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.
With so much hype created about the NFT marketplaces, there has been a considerable volume of blockchain enthusiast entrepreneurs planning to build an NFT marketplace. In this regard, there are a few essential things to know prior to creating the NFT marketplace.
- NFT Standards
Standards are NFTs’ driving force which guarantees that the asset would be acting in a specific manner and showcases the ways of interaction with the basic functionalities of an asset. Presently, there are two common standards used for the creation of non-fungible tokens.
- 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
There is a concept known as ‘ownerOf’ in the NFT marketplace. It offers a way to search for the owner of an NFT. For instance, while searching for the owner of 212022 in any NFT’s smart contract, you can see token 212022’s owner is ‘ABC’. This information can be then verified on NFT marketplaces like OpenSea. But now the question arises that how do platforms like OpenSea understand what 212022 is and what are its unique attributes? It is precisely the situation where metadata comes into play. Metadata provides descriptive information for a specific token number or an ID like descriptions, pictures, or any additional features.
- Legal Documentation for Creating an NFT Marketplace
In addition to the nomenclatures, knowing the legal documentations for creating an NFT marketplace is extremely important.
- 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.
$630 – $2520
Authorization and Security
$1080 – $4320
$630 – $2520
$1260 – $5040
Search and Filters
$1440 – $5760
$630 – $2520
Reviews & Ratings
$720 – $2880
$720 – $2880
$630 – $2520
$480 – $1920
$1440 – $5760
$1440 – $5760
$630 – $2520
$960 – $3840
$1980 – $7920
$1325 – $5100
$15,995 – 58,020
The cost breakup would give the users a rough idea about the cost of developing an NFT marketplace.
NFT marketplace development is the new trend with consistently rising values. Now with the rising values of non-fungible tokens, more and more users are attracted to the platform because of its enticing features. Moreover, investors have increased preference for considering blockchain platforms because of their high trending graph. So, the scope for the NFT marketplace is quite a lot in the time to come.