Non-fungible tokens, more popularly known as NFTs, have already taken the world by storm. With just into the third quarter of 2021, the market cap of NFTs has already seen a massive increase by about 1785%. The extraordinary growth has resulted in benefitting not only the owners of NFTs but also the NFT marketplaces where they are hosted. NFT marketplace and its development have been at the top of the discussion table for quite some time. So, let us dive a bit deeper into the topic to understand the NFT marketplace in detail and the cost of building one.
Concept of NFT Marketplace?
An NFT marketplace is an online marketplace where a wide array of high-valued crypto-collectibles are sold via auctions. In this marketplace, the creators sell their non-fungible virtual products and the buyers or investors procure them by the use of cryptocurrencies such as Bitcoin or Ether. The NFT marketplaces charge an amount for every transaction where an NFT is purchased on the platform.
Once an NFT is purchased, the investor of the buyer gets a token. The token here is a unique identifier that consists of the proof of ownership as well as information about the author, provenance, and authenticity. In an NFT marketplace, the buyers can purchase various types of artwork, gaming assets, fashion accessories, memes, and a wide range of others online by making bids in the auction conducted.
- Let us have a look at some of the top NFT marketplaces in terms of the highest trading volume.
- OpenSea ($1.45 million)
- Axie Infinity ($1.26 million)
- NBA Top Shot ($1.06 million)
- AtomicMarket ($850,840)
- Decentraland ($789,670)
- In terms of the highest sales, the following are the top 5 NFT marketplaces.
- CryptoKitties (2,879,359)
- Gods Unchained (572,996)
- Sorare (382,410)
- Ethereum Name Service (154,146)
- Decentraland (126,268)
- Considering the highest number of traders, the top NFT marketplaces are listed below.
- AtomicMarket (20,585)
- NBA Top Shot (19,380)
- Axie Infinity (2860)
- OpenSea (2569)
- Sorare (1979)
Important Things to Know Before Building an NFT Marketplace.
- NFT Standards
- ERC721 – This standard makes use of mapping unique identifiers to the addresses representing the owner of the identifier. ERC721 offers a permission way of transferring the assets by the “TransferFrom” method.
- ERC1155 – This standard uses IDs that do not just represent one asset but an entire class of assets. ERC1155 proves to be much more efficient as compared to the ERC721 standard.
- NFT Metadata
- Legal Documentation for Creating an NFT Marketplace
- Formation of company
- Terms of service
- Community standards
- Details of IP consideration
Working Procedure of an NFT Marketplace
The working of an NFT marketplace involves a few simple steps that are described below.
- First, the users sign up for an NFT platform.
- The next step is to set up a crypto wallet on the platform for storing the non-fungible tokens and cryptocurrency.
- Then the users create an NFT and appropriately configures the parameters of the auction.
- Now, the collection is listed for sale.
- In the next step, the chosen platform moderates the items.
- Then the non-fungible tokens appear on the list for sale in the auction.
- In the auction, the buyers place their bids.
- At the close of the auction, the sellers receive notification regarding the top bids from the buyers.
- Finally, the platform handles the transfer of items as well as funds and close the deal.
In return for work done for transferring funds and non-fungible tokens by the platform, the NFT marketplaces charge some fees on the selling amount.
Top Features of the NFT Marketplace to be Created
Here are some of the major features of the NFT marketplace that is going to be created.
Storefront – It is the section of the NFT marketplace that provides users with detailed information around the items such as their details, owner, bids, price history, and a number of others.
Live Auction Feature – Several non-fungible tokens can be sold to prospective buyers via the live auction feature. The feature contains various types of information such as the names of the tokens & seller, methods of payment to be used, picture, price, number of bids made by other buyers, and the time left for making the bids.
Search Functionality Option – The NFT marketplace must possess a category tagging and management functionality, thereby making it easy for the users to search for items that they are looking forward to buying on the platform.
Trending Collections – There are certain non-fungible tokens that get a high selling price if they are appropriately showcased in the ‘Trending Collections” section. Therefore, it is extremely important for the NFT marketplace that is being built to have a special ‘trending collections’ section that contains very useful insights such as average price, features or characteristics of the crypto collectible, name of the seller, total supply, and trading volume.
