Best Practices for Building an NFT Marketplace
Non-fungible tokens (NFTs) are becoming increasingly relevant to the art and entertainment sectors. Using blockchain technology, NFTs make it easy for creators to protect their work, collectors to prove ownership, and for different parties to trade digital assets. As a result, creators, enthusiasts, businesses, and investