.
Community Engagement: Foster a strong community around cNFTs on Solana by hosting events, forums, and collaborative projects.
Interoperability: Explore opportunities for interoperability with other blockchain networks to expand the reach and utility of cNFTs.
Scalability Solutions: Continue to optimize scalability solutions to accommodate the increasing demand for cNFTs.
Integration with Marketplaces: Strengthen partnerships with existing NFT marketplaces to ensure smooth integration and accessibility of cNFTs.

cNFTs represent a promising avenue for the evolution of the NFT ecosystem. To enhance their impact and ensure sustained growth, it is crucial to focus on education, developer support, community engagement, interoperability, scalability, and marketplace integration.

As Solana continues to position itself as a leading blockchain platform, cNFTs can play a pivotal role in attracting diverse creators and users.

Top cNFT Communities

2024 Outlook

Interoperable cNFTs: Magic Eden’s exploration of interoperability with other platforms can be further extended. Interoperable cNFTs could facilitate cross-platform trading and collaboration while increasing cNFT adoption.
Proof-of-Contribution cNFTs: Proof-of-Contribution cNFTs would help build a verifiable reputation better than a resume or word of mouth would.
cNFT Perps: Sujiko Perps has developed a perpetual trading exchange on Solana that allows you to trade top NFTs for as little as $1. I expect them to launch their protocol in a few weeks and integrate top cNFTs.