Non-fungible tokens (NFTs) generated more than $25 billion in trading volume, and their market capitalization surpassed $40 billion in 2021. NFT even became the word of the year.
The non-fungible token market is exploding with new marketplaces emerging each month. But as new creators and investors are joining the space, the question of how not to get lost in the saturated NFT market is highly relevant.
In this article, we’ll talk about what criteria to consider before choosing an NFT marketplace.
What Is an NFT Marketplace?
The NFT marketplace is an online place where anyone can create, auction, buy, and sell non-fungible tokens or digital certificates of authenticity and ownership that can be built into digital art, music, sports, science intellectual property, in-game assets, collectibles, and multiple other types of digital forms.
Almost every blockchain has its own NFT marketplace running on it. And as the industry is quickly evolving, new types of NFT marketplaces emerge.
Some of them specialize in certain NFT types, like music or digital art, while others are broader and general NFT marketplaces. Some NFT marketplaces are open to the public, while others operate like private clubs and require the NFT seller to apply to get on their list.
Aspects to Consider Before Choosing an NFT Marketplace
As the range of NFT marketplaces is broad, sometimes it might be tricky to choose where to mint, sell, or buy NFTs.
To avoid bad decisions, every new NFT creator or investor should be aware of certain aspects to consider before choosing the platform. This will not only help to narrow down your search and save time but will also allow you to reach a more targeted audience.
Type of Marketplace
Although various options exist, currently there are three major types of NFT marketplaces that are dominating: open, curated, and proprietary NFT marketplaces.
Open marketplaces like OpenSea or Rarible give access to anyone to mint, buy, or sell NFTs. They allow all types of NFTs, from music, art, virtual world assets to any other type of non-fungible tokens. Some of them support NFTs that were minted outside their platforms. However, this firmly depends on the specific marketplace.
Curated marketplaces like SuperRare, Nifty Gateway, Foundation, or KnownOrigin are more exclusive and decide by themselves which NFTs they allow to be minted and auctioned. NFT creators have to fill out applications to be accepted on such platforms.
Proprietary NFT marketplaces are the most restrictive and only permit displaying NFTs that are minted by the marketplace itself. Because of limited supply, such marketplaces usually witness high demand and asset prices. The best examples of proprietary NFT marketplaces are Bored Ape Yacht Club, Top Shot, and Vee Friends.
Type of NFT
Although anything digital can be an NFT, some types of NFTs are more popular and in-demand than others.
Although the biggest NFT marketplaces act like an NFT eBay and enable sales of multiple NFT types, the majority of smaller NFT marketplaces focus on specific niches, be it luxury goods, anime-related NFTs, trading card games, tweets, or even the ASMR Ting NFTs.
Decide what your field of interest is and what your goals are. Generic NFT marketplaces have considerably higher traffic and trading volume, but also bigger competition. A niche marketplace is based on a specific topic, targets a specific group of people, and gets more filtered traffic.
Token Standard Support
Just a year ago, the majority of NFTs were built on Ethereum and came as the tokens of the ERC721 standard. Ethereum brought the first-ever NFT token standards and was a pioneer in the NFT space. ERC721 still is the most commonly used NFT token standard.
Now the situation is different as various blockchains support NFTs. Creators that initially built NFTs on Ethereum shifted to other blockchains or create their own, like the iconic CryptoKitties.
NFT standards on different blockchains or even on the same one vary depending on their smart contracts. Some of them have different or broader functionality compared to others.
Thus, new NFT creators or sellers should not forget to check what token standard NFT marketplaces support.
NFT marketplaces charge fees, as it is their key source of income. Typically they charge several types of fees, including an upfront fee and transaction fee.
An upfront fee refers to the single-use payment that the first-time user pays for opening an account and listing the NFT. Whether the upfront fee is fixed or it varies depends on the marketplace.
Transaction fees are fixed and charged for NFT transfer services. Various platforms apply their own fee policy, but typically the transaction fee is split between buyers and sellers. Some marketplaces apply it only to NFT sellers.
In addition to the above-mentioned fees, NFT creators or investors should keep in mind that different blockchains come with their own network (gas) fees. This could mean extreme differences in NFT transaction prices, especially in times of high network congestion.
The more ways to pay for the non-fungible items, the better. Cryptocurrencies are the main way to pay on the NFT marketplaces, although some of them do accept fiat currencies for purchases.
However, support for cryptocurrency wallets is not the same on various NFT platforms. It may vary depending on what blockchain the marketplace is built on and what token standard it supports.
Why You Should Care
Because NFT marketplaces aren’t all the same, choosing the right one is a decision that requires doing proper research in order to start your NFT minting or investing effectively.