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NFTs are becoming an increasingly popular choice for digital projects of all sorts, from community building to artistic expression. The number of NFT marketplaces is growing just as fast, each fighting for its place under the sun.
Just like in traditional retail, they differ in many aspects: location (different blockchains), offer (all types of NFTs, specific categories like music NFTs or curated art, specific collection), trading fees, user rewards, user governance…
We have made a simple guide of NFT marketplaces to help you better understand the state of the NFT trade and its possible future developments.
Founded in 2017, OpenSea is the Amazon of the NFT trade. The platform supporting Ethereum, Polygon and since recently – Solana in beta, has become a go-to for any types of NFTs, and its sheer size has become its best quality.
However, since the beginning of 2022 the platform has been multiplying missteps, be it a listing bug that caused expensive NFT to be sold at low prices, or introducing minting limits preventing creators from completing their collections.
The biggest controversy is probably the company’s unwillingness to embrace the web3 values of sharing revenue with users or letting them into the decision-making process.
It is OpenSea’s weaknesses that have become LooksRare’s main selling point. Launched in January 2022, the new “community-first” Ethereum NFT marketplace took the space by storm, notably by introducing user incentives for minting and trading NFTs. These incentives took the form of $LOOKS, which were first used in a vampire attack on OpenSea: the tokens were airdropped to all wallets that have traded a certain amount worth of NFTs on OpenSea. $LOOKS value comes in big part from trading fees of 2% (vs OpenSea’s 2.5%).
However, trading incentives also have a major drawback – wash trading, a practice when a user “trades” their NFT between its own addresses in order to collect trade incentives and/or create an illusion of interest to their NFT, often artificially inflating its price.
However, after the first months’ excitement has worn off, wash trading appeared less profitable than in theory, and many people choose to trade normally on LooksRare, enjoying notably its user-friendly interface.
Launched in September 2021, Magic Eden has since become the biggest NFT marketplace on Solana blockchain.
After having raised $27 in March of this year, Magic Eden closed another funding round for $130 million in the end of June, which brought the company’s valuation to $1.3 billion, making it the third NFT marketplace unicorn, after OpenSea ($13 billion) and LooksRare ($7 billion).
Magic Eden lists all sorts of NFTs, but the newest founding is likely to be used for developing the gaming ones – the sector in which the marketplace is already holding a leading role (90% of Solana gaming NFT trades already happen there). Last week’s launch of Magic Ventures – an investment arm dedicated to crypto gaming – falls within this strategy.
To prove its engagement with its community, Magic Eden has airdropped Magic Ticket NFTs to 30k of its users, allowing them to participate in the decision-taking process via MagicDAO.
X2Y2 is a marketplace supporting Ethereum NFT that was launched in February and followed LooksRare trajectory almost to the letter, notably poaching OpenSea users with an airdrop of $X2Y2 and redistributing revenues among token stakers.
Unlike LooksRare, however, initially X2Y2 did not grant trading rewards (supposedly in order to avoid wash trading) – a decision that was revised in April, when both seller’s and buyer’s rewards were introduced, together with a 0% fee. It has since been increased to 0.5%, fully reimbursed in $X2Y2.
Such aggressive discount policy did its job in attracting users to X2Y2… together with a big amount of wash trading (the platform’s net volume made 30% of the total NFT trade in May).
The incentives were supposed to end in May, but as of now they are still active.
Some of the biggest trading volumes happen directly on the platforms integrated into NFT collection creators’ websites. CryptoPunks, Axies and NBA Top Shot hold respectively the 3rd, 6th and 7th places in the last 30 days’ trade volume chart, according to DappRadar.
This trend is likely to continue, as more tools allowing to easily integrate an NFT marketplace into one’s website appear. Among them probably the most promising one for promoting NFT adoption is Shopify: the company that already proposes its e-commerce solution to over 1.75 million merchants all over the world has added NFT trading feature to its offer.
Some marketplaces choose to propose a selection of NFTs that correspond to a certain standard.
Some of the most reputable ones are Foundation (Ethereum) and Rarible (Ethereum, Polygon, Tezos and Flow).
The latter also features an important social component, allowing users to discuss the NFTs on the platform, and a decentralized governance structure, where $RARI token holders can take common decision on the platform’s future.
The trade fees policy also differs: while Rarible has set 2.5% , Foundation keeps a surprising 5% fee.
Other NFT marketplaces specialize in music, like AirNFT, or gaming – like the recently launched GameStop, which generated almost $3.5 million of trading volume in just two days (which is twice as much as Coinbase NFT marketplace did in two months).
Even if most NFTs are still on Ethereum, with Solana picking up pace, other blockchains slowly see their NFT offer increase as well, and the dedicated NFT marketplaces appear.
BloctoBay on Flow, Mobox and Pancake Swap on BNB Chain, Objkt on Tezos, Aavegotchi on Polygon, Waves Ducks on Waves are all participating in creating a multi-blockchain NFT trade.
What can the future of the NFT trade look like? We believe it could mimic the traditional retail: from Amazon selling (almost) everything to a monobrand boutique, from a multibrand store offering its unique vision to a specialty store…
Most important, however, could be the development of the “local stores” of NFTs – businesses using NFTs as a way to increase customer engagement or as a part of their offer, and which can now easily integrate NFT trade directly on their websites. This will come handy for the growing “local NFT” trend, where users can only mint an NFT if they physically go to a specific location – a physical store, a gallery etc.
The NFTs are about to flood our lives in the most surprising ways.