What are NFT marketplaces?
The year 2021 has been recorded as an outrage for awareness and hype of NFT’s and their functionalities. This hype is accompanied by the equal popularity of NFT marketplaces and trading for income streams.
Let’s first briefly understand this product of popularity.
Non-Fungible Tokens (NFT’s) are pieces of digital tokens that are used to feed in unique assets such as digital assets or physical assets. They are used for providing proofs of originality and cannot be held by more than one entity at a time.
NFT marketplaces are the result of emerging blockchain technology that facilitates the trading of these unique assets. The trading on NFT marketplaces works with the help of cryptocurrencies.
The NFT maker can publish their unique creation on any marketplace for pre-fixed price or on an auction basis. The trader or the purchaser can buy the NFT via valid cryptocurrencies and in simple steps, the possession is transferred digitally.
Just like stock markets such as BSE or NSE, where stocks are traded digitally as a shared part of any listed company, NFT marketplaces also follows the similar route, where unique possessions are a product of trading.
The feature of uniqueness and its proof gives an edge over traditional rights of originality. The NFT marketplaces also ensure no tapping or erasability of NFT’s which means once made and listed the tokens are not editable and no outside entity can take control over it without the full procedure of technology.
NFT marketplaces are free from any regulators or intermediaries. This ensures free and fair means of trading where a technology-driven platform with no control of any entity gives equal opportunity to all for entry or exit as buyer or seller.
NFT marketplace is a safe platform for transactions as the transactions are recorded on public ledgers with blockchain technology which gives negligible opportunities for fraud.
This opportunity to generate an income stream through digital assets can be a burden without understanding the complete ecosystem.
Looking forward let’s understand all essentials of the NFT marketplace you need to know !
What can be traded on NFT Marketplaces?
NFT marketplace majorly deals in digital content tokens and tokens for proof of physical possessions. These items for tokenization include the following list :-
- Art or paintings
- Music and audios
- Real estate
- Games and virtual possessions
These items can be formed as NFT’s and be listed on the NFT marketplace for buying and selling opportunities. Apart from the list, medical records or any recorded information can be stored here for contemplating originality but not traded.
Kinds of NFT marketplaces
Broadly classifying NFT Marketplaces, we can divide the platform into two categories depending upon the services and ease provided to users. The following platforms are:-
Streamlined platforms are the ones that are generic in terms of trading and cater to a large variety of audiences. They give out general services to users like NFT listing, transaction facilitating, buying and selling with recording.
As they provide limited services, the cost to market participants is relatively low with no additional expenses other than setting up the ecosystem. They do provide functions for trading that give ease for listing NFTs on auction or pre-fixed price.
Augmented marketplaces are the ones that give exclusive specifications and provide more facilities to users other than basic trading.
The audience is comparatively selective based on their requirements and investment in assets.
These marketplaces are expensive as they give out extra services like portfolio tracking, minting of Non-fungible tokens, recommendations and analysis of market performance.
Top 10 NFT marketplaces
The trader and seller’s sustain is dependent on the marketplace and the reliability of the platform. Therefore before entering the market, having a clear picture of top places to start with is given below.
OpenSea is the largest NFT marketplace till date with a wide base of sellers and buyers. This marketplace was founded in 2017 and since then has improved its visibility with 600000+ users till now. The valuation of assets on this marketplace accounts for $12.35B.
The collection of the platform is more than 2M with 80M+ NFTs listed as of now. This is probably the best platform as it trades for a wide range of Non-fungible tokens such as art, collectables, music, domain names, sports along with ERC1155 and ERC721 assets.
The platform has all NFTs with the smallest to highest valuation that gives space for all capacity investors to explore the market.
The platform claims this top position by quoting “We’re proud to be the first and largest marketplace for NFTs.” on its website.
It is a type of augmented platform that provides access to mint and create NFT’s and launch them in the open market.
The OpenSea marketplace gives 3 types of listing options that are :
- Fixed-price listings
- English auction listings
- Dutch auction listings
The platform enables buying and selling of digital assets such as Decentraland, Axis, CryptoKitties, ENS names.
The reliability of the platform is proved with its top supporters in the market like CoinBase, Trust Wallet, Dapper and more.
The best place to visit for art collectables is the Nifty gateway marketplace. This platform exclusively collaborates with artists and athletes.
