Introduction
Not less than three decades ago, blockchain technology was still confined to academic high-speed computing research laboratories. But, no one then thought that these distributed digital ledgers would mark the dawn of the new internet era. Still, we know what happened later, which has led us to write this blog. It all started with the crypto legend Satoshi Nakamoto’s Bitcoin, which has become the top crypto asset so far, from where multiple applications based on cryptocurrencies began blooming. Later, many standalone applications and ventures based on them came up, such as non-fungible tokens (NFTs), decentralized finance (DeFi), decentralized autonomous organizations (DAOs), and stable coins.
When we talk about successful blockchain applications, non-fungible tokens (NFTs) are only overtaken by cryptocurrencies that form the basis for the total blockchain ecosystem. Non-fungible tokens are digital entities on the blockchain that support assets (physical/digital), proving ownership and authenticity of those items. NFTs have been in existence since 2014, although they became popular only after 2017 when an NFT trading game “CryptoKitties” became popular. Then, again their popularity faded, thanks to the rise of fundraising applications in the crypto world. Suddenly in 2021, the fame of NFTs went beyond the crypto communities, with expensive purchases marking the beginning of the NFT boom, which has not faded yet. Although most people credit expensive buys behind the resurgence of NFTs, the role of NFT marketplace platforms should not be forgotten. That is why this blog concentrates on all the facets involved in an NFT marketplace platform.
What is an NFT Marketplace?
An NFT marketplace is a platform that helps users to buy, sell, and trade items backed by NFTs. These marketplaces exist on various blockchain networks, with the most famous ones among NFT marketplace owners being Ethereum, Polygon, Binance Smart Chain (BSC), Solana, Avalanche, Flow, Harmony, and Cardano. While some NFT marketplaces sell general NFT items, attracting a wider audience base, others intend to cater to particular sets of consumers by selling specific NFT items. Examples of NFT marketplaces include OpenSea, Rarible, Solsea, LooksRare, Sorare, the Sandbox, NBA Top Shot, Decentraland, CryptoPunks, and Axie Infinity. Typical tender in these platforms is various cryptocurrencies, although a few accept crypto stable coins and fiat payments (debit/credit cards and wire transfer) to serve a broader target audience.
Why are NFT Marketplaces Necessary?
NFT marketplaces are necessary since they help creators/sellers to get close to their customers, which was not the case with Web2 e-commerce stores. Also, NFT marketplaces are mostly peer-to-peer, meaning that no one can meddle in your purchases. Although total transparency of the NFT marketplace brings concerns of data breaches, the names behind will stay anonymous, and any tampering attempt will be clearly visible. These platforms are also immensely beneficial to small-time entrepreneurs and newbie creators who need enough recognition before forming their community.
Benefits of an NFT Marketplace
- An NFT marketplace provides a way for a creator to get closer to their fans as all trades involved are almost peer-to-peer.
- Such a platform also benefits users by allowing them to search and buy their favorite NFT items easily.
- NFT marketplace platforms also help ease the entry barriers for new creators and small-scale NFT businesses that aspire to do big.
- Also, an NFT marketplace platform assists business firms by making them manage a utility-based community or even a decentralized autonomous organization, which has been the buzzword in recent times.
Important Features of an NFT Marketplace Platform
- Shopfront – The shopfront should show all the important information about NFT items, such as descriptions, ownership history, bids, reviews, etc.
- Search Engine – The marketplace platform should contain a sophisticated search engine where users can quickly search for their favorite NFT assets.
- Filter and Sort Options – The NFT marketplace should also have a filter engine so that users can easily get the necessary results and sort them easily according to their needs.
- Listing Portal – Creators on an NFT marketplace should be able to mint and list their NFTs easily by providing necessary information to sell their NFT items.
- Status Portal – This feature helps sellers list their NFTs for sale, as admin moderation will take some time.
- Bidding Portal – Buyers on the NFT marketplace should be able to place bids quickly and update themselves with the current status of an NFT sale.
- Crypto Wallet – It is an essential feature for any NFT marketplace as they play an integral role in processing transactions. The wallet can be internally or externally integrated.
- Ratings and Reviews – It is important to have these features so that buyers can know which sellers are the best before buying NFT items.
How Does an NFT Marketplace Work?
- To start with, a user (buyer/seller) should create their account on the portal and connect their cryptocurrency wallet or load cryptocurrency into the provided wallet.
- Now, the seller can mint NFTs to support their digital collectibles. They must provide detailed information about the NFT, including a description, cost (initial auction price/fixed price), deadline, utilities, etc.
- The marketplace administrator will moderate the NFT items, and if they match all their criteria, they are listed on the selling portal. The platform can also show the NFTs on a prominent space on the platform for a fee.
- A potential buyer looks at the NFT item and its details to place a bid or wants to pay the fixed price. The amount is debited from the buyer’s crypto wallet.
- If the seller finds that the bid amount satisfies them or the deadline is reached, they can accept the offer, which releases the NFTs to the buyer, and the amount is credited to the seller.
- A transaction fee (apart from the blockchain’s gas fee) may also be charged during the transaction. The fees are typically taken as a proportion of final sales, which will be used to maintain the platform.
Use Cases of NFT Marketplace – An Updated List
Currently, NFT marketplaces sell a variety of assets, both physical and digital, and a few are listed below:
- Artworks (Physical/digital/pixelated)
- Music
- Video clips
- In-game items
- Plots of metaverse land
- Profile picture (PFP) images
- Accessories and Wearables
- Antique collectibles
- Bottles of branded alcohol
- Web domains
- Memes, and more.
How Much Does It Cost to Develop an NFT Marketplace Platform?
The cost involved in developing an NFT marketplace platform depends a lot on your preferences. For instance, creating your new platform from scratch costs more than using a customizable ready-made solution. Also, the features you want to integrate into your marketplace software and the blockchain(s) you wish to conduct business on also affect the final bill. The costs also include your working partners, as outsourcing your project to a specialist firm costs less than employing experienced blockchain developers. These are only a few main points involved in determining the cost of developing an NFT marketplace, although you can have a rough estimation once you draft the final roadmap for your project.
How Do DAOs Change the NFT Marketplace Ecosystem?
DAOs or decentralized autonomous organizations are a set of rules that work without human intervention. These empower the community around a business to participate in the decision-making process through various means. In the case of an NFT marketplace, a DAO can enable the user community to participate in major decisions through proposals and votes. This means the community will bear some responsibility for your venture, and take some pressure off you, which is a huge shift in the crypto business mentality.
Is It Possible to Build an NFT Marketplace Working on Multiple Blockchains?
Although the possibility has not been achieved extensively, some NFT marketplaces are working on multiple blockchains (two chains currently). Building multi-chain NFT marketplaces gives an opportunity for a venture to spread to different networks and build a wider community. Also, by maintaining uniform user features across all blockchains, you can earn a great reputation.
Updated List of Top NFT Marketplace Ventures
The fame various NFT marketplace businesses have earned can change abruptly due to some unprecedented events, and as a business, the platform should strive hard to get back on track as soon as possible.
Below are some of the top and famous NFT marketplaces during May 2022, sourced from DappRadar.com (not necessarily in continuous order).
- OpenSea – A horizontal NFT marketplace based on Ethereum and Polygon.
- LooksRare – An Ethereum-based NFT marketplace that puts its community first.
- Magic Eden – An NFT marketplace based on Solana that supports digital creators.
- CryptoPunks – An NFT marketplace based on the community around pixelated images.
- BloctoBay – A Flow-based marketplace that sells assets bridged from various blockchains.
- Axie Infinity – An NFT marketplace based on a battle-based NFT game of the same name.
- NBA Top Shot – A licensed marketplace that sells iconic video clips from the NBA league.
How Do NFT Marketplace Marketing Solutions Help?
Marketing plays a vital role in the NFT world, as it is important to let the community know about your venture in the first place. To accomplish the mission effortlessly, there are a few firms that can help in promoting your NFT marketplace venture in a variety of ways. A marketing agency would usually utilize conventional and crypto-specific marketing tactics to advertise your platform to the world. You should also note that the plans will be based on your preferences and allocated budget.
Concluding Thoughts
Hence, we can say that running an NFT marketplace can be more than lucrative due to the certainty that your venture will sustain for a long time. Although this blog has not explained much about the development process involved, it is just like building any other NFT platform. So, we focused more on letting you know about additional important information. There are a few companies that excel in developing and marketing NFT marketplaces, and it might be the right time to start your journey in the crypto world as a business owner.
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