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As of May 2014, the artwork, Quantum – the octagon-shaped animation was created and became the first known NFT. In March 2021, Beeple’s “Everydays: The First 5000 Days” was sold for $69 million. It’s now the second most expensive NFT.
The popularity of NFTs has grown tremendously over the past year. The NFT market has reached more than $40 billion in value, according to the 2021 NFT Market Report. And new NFT marketplaces are beginning to appear all over the crypto world.
While some people are trying themselves in the roles of creators, we help startups and established businesses create NFT marketplaces. We just finished one NFT project recently, and I’m going to share with you what lessons we learned and the insights we found. I’ll explain how to create an NFT marketplace, and share the list of must-have features and challenges of creating an NFT marketplace. All based on our expereince.
What is NFT Marketplace?
To keep it consistent and clear, let’s move in small steps. So what is an NFT marketplace?
– It’s a digital platform for buying and selling NFTs.
I suppose the one thing that may sound confusing here is NFT. NFT or non-fungible token is a unique asset that can’t be replaced with something else. It can be anything, like drawings, music, photos, sneakers, Twitter posts, etc. The main condition, NFTs must be in a digital format.
All NFT marketplaces are built on a blockchain (usually Binance Smart Chain or Ethereum). The ‘blockchain’ part may be in a tailspin that makes NFT enthusiasts fearful of long-term investments in NFT. But let’s move further and find out how NFT marketplace apps work.
How Does NFT marketplace works?
When a person creates an account at the NFT marketplace, they get access to some of the following functionalities depending on the platform:
- browse the available options for sale;
- mint (create) NFTs;
- store and display their NFTs;
- add a payment method (crypto wallet/credit card);
- buy and sell NFTs directly for a fixed price or on an auction;
- connect with creators, and join the community.
When a user buys something, the NFT marketplace records it on its blockchain showing the change of ownership. Users don’t need to get in the weeds of blockchain technology to use the NFT marketplaces. Sounds awesome.
So the existence of blockchain technology shouldn’t make your blood run cold. Try to think the opposite – using the blockchain helps you create an NFT marketplace that brings value.
Types of NFT Marketplace Platforms
Generally, an NFT marketplace allows users to buy and sell unique digital assets. However, the details vary from platform to platform. For example, the type of digital assets can really be anything, starting from sport- and game-related collectibles to drawings and music.
Although there’s a lot of noise around the art NFT marketplace now, I’ll name the main types of NFT marketplaces these days:
This type of NFT marketplace is like eBay for NFTs. People can find a wide variety of NFT collections there. Universal marketplaces easily attract many users as you don’t focus on a specific group of users but cover people with different interests.
Universal NFT marketplace example: OpenSea – collects different non-fungible tokens, including artwork, sports collectibles, virtual worlds, trading cards, and domain names.
If universal NFT marketplaces are like eBay, niche platforms are like Goat with its best sneaker collections. Niche marketplaces become more popular as they narrow their focus on specific, rare assets and attract people with particular tastes. NFT art marketplaces are a great example of niche marketplaces.
Niche NFT marketplace example: SuperRare – niche marketplace focused on digital artworks with a select handful of leading concept artists.
Why to Create an NFT Marketplace
However, NFTs are a relatively new and hype concept, some facts prove an auspicious future for the NFT market.
The NFT market had increased by 30 times by mid-2022
Today the global NFT market is worth around $3 billion. Such a huge raise means that the market is on hype, and you have all the chances to grab the opportunity by creating the NFT marketplace app.
23% of millennials in the US collect NFTs
Morning Consult found that Millennials are twice as likely as Gen Z to collect physical items and 3 times as likely to buy and sell NFTs. So if you decide to build an NFT marketplace, here’s your target audience.
250K people trade NFTs every month on OpenSea
If you decide to enter the niche of universal NFT marketplaces, OpenSea is your biggest competitor. In August 2021, it did more than $3 billion in trading volume, which is impressive.
How to Create an NFT Marketplace?
When it comes to 'how to build an NFT marketplace?' I probably will not open you a secret, but the product development process remains the same.
We move in the flow:
- Conduct product discovery;
- Define the value proposition;
- Shape the target audience;
- Create user flow;
- Define must-have features;
- Build an MVP.
After gathering the feedback, we improve the MVP, and it evolves into a full-fledged product step by step.
From my experience, the hardest part in building an NFT marketplace is defining the right feature set to satisfy the users' needs. So I'll stop here and give you a list of must-have and nice-to-have NFT marketplace features.
NFT marketplace must-have features
Over the work on the NFT product, we did a huge competitor's research, and I noticed that all of the NFT marketplaces have several main features. Below I listed them. Please, take a look.