Nifty Gateway teams up with Top artists and brands to create collections of limited edition, high-quality Nifties, exclusively available only on this platform.
Main feature of this marketplace is that it has all the top creators and partnerships with brands with big values but this comes with a cost of making the entry of newbies more difficult.
The collections are only available for a limited period of time, that is called “drop” on the platform. After that drop period, the collections are open for trading in the marketplace.
They aim to drop new NFTs once every 3 weeks.
This marketplace provides room for transferring nifties bought through the Nifty gateway into external wallets. Similarly, it facilitates the transfer of NFTs from external wallets to wallets connected with Nifty Gateway.
The platform provides three types of buying decisions that are :
- Silent auctions
- Buy It Now
- Timed auctions
This platform gives autonomy to transactions through credit cards, debit cards and Ether(ETH).
This platform is regarded as best for beginner creators as it provides a good room for social interaction and networks.
SuperRare delivers tokenisation of artwork and authenticity as its priority. Artists receive continuous royalties for all secondary sales on their artworks forever.
The platform has a total valuation of $187.21M as of now and continues to grow.
It is famous for its single edition artworks, therefore, presenting unique content. The transaction mechanism goes with the help of Ether(ETH) only.
There is a simple 3% transaction fee for all purchases which is to be paid by the buyer. On the creator’s side, the creator is charged a 15% commission of the total amount that NFT is sold for in the primary market having 85% value in hand. Whereas they get a 10% royalty amount each time their created NFT is traded secondarily in the marketplace.
Rarible platform is a multichain marketplace, meaning you can buy, mint and sell NFTs on multiple blockchains. The Web3 space has no bounds and is therefore easy to club all investments. It is best for beginners from both the buy and sell sides.
This platform accounts for a $276.9M valuation. The platform charges a fee of 2.5% on every sale.
The marketplace also has a feature of yellow checkmarks for creators that give them a verified status and thus improving their NFT’s visibility across the marketplace.
The fact that is exceptional here is that this platform has its crypto token called RARI. The marketplace supports payment flow in terms of cryptocurrencies such as WETH (Wrapped ETH), ATRI (Atari), DAI, RARI (Rarible) and ETH.
The DAI stablecoin is a decentralized, unbiased, collateral-backed cryptocurrency soft-pegged to the US Dollar.
The platform cargo is on its way to get popularity among artists as it does not give an auction feature but enables creators to decide the worth of their art.
This marketplace is built as a multi-chain platform and enables the buying and selling of NFT’s on multiple chains including Ethereum, xDai, and Polygon. It gives a feature for creators to create any number of NFT’s in one transaction that provides a pocket-friendly environment.
The feature of ‘Magic Minting’ in Cargo also helps in avoiding gas fees, which brings cost-effectiveness for beginners. Transaction processing is allowed via ETH.
Myth market is a unique type of marketplace that combines other marketplaces. It is a trading platform that enables trade through various NFT marketplaces.
These marketplaces are unique for each brand of collectables.
For example, Shatner which is exclusively for buying and selling William Shatner’s memorable.
Some examples of marketplaces within Myth Market are GPK.Market, Heroes.Market, Shatner.Market, GoPepe.Market and KOGS.Market.
The Myth market is built on the WAX blockchain that enables all operations. The transaction mechanism holds on only to WAX cryptocurrencies that can be bought from any crypto exchange.
Mintable is a marketplace that is based on the Ethereum blockchain and supports transactions through ETH only.
The marketplace is famous for the gasless minting feature that makes it most beneficial for creators pockets. It supports the creators pocket with a 5% royalty on secondary sales of their NFT. This is the best place for beginner artists to start with no cost and then evolve in the market.
This ecosystem allows three types of auctions that are :
- Timed auctions
- Buy it now
- Traditional auctions
It enables turning mostly everything into an NFT like art, game items, domains, music, videos, templates and collectables.
Foundation is a marketplace that gives room for creators and collectors to sustain. It is based on the Ethereum blockchain and facilitates transactions through ETH.
Since the launch in February 2021, creators have earned 43,641 ETH that accounts for $170,760,994.30 of amount.
When an artwork is sold on the primary market, creators receive 85% of the final sale price. If an NFT is listed and collected again on the secondary market, a 10% royalty is automatically sent to the creator who originally minted the artwork.
Whenever a new NFT is listed on the secondary marketplace, a 24-hour auction is held, minding a feature that if a bid is placed in the last 15 minutes of ending auction, the time will be increased by 15 minutes more.
It is a marketplace placed on the Ethereum blockchain and is famous for rare pieces of NFT’s.
The current marketplace volume is 10.3M.
This marketplace efficiently helps in creating, minting and trading in NFTs. Until now it has 1.7M wallets with 1.16B created assets.
The marketplace has two types of tokens that work together i.e. Enjin Coin(ENJ) and Efinity Token(EFI). They work together for transactions as well as storage of NFTs.
ENJ is used to infuse digital assets like NFTs. It powers NFTs as they move across games, apps, marketplaces, and wallets. EFI is designed to pay for transaction fees and facilitate liquidity, community rewards, and governance of the network.
KnownOrigin is based on The Ethereum blockchain network. It has a much smaller all-time trading volume as this platform presents rare NFT’s in trade.
It does not require creators to have a large following or recognition as established artists for being accepted.
The ‘Trending’ feature in KnownOrigin is a promising tool that helps in promoting creators. The platform gives access to primary and secondary marketplace separately depending upon collector and creators requirements.
The marketplace charges a 15% commission for service fee while buying the NFT at the primary level and then at resale they charge 2.5%. These charges are inclusive of gas fees.
The transaction mechanism happens through ETH or any supported crypto supported by this platform at a time.
Choosing a suitable marketplace
It is important to analyse the utility of platforms that aligns with your objectives and check for your bucket list. The factors that should be considered in priority to choose a suitable NFT marketplace for you are :-
The first concern that all investors as well as creators have is the cost included in the path of gains. Cost can be determined as one-time gas fees or recurring transaction costs. This depends from platform to platform and the size of auctions.
Market breadth is the size of the market and the type of brands that value as small or large. This affects the entry and sustenance of both buyer and seller. Selecting a perfect marketplace would be based on your capacity concerning the platform.
Auction styles can be on pre-fixed prices, immediate market conditions or open auctions. Your pocket and risk capabilities will define a suitable area for you. Both creators and investors must decide the style of auction they want to be a part of.
Transaction mechanisms and the flow of funds for every marketplace differ. This can be sometimes credit cards or debit cards, all cryptocurrencies or some selective currencies and often just one type of cryptocurrency is allowed. This brings to you a decision to make about your currency holding and selecting the marketplace accordingly.
Platform reliability and the market image does affect investor decision to put money and identify safer opportunities. Reliability can be the ease of access with privacy settings and effective transaction setup.
How can one trade using the NFT marketplace?
Non-fungible tokens are easy to trade with blockchain technology and ease of access for investors. The investor side of the market can simply create a crypto wallet and link it to the desired NFT marketplace. Enable transactions through the wallet and is ready to buy out digital assets listed on the marketplace.
The seller side requires a bit of working before listing the craft on the marketplace as NFT.
The creator needs to first mint the NFT through services of desired marketplace or external service providers. The minted NFT is linked to the crypto wallet of the seller and the marketplace.
Here both market participants are ready to trade and negotiate for value !
The craze of cryptocurrencies, blockchain technology, Non-fungible tokens and NFT marketplaces has been breaking records this year.
As more and more people are getting into awareness and use cases of the digital world, the popularity of crypto assets is increasing, which increases the popularity of NFT marketplaces and the crowd there.
The present scenario does create a possibility of high-end investments in NFT marketplaces in the upcoming decade. Valuation of marketplaces is huge and will boom records as the young generation is anticipated to be inclined towards original art and technology.
The public ledger system and easy transaction mechanism of NFT marketplaces have paved the way for future technology and will dismantle the old right systems. The creators will look forward to proof and digital rights for their content with monetization benefits.
Reaching a bottom line, we can infer that the NFT marketplace is a big support for facilitating trade in collectables. They provide for monetisation and royalty benefits to creators and gains by auctions for investors. The gains enjoyed by market participants are far from regulatory reach and technology ensures free and fair trade.
The point to notice is that till yet not the whole world has legalised a framework for NFT markets to float. A handful of countries support this system whereas others are either in process of easing or are designing frameworks.
As more and more funds are diverting towards NFT marketplaces, this might be a threat to traditional trading platforms like stock markets or other investment instruments. Future holds a lot for NFT marketplaces to evolve and grow with lesser legal restrictions.