Create Listing Feature – It is a feature of the NFT marketplace that is specifically for sellers. The platform should be created in a way that allows the users with the feasibility to create listings, thereby enabling them to add in the details of their NFT.
Auction and Buy – Any of the efficient NFT marketplaces must-have auction and buying options where the users can easily add bid amount, expiration date, and a watch list that shows all details of the status of the bids.
Wallet – The marketplace should necessarily have a wallet that enables users to send, receive, and store non-fungible tokens as well as for cryptocurrencies. Your users will have to make use of wallets for sending, receiving, and storing NFTs and cryptocurrencies. The NFT marketplace should either be created with its own wallet or have the provision to integrate existing wallets for providing a seamless experience to the users.
Acceptance of Various Payment Methods – A good NFT marketplace should have different methods for payment like debit cards, credit cards, wire transfers, and net banking from buyers in addition to popular crypto wallets.
Instant Notification Feature – The marketplace should have an instant notification feature that sends all the latest information via emails and pushes notifications regarding real-time data about the launching of collectibles, new non-fungible tokens, upcoming auctions, and many more.
Provision for Round the Clock Customer Support – The NFT marketplace should come with a provision for customer support which can play a significant role in boosting the customer retention rate.
Steps to Build an Highly Scalable NFT Marketplace
Now, let us discuss the steps to build an NFT marketplace.
Defining the Niche – The first step towards building an NFT marketplace is defining the niche. The proper definition of niche is the key to success. Also, it is extremely important to be aware of the present market. There are two types of markets.
- A vertical market where the suppliers sell the items that rightly satisfy the needs of a specific target audience.
- A horizontal market where the focus is on a wide array of products or services at the same time. This type of market is quite dynamic in nature requiring a lot of investments as well as effort.
Choice of Role – There are three types of roles in the NFT marketplace platforms.
- Buyers – They are looking for digital artworks or other assets and willing to buy them, hence termed as buyers.
- Creators – As can be understood from the name, they are the artists who create and design the digital assets that further get tokenized as non-fungible tokens.
- Administrators – They are the admin of the NFT marketplace platform. They are the ones responsible for managing and running the platform. They play a crucial role in the hassle-free exchange of funds between the buyers and sellers as well as the ownership of the transfer of crypto tokens.
Documentation of the Project – The next step is to create detailed documentation of the entire project which is of immense importance. It is a cumbersome task involving a lot of time and effort. But proper documentation is helpful in saving a lot of money in building an NFT marketplace.
Prototyping – In this highly competitive market, delivering an efficient and effective product is not sufficient since the users have a lot of choices. Thus, it is of utmost importance to aim at delivering experiences that just deliver a functional product or service. It is precisely the situation where UI and UX come to the rescue. The overall look and feel matter a lot in this regard. Thus, prototyping the UIs and mocks becomes an important step in the development of the NFT marketplace before the actual development starts.
Development – It is the stage where the entire developmental work takes place with the owner deciding the type of framework for the project. The development of the NFT marketplace is done keeping in mind optimum performance, functionality, reliability, efficiency, and operation.
Testing and Execution – It is the penultimate stage where the developed software is put to test and execution to check for all errors. The testing stage is aimed at finding the bugs and fixing them to make sure that the end product is of the highest quality.
Deployment – It is the final stage of building the NFT marketplace where the software after testing is ultimately implemented for use. After deployment, the software serves its intended purpose of use.
Cost of Developing the NFT Marketplace
Now, you have a clear understanding of NFT marketplaces. With the technology and complications involved in the development of an NFT marketplace, it is evident that a considerable volume of expenses would be incurred. The total cost of developing an NFT marketplace depends on a number of factors that are listed below.
- Number of features included
- Level of customization
- Tech stack
- Developers’ cost
- Total time is taken for development
- Third-party API integration
There can be several other factors that determine the price of the NFT marketplace. Let us have a brief breakdown of the costs involved in building the marketplace.
$2395 – $5040
Authorization and Security
$3285 – $8640
$2385 – $5040
$3645 – $10,080
Search and Filters
$4005 – $11,520
$2385 – $5040
Reviews & Ratings
$2565 – $5760
$2565 – $5760
$2385 – $5040
$2085 – $3840
$4005 – $11,520
$4005 – $11,520
$2385 – $5040
$3045 – $7680
$5085 – $15.840
$3775 – $10,200
$50,000 – $116,040
The cost breakup would give the users a rough idea about the cost of developing an NFT marketplace.
