According to Chainalysis, the NFT marketplace grew to almost $41 billion in 2021. Last year was a breakout year for NFTs as tons of money poured into the NFT space.
NFT marketplaces enjoyed equally as the sales grew to significant amounts. However, dissatisfaction with OpenSea increased last year on Twitter due to several factors.
Non-responsive support departments, insider trading scandals, and freezing of stolen assets usually add a barrier for the seller and buyer. But in general, NFT marketplaces are registering appreciation and volume worldwide.
NFTs are Climbing a Ladder
NFTs are garnering impressive statistics as collectors have sent over $37 billion to NFT marketplaces till May 2022. Q1 2022 registered the most active NFT buyers and sellers as almost 950,000 unique addresses bought or sold an NFT.
As of May 1, 2022, over 491,000 addresses have transacted with NFTs marking steady growth. The number of active NFT collections on OpenSea has also grown consistently since March 2021.
An exciting study by CNBC revealed that NFTs registered eightfold gains in quarterly trading volumes between Q2 and Q3 2021. It is also a clear indicator that YoY sales and the popularity of NFT marketplaces are growing massively.
What are the Different NFT Marketplace Models?
Although several NFT marketplaces exist, collectible-oriented marketplaces are the most popular ones because collectible NFTs are the most traded and contribute to over 60% of the total sales.
- Universal eBay Type NFT Marketplaces
Universal marketplaces bridge the gap between NFT buyers and sellers for peer-to-peer (P2P) trade. OpenSea and Raible are two popular NFT marketplaces that hold numerous NFT collections.
- Single NFT Type Marketplaces
Single NFT marketplaces only support the trade of a single NFT, i.e., high-end digital art. super rare is an example of a single NFT marketplace that ensures NFTs are curated before being listed on the platform.
- Hybrid NFT Marketplaces
Hybrid marketplaces cater specifically to organizations integrating these marketplaces into their digital platforms. It offers digital experiences to the users and allows buyers to create custom avatars that they can sell in the marketplace.
Even companies are specifically offering NFT marketplace development services for platforms that are willing to adapt to their personal marketplace.
Let's look at some of the problems emerging for the NFT marketplaces.
Fragmentation and Niche Marketplaces
With the rise of NFT collectibles, we expect more niche-oriented marketplaces to emerge. Although it has already played out for a while with 1/1 art-focused marketplaces, the NFT trends will continue.
Play-to-earn gaming models are steadily increasing, making them prominent in 2022. It will likely have specialized marketplaces for in-game assets. Some NFT communities can also grow big to build out their marketplaces.
It also makes sense as the big players such as Bored Ape Yacht Club, Cryptokitties, and others would want to circulate the transaction fees in the project's ecosystem.
Community-Owned Competitors
OpenSea is garnering interest from both sides of the party, making it inevitable that community-owned marketplaces will emerge. LooksRare is one such example that offers tokens to the community as an immediate incentive.
Even marketplaces are tracking the activity of NFT traders on the blockchain to provide them ownership of their NFT marketplace and an incentive to increase the marketplace's value.
However, it is too early to comment if LooksRare can succeed with the current demand from the OpenSea marketplace.
Many other mainstream NFT marketplaces are in a development phase that will launch later this year. While some marketplaces have already failed to take on the escape velocity, OpenSea is a standing example of how it has garnered the position to be number #1.
Emergence of Aggregators
Web3 world has everything on the blockchain, and anyone can access public databases. A person can create new building blocks on top of the existing ones (same as in DeFi).
With more and more DEXs (decentralized exchanges) having come up with varying liquidity pool depths between different trading pairs, users were perplexed about choosing the platform for a perfect trade.
Aggregators like 1inch Network helped users skip going to DEX and enter trade via the aggregator, which sources liquidity from multiple exchanges.
We can also implement the same model for the NFT marketplaces with the growing fragmentation of supply and demand for NFTs. Genie is one such example of the emergence of the aggregation layer as it started by complementing OpenSea with features that the latter is missing, most significantly better handling of multi-item selling and buying.
Wrapping Up
NFT marketplaces are a principal aspect of NFT trading and could play a crucial role in the mass adoption of NFTs. In the next few years, the growing use cases of NFTs will create a different marketplace landscape as some ecosystems will integrate asset trading, and aggregators will provide the best, most advanced tools for serious traders.
As the platforms move towards scalable, cost-effective solutions and more mainstream players enter the space; we will experience trading in next-generation NFT marketplaces.