The total number of Ethereum ERC-721 smart contracts, which form the backbone of most non-fungible tokens (NFTs) on the blockchain, has reached a new all-time high on the heels of the current NFT boom, according to CoinMetrics’ report published on Tuesday.

Per the report, the number of ERC-721 smart contracts has recently reached a new all-time high of around 19,000 as a result of the latest “NFT mania.”

ERC-721 is the Ethereum standard for creating NFTs, non-interchangeable tokens that are cryptographically unique. They’ve been used to create digital items with scarcity, including artwork, video game assets, and music. In recent months, the NFT space has expanded considerably, with trading volume across the top three NFT marketplaces reaching $342 million in February alone, up from $12 million in December 2020, according to DappRadar.

“The NFT market has gone from virtually non-existent to a flourishing multi-million dollar decentralized marketplace just in the last few months,” analyst Mati Greenspan, founder of crypto analytics outfit Quantum Economics, told Decrypt.

The number of Ethereum ERC-721 smart contracts has skyrocketed
The number of Ethereum ERC-721 smart contracts has skyrocketed. Image: Coin Metrics

However, despite the uptick in sales volume, NFTs remain a relatively small slice of the Ethereum pie. Although the number of ERC-721 contracts has surged to around 19,000, they’re a “small fraction” of the 17.84 million smart contracts currently deployed on Ethereum, the researchers pointed out.

Early days, or a bubble waiting to burst?

Despite the fact that NFTs are much more expensive than other tokens on average, the relatively small number of deployed ERC-721 contracts—compared to the Ethereum ecosystem as a whole—suggests that the sector is still in its infancy in terms of mass adoption.

“Considering the growing public interest towards NFTs and the growth of the metaverse market, the NFT technology has high prospects of scaling and evolving,” Petr Kozyakov, co-founder and CBDO of payment network Mercuryo, told Decrypt.

He suggested that the NFT market could peak as high as $40 billion by the end of 2021. However, other experts argued that the unprecedented prices paid by some collectors for NFTs have overinflated the market.

Konstantin Anissimov, executive director of crypto exchange CEX.IO, told Decrypt that the core deployment and use cases of the entire NFT technology have yet to be fully discovered, tapped, and integrated.

In the meantime, he argued, “there are clear indications that the NFT market is hyper-inflated in terms of the unprecedented valuations of some of the items sold thus far, including Beeple’s EVERYDAYS: THE FIRST 5000 DAYS, which sold for $69.3 million.” Beeple himself is inclined to agree, having described the NFT space as “a bubble” in a recent interview.

“We will likely see many peaks and troughs but there’s no doubt this technology is here to stay,” Greenspan concluded.