Top Use 3 Use Cases Of NFTs in 2022 and Beyond
During the year 2021, the Collins Dictionary named Non-fungible Tokens (NFTs) its word of the year. NFTs are rapidly being recognized as a building element for peer-to-peer economies in virtual worlds, or in the metaverse, as the crypto and blockchain boom continues.
In recent months, the worldwide NFT industry has established itself as a prominent and rapidly expanding subsegment of the digital assets market. In November 2021, the total transaction volume of the global NFT market surpassed US$16 billion for the first time. It was just US$355 million in 2020, demonstrating how spectacular of a run NFTs have made in order to establish a new asset class in the cryptocurrency sector.
During the first several months of 2021, the market was led mostly by sporting highlights and trading cards. Although NFTs took on new forms in the second part of the year, this resulted in the creation of several new market categories, including virtual real estate, gaming avatars, and fashion. Businesses, corporations, artists, and celebrities are using NFTs to communicate with their consumers and followers in a new and novel manner.
Despite the fact that NFTs are still in their infancy, we can clearly see the technology’s incredible promise in terms of its applications. Increasingly evident and beneficial use cases for virtual items will become apparent as virtual worlds continue to develop and flourish, therefore benefiting both virtual customers and producers. You must construct virtual versions of your items in order to be prepared to capitalize on present and future chances to generate money and expand your brand in the multiverse, in addition to creating physical versions of your products.
NFTs in Metaverse
The metaverse – a new type of virtual living – is becoming more popular with gamers. In tandem with the advancement of virtual and augmented reality technology, virtual worlds with unlimited experiences are progressively developing and becoming the preferred leisure channel for an increasing number of people. Furthermore, NFTs are playing an important part in the development of immersive and interactive metaverses such as Sensorium Galaxy.
Instead of scripted tales and predefined results, metaverses depend on user-generated material to serve as the connecting thread across virtual worlds, in contrast to traditional gaming. Members have complete control over the parameters of their virtual experience, from the appearance of their avatars to the dancing choreographies they want to attempt, who they want to connect with, what music concerts they want to attend, and everything in between.
Users may choose to cohabit with AI avatars or create their own virtual creatures that are capable of having intelligent discussions, performing their own dances, and DJ-ing unique sets in an AI-powered metaverse such as Sensorium Galaxy. Collaboration opens up a world of possibilities for content production that defies all expectations.
As a means of promoting innovation, NFTs may be used to compensate virtual world developers for their time and effort via open, fair and decentralized virtual markets.
Users may conduct transactions inside Sensorium Galaxy using the in-platform currency SENSO, and owning these tokens provides access to a variety of additional valuable benefits, such as the ability to have a vote in product-related choices. Users and content developers have more control in NFT-based virtual worlds since they have more control over the technology.
NFTs in Gaming
Everyone seems to be getting into gaming at the moment. Animal Crossing was quietly being played by even the grandmother you never knew. Many of us resorted to our phones or gaming consoles to find an escape during the Covid-19 lockdowns, for a variety of understandable reasons, and this altered the landscape of gaming forever.
Gamers of all ages (55-64), mobile games, and new consumer models are all changing the face of the industry, making it more appealing to older internet users.
As a result of the expansion and maturation of NFTs, investors began to see the long-term potential of NFT and metaverse-based projects and initiatives. As a consequence, numerous non-traditional gaming firms with aspirations to construct virtual worlds have received tens of millions of dollars. True Global Ventures, for example, has invested US$10 million in The Sandbox, a metaverse leader that will open their Alpha access at the end of November 2021.
Gamers are increasingly choosing to enhance their knowledge, whether through subscription services such as the Xbox Game Pass and PSNow, or by participating in games that operate on a freemium model, in which entry to the game is free but additional features, such as avatar skins, must be purchased separately. Fortnite and Call of Duty are two instances of free-to-play games that have achieved widespread popularity.
Among the most popular NFT-driven games today is Axie Infinity, which is a mix of CryptoKitties and Pokémon Go, replete with monster battles and other features. Small Love Potion ($SLP) tokens, which are based on the ERC-20 standard, serve as a kind of currency for raising Axies and may be traded outside of the game on global cryptocurrency platforms such as Binance. Axie Infinity presently has over 40,000 paying subscribers, $15 million in NFT volume per month, a $2 billion market capitalization, and partnerships with companies like as Ubisoft, Binance, and Samsung.
