NFT marketplace overview: The road to becoming a giant
The overall picture of the NFT marketplace - where the value of NFTs circulates and the opportunities surrounding them.
Market share of NFT marketplace - value is in the hands of a few
Like any other type of commodity or asset, NFTs also need a market to buy and sell, places to trade NFTs are called NFT marketplaces. Based on the types of NFTs being traded on the market, we can divide the NFT marketplace into 3 main types including:
· General NFT marketplace: For NFT collections with many designs and quantities.
· Exclusive NFT marketplace: For buying and selling unique NFTs.
· Specific NFT marketplace: For NFTs specific to a certain segment
General NFT marketplace (popular NFT marketplace)
General NFT marketplace is the marketplace for most NFTs. This is the most popular type of marketplace and attracts the most value because it meets the needs of the majority of users.
Although the number of NFT marketplaces has been appearing more and more, the market share of this segment is currently concentrated on Blur, Magic Eden, OpenSea and Tensor.
The NFTs sold here are only one copy or in very small quantities for each work. Prominent exclusive NFT marketplaces include SuperRare, Foundation, knownorigin.
Looking at data from Super Rare, the most prominent exclusive NFT marketplace in the market, the exchange has a total trading volume to date of more than 311 million USD. This number is very small when we consider the correlation with the general NFT marketplace branch. In just one peak month of January 2022, OpenSea alone conducted 4.9 billion USD in transaction volume.
Specific NFT marketplace (specialized NFT platform)
Having a specialized market for a certain segment makes asset transactions easier and more convenient. Typically, it can be seen through in-game NFT marketplaces such as Axie Infinity, Sandbox, StepN...
However, specialized NFT exchanges only serve a limited customer base and are often considered a by-product of a project.
History of formation & development of NFT marketplace
Opensea and Blur
OpenSea is the first general NFT marketplace on the market. From late 2018 until the second half of 2022, NFT trading volume was concentrated mainly in OpenSea. OpenSea at that time was considered a giant that could not be overthrown and created a development framework for other projects to learn from. In January 2022, Open Sea raised capital of 300 million USD with a valuation of 13.3 billion USD.
At the beginning, OpenSea only supported the Ethereum network. Then with the emergence of many new networks, OpenSea supported other networks but without success. Currently, the trading volume on OpenSea is still only concentrated on Ethereum.
Since the January 2022 peak, NFT trading on Ethereum has continuously declined. By September 2022, NFT trading on Solana grew strongly in a short period of time. Although Magic Eden was not the first NFT exchange on Solana, providing a smooth experience, neat products, and supporting many new collections, it attracted many users. For more than a year until the end of 2023, Solana in general and Magic Eden in particular still hold a significant share of the market.
Not only losing market share due to the rise of other chain competitors, Open Sea also has to face a dark horse on the Ethereum network itself. In October 2022, Blur platform launched. With features that help optimize costs and trading experience along with the point model, Blur has helped Blur surpass Open Sea in trading volume after only 3 months. Since then Open Sea has become a thing of the past, Blur is still the exchange attracting the most value on Ethereum to date. Open Sea lost its position to the project that came later but moved quickly and focused on optimizing user experience, Blur.
Magic Eden and Tensor
The same thing happened on Solana. In November 2022, the FTX exchange collapsed. This incident seriously affected the ecosystem and even the leading projects were not optimistic about Solana's future. The top PFP at that time was Degods and y00ts left Solana for Polygon and Ethereum. Phantom wallet and Magic Eden exchange focus on multi-chain support.
However, in that dark hour, there were still many products being cherished and developed in the ecosystem. Tensor continues to focus on perfecting products for NFT players on Solana. Users experience smooth, intuitive NFT trading operations and many features such as Raffe, long/short NFT along with incentive point model. Tensor's Solana trading volume has surpassed that of Magic Eden and has become the most popular NFT exchange on Solana.
It seems that switching to another network support will make Magic Eden become a second Open Sea. But the move to support the Bitcoin network has helped Magic Eden attract a lot of value in a short time thanks to the attraction from the Ordinals trend. From the beginning of 2024 until now, Magic Eden processes about 15-30 million USD in transaction volume on average every day. Magic Eden has many times become the exchange with the largest trading volume of the day.
In addition, with Tensor announcing the snapshot and token launch, users tend to return to using Magic Eden on Solana to hunt for airdrops. Magic Eden gradually returns to becoming the NFT exchange with the largest trading market share on Solana.
The direction for the upcoming NFT marketplace
Reasons for the success of NFT marketplaces
Looking at the stories of the giants, we can generalize the main reason for the success of NFT marketplaces based on two factors:
- Focus on the network that attracts cash flow
- Focus on products and operating models
As presented in the NFT Collection Overview article | The competition of Jpeg lands, although the current number of chains is very large, the number of chains that attract value is very few, the number of chains suitable for NFT collection development is even less. Therefore, choosing the right network is very important if you want to have a significant market share in the current NFT market.
Besides, focusing on products is also very important. Projects that are more optimal in terms of cost and user experience will gradually attract cash flow for you. Blur and Tensor, thanks to their more optimized products and incentive model, have attracted users from the two previous leading exchanges, Open Sea and Magic Eden.
The token element also plays a significant role in attracting users. The appeal of airdrops is still the driving force to attract large cash flows in the crypto market. Projects that have not yet released tokens have many ways to encourage users to use their products similar to how Magic Eden is gradually regaining market share after Tensor released tokens.
The direction for the upcoming NFT marketplace
From the above reasons, we can target a few approaches for the NFT marketplace to gain market share including:
Support potential networks suitable for NFTs
Chains that are quite suitable for developing NFT collections include:
· Base with a strong community and user base from Coinbase
· Ton Network with community element available from Telegram
· Small chains that identify NFT as a strategic development direction such as Viction have continuously launched many NFT collections in recent times.
In addition, chains that have differences in platform and support NFTs are also worth noting. Currently, there is a Starknet network that has the above characteristics with strengths in Fully-on-chain games (FOCG) and FOCG-related NFTs.
Develop products that optimize user experience
User experience here is not only the experience during use but also the optimization of costs, access to opportunities,... With many possible approaches, we can expect to have many unique NFT marketplace models or NFT marketplaces that support unique NFT collections in the future.
Some approaches include:
· Trading model for professional NFT traders with many features instead of just regular trading like Blur and Tensor
· Or like the NFT marketplace Dagora supporting the NFT Starship collection. NFT Starship holders can use NFT to participate in IDO and receive many related airdrops.
Other directions of NFT Marketplace
Although the directions may be different, in the end users will choose the place that helps them optimize the best use of capital. It is entirely possible that new trends will appear in the market with new types of NFTs, such as carbon credits being NFTed on Toucan Protocol, and some projects are also NFTing real-life assets such as real estate. , new NFT standards are also being developed such as ERC404/DN404,... As the trend develops, the NFT markerplace platform that supports this type of NFT will also develop.
In addition, new products that help further optimize user experience and costs will also be prioritized over similar products. If Blur and Tensor rest on their laurels, it is entirely possible that they will become the next Open Sea in a fast-growing market like crypto.
summary
Currently, the NFT marketplace market share belongs to a few projects. Other projects that want to get a piece of the pie need to understand the core factors that lead to the success of this segment.
Understanding the landscape of NFT marketplaces not only gives users the opportunity to use the most optimal products, for projects that want to develop products with a position in the market, but also helps investors evaluate growth potential. when investing in related asset types.
