The Future of NFT Marketplaces
Over the last few months, NFT sales have been through the roof. According to nonfungible.com, during the first week of August, the total USD value transferred over 7 leading NFT marketplaces has crossed a total of $356 million. It’s evident from the graphs below that the NFT sales skyrocketed in the first week of August and the trend continued.
No signs of slowing down
According to a 2020 year-end report by NonFungible.com, the total market capitalization of the NFT sector was close to $210 million in 2019. The report suggested that in 2020, the market cap could touch $315 and by 2021, it could surpass $700 million.
Surprisingly, the NFT market capitalization has superseded the assumptions is currently sitting at over $33 billion according to CoinMarketcap. This clearly indicates that the NFT market is no more a fad as was believed in 2017 and holds the potential to become a trillion-dollar market in the future.
NFT Marketplace Models
NFT marketplaces are platforms where one can mint, store, display, and trade NFTs. These have played a pivotal role in the explosive growth of the NFT market cap. Check this out, recently, OpenSea, one of the leading NFT marketplaces crossed the record sales of $1.5 billion.
While there are many types of NFT marketplaces, universal or collectible-oriented marketplaces are the most popular ones. That’s because sports and collectible NFTs are the most traded NFTs and contribute to over 60% of the total sales.
Popular models of NFT marketplaces
- Universal eBay type NFT marketplaces: These marketplaces connect NFT buyers to the sellers for peer-to-peer trade. For example, OpenSea and Rarible. But these two also differ in the way they support the minting of NFTs.
- Single NFT type marketplaces: Some marketplaces like SuperRare support trade of only a single type of NFT which is high-end digital art. It makes sure the NFTs are curated before they are listed on the platform.
- Hybrid NFT marketplaces: Organizations are introducing NFT marketplaces in their digital platforms where they can offer digital experiences to the users. These marketplaces allow buyers to create custom avatars which can then be sold in the NFT marketplace.
What are the top trends in the NFT marketplace?
According to DappRadar’s recent portfolio tracking tool, 85% of the DeFi users claim they have interacted with NFTs and this is a 10% increase since May 2021. Even the Ethereum blockchain usage clearly indicates that the unique wallets interacting with NFTs have surged by over 202%.
With so much interest exploding in the space, NFT marketplaces are looking at more ways to engage more NFT users. Here is what is trending:
- Moving to low gas-fees Layer 2 protocols
NFT marketplaces have been struggling with infamous Ethereum gas fees issues. But now some of the leading platforms are now moving to efficient Layer-2 solutions like Polygon and Immutable-X. According to these marketplaces, they expect their transactions to consume 100 times less energy once they migrate from Ethereum to Layer-2 solutions.
Also, OpenSea will soon move to Immutable-X, the gasless layer-2 developed especially to cater to NFT transactions.
- NFT marketplaces going cross-chain
The potential of NFT trades has been limited because of no cross-chain trading between NFT marketplaces. But this is gradually changing now. Exchange’s like FTX have announced launching a cross-chain NFT marketplace that will allow users to trade NFTs between Ethereum and Solana blockchain. Breaking these blockchain silos is crucial to unleashing the real potential of NFTs.
- Airdrops tokens
Recently, SuperRare airdropped RARE, the platform curation token to the users. Anyone with a SuperRare account received these free tokens. In the past, such airdropped have led to a rush of users to the platform that conducted the drop and it seems to be becoming a new trend in the NFT place.
- Introducing Curation tokens
Many NFT traders are moving away from universal NFT marketplaces and heading towards platforms where they can get access to curated, high-end NFTs. To ensure only high-end NFTs are listed on their marketplaces, the platforms are incentivizing curators with curation tokens. This means someone with experience in art curation can make an earning by simply curating NFTs on a marketplace.
- NFT join the yield farming hype
The NFT and DeFi worlds are trying to converge and take advantage of each other. Because of this, the yield farmers are now using NFTs as a new way to leverage digital assets through DeFi protocols. Many upcoming DeFi platforms are introducing innovative liquidity mining models where instead of farming rewards, liquidity providers are incentivized with illiquid NFT tokens. These tokens can then be wrapped into NFT collectibles and sold in the marketplaces.
In-game NFT trades are on the rise. Because of this many popular games like Axie Infinity introduced an in-game marketplace and these turned out to be really successful. In fact, Axie Marketplace sells more than 50,000 Axie NFTs per day in comparison to OpenSea, the leading NFT marketplace.
- Mainstream players entering the space
Shopify, the leading multinational e-commerce company allowed its merchants to trade NFTs directly. According to Shopify, this will give merchants more control over the sale and customer relationship. However, Shopify does not intend to compete with OpenSea or Rarible but will offer credit and debit card buy/sell support to NFT traders. With mainstream players like Shopify entering the space, we might witness a different model of NFT marketplaces coming up.
- Venture Capitalist investing in NFT marketplaces
In the last six months, notable venture capitalists have invested in some of the leading NFT marketplaces. Take a look at this chart OpenSea, Rarible, Mintable, almost every popular NFT marketplace have received funds from notable investors. This strongly indicates that NFTs are no longer a fad as believed originally.
Wrapping it up
NFT marketplaces are a very prominent aspect of NFT trading and could play a crucial role in the mass adoption of NFTs. With the platforms moving to scalable, cost-effective solutions and with more mainstream players entering the space, it seems we are on the verge of experiencing trading on next-generation NFT marketplaces.