This infusion of NFTs and blockchain technology into gaming is poised to launch a new chapter in online entertainment and turn play-to-earn gaming into a worldwide sensation, according to industry experts. Some believe it will eventually displace the highly popular free-to-play gaming model that is already in use.
Sandbox, an Ethereum-based virtual environment where users may create their own games and monetise them, is another use case for NFT.
The idea is to displace current game developers such as Minecraft and Roblox by giving creators with genuine ownership in the form of non-fungible tokens (NFTs) and paying them for their engagement in the ecosystem as a result of their participation in the ecosystem.
Within the metaverse, it serves as a platform for the creation of games. It improves the user experience for people who create their content using blockchain technology and smart contracts. The Sandbox Game Maker is an excellent illustration of this.
Because they are the ones who are producing and developing game assets, Sandbox users have the ability to shape the future of the ecosystem. Additionally, VoxEdit, a sophisticated 3D modeling tool, is available for use in this metaverse to quickly build items and turn them into NFTs. Assets may be sold by posting an initial selling offer on the NFT marketplace, where interested purchasers can bid on them and acquire them from the original seller. Additionally, The Sandbox will be launching a unique experience with “Main Hub” in the near future. A gathering space where individuals will be able to engage with one another will be established here.
According to the amount of unique addresses, the Sandbox is presently the most popular NFT Metaverse, with over 500,000 registered wallets and 12,000 special virtual LAND owners. During the month of November 2021, they made more than US$144 million in lifetime Gross Merchandise Value (GMV) sales, and it seems that this figure will rise even more in 2022.
NFTs in Real Estate
Real estate is both pricey and difficult to navigate. Even if you have the financial means to purchase a home these days, there is generally a significant amount of red tape to manage before you are given the keys to your new home.
It is common in many nations for a procedure like purchasing, selling, or even inheriting a real estate asset to be expensive and time-consuming because of the paper-based administrative work that must be completed. For the most part, little has changed from the times past.
When used in conjunction with blockchain, NFTs may serve as a secure and transparent means of transferring ownership. It is simpler to resolve legal paperwork and handle real estate transactions when a property is tokenized, since it eliminates the need for middlemen.
Land is a limited resource, and mankind has been battling over it for millennia to secure it. However, as we’ve seen, land is growing more costly and out of reach for most people. But what about purchasing a piece of virtual real estate in the virtual world? A slew of virtual real estate companies have flocked to Decentraland to demonstrate their belief that it is a wise financial decision. Virtual land plots have been auctioned for as much as one million dollars in this virtual reality game in which participants may construct, purchase, and sell virtual structures.
Video games are rapidly being relied upon to offer their own NFT-driven metaverses. It was in The Sandbox,where the Winklevoss twins and other crypto giants made significant investments in virtual land. Nine plots of land in the Axie Infinity video game were auctioned for a total of $1.5 million in February. In addition, Minecraft players may use in-game cash to purchase NFT-based land on the Meta City server. Earlier this year, Republic Realm, a digital real estate investment business, spent nearly $913,000 for a crucial property in the Decentraland metaverse. This property may be split, with each parcel being leased or sold as a separate NFT.
Physical real estate is a part of the NFT real estate market. There are around 65 billion NFTs available via a well-funded company called SuperWorld, which has digitalized the actual world and mapped it into 100×100 metre plots. In this augmented reality environment, owners may build anything they want on their plot and see it as a 3D model. The majority of common blocks (including, most likely, your childhood house) sell for 0.1 ETH. A block of New York Avenue is presently listed for 1000 ETH.
In this way, the success of merging virtual reality with blockchain technology to produce virtual words may be shown (or metaverses).
All of this is to say that NFTs and their application scenarios are still in their infancy.
It should be noted that the scope of this article and its many examples should serve to demonstrate the widespread experimentation taking place in NFTs, the importance that individuals place on them, and the intriguing ways in which NFT activities are starting to cross-pollinate.
Many more use cases and applications will be made accessible to NFT owners in the year 2022, which is predicted to result in the market being more stable and mature.