Sign In / Sign Up
- Sign in/ sign up on the platform with email/social media accounts
- Forgot password functionality
- Recover my password functionality
- Add name, photo, bio, select budget, and interests
- Add payment methods (Credit card/ crypto wallet)
- Card verification with temporary transactions
Create an NFT collection
For Creators to create an NFT collection for sale, they should have the following functionality:
- Add NFT details: title, description, image / gif / video, price, tags, ABIs, edition size. deal type (auction / buy now), drop date, limitations for participation
Create a listing
To place an NFT for sale, a user should create a listing. Here's what it includes:
- Page with details of the deal
- Select currency, duration (timeline), payout method
- Select deal type: fixed price/ auction
- Add fixed price/ the starting price and a min selling price
- Confirm listing
- See my NFTs listed for sale
- Edit made offers: delete, change the bid
- Choose the type of purchase (primary, secondary)
- Set a price/ bid amount
- Enter payment info / select payment method
- Pay with a credit card
Search & Filters
As a user, I want to search for an NFT collection. To do this, I need filters by:
- Creator name
- Collection name
Collection & NFT Page
As a user, I want to see the details of an NFT or collection.
- Page with the NFT/collection name, image, Creator, owner, edition size, description
- General stats (market volume, floor price etc.)
Admin should have the following functionality:
- Upgrade users to Creators
- Upgrade Creators to VIP Creators
- Deactivate/blacklist Users/Creators
- Control offer curation on pages, including front-page feature
NFT marketplace nice-to-have features
The list of nice-to-have features may differ depending on the NFT marketplace. I tried to gather the most common ones.
NFT Marketplace Nice-To-Have Features
- Chat/ Video Calls
- Event Scheduling
Chat/ Video Calls
NFT marketplace users value community a lot, and they are likely to demand social aspects in your app, like:
- chat with the Creator
- video call feature
- Calendar with events for users/ creators
Influencers often want to create events online or offline with the user who purchased an offer.
Challenges in Creating NFT Marketplace
Let's make it clear, NFT marketplace development is on hype. As it often happens, anything that generates impressive profits and becomes popular tremendously has some big challenges.
Offer the Best User Experience
To create a user account at the NFT marketplace, users need to ask users to provide a lot of their personal details such as their government IDs (KYC), address, phone number, credit card number, etc. Together with a huge feature set, it all creates an obstacle – poor user experience.
You should create guiding templates to navigate users on the platform smoothly, and a UI/UX designer should work hard to create a friendly experience for prospective users.
Find Product/Market Fit
Being on hype also creates challenges, like uncertainty and a lack of NFT marketplace development examples to look at. There are no defined rules or one-size-fits-all approaches that we could take and implement right away. NFT market is super fast-changing, and you should figure out how to enter, play and win in this market on your own.
Conducting in-depth market and competitors' research may help you lower the level of uncertainty and find product/market fit.
Well, blockchain technology itself can become a big challenge if you don't have the developers with the right expertise. To build an NFT marketplace that handles millions of people using it worldwide, you should first find great developers.
NFT Marketplace Uptech Case Study
We finally approach insights time. As we have finished our NFT case study recently, I'm ready to share my findings and insights of that project as it's fresh in mind.
– So, what was different in creating the NFT marketplace from other products?
Research, research, and again research
First, creating an NFT application demands far more hours of research. We started from scratch, discovering the NFT industry from its very roots and digging inside the business. We interviewed stakeholders to understand their goals. Our in-depth Discovery came to the rescue here.
Create Awesome UX for Both Creators and Fans
The second lesson learned is the social aspect. If you create an NFT marketplace that will be competitive in the market, you must include social features such as chats, streams, and the ability to visit and create events. It all demands extra development time, but this is what creators and fans asked us for.
All in all, together with a client, we managed to shake up the NFT market in a promising way. It was exciting to see how the vision evolved into the product and be a part of it.
How Much Does it Cost to Build an NFT Marketplace?
The cost of creating an NFT marketplace depends on the amount of work required. If you decide to build the app from the ground up in-house, it'll cost you around $200-300K.
To reduce the expenses, I advise you to consider software outsourcing and combine it with ready-made solutions. Hiring a software outsourcing partner will definitely save you money. For example, building the 1st version of the NFT marketplace app with Uptech will cost you approximately $120-180K (the price includes 3rd paty services integration and the Discovery stage). Just for the record, using 3rd pary services saves you extra $50-80K. Again, this is not a fixed amount but just an estimation.
Get ready that the NFT marketplace cost may increase depending on the level of customizations you need. If you want to build your own NFT marketplace from the ground up, then the NFT cost for that will be higher than the ready-made solution.
In conclusion, the NFT Marketplace is a digital platform for buying and selling unique digital assets. There are two types of NFT marketplaces: universal and niche, which names speak for themselves. The NFT market is generating much hype. From one side, it becomes a challenge. On the other, it opens opportunities, and creating an NFT marketplace is one of them.
If you have an idea to build an NFT marketplace but lack expertise or a team of professionals, the Uptech team is here. With 6-year expertise in developing products of different complexities and types, we know how to turn your idea into an awesome product users love. Contact us to tell us about your NFT product idea or if you have any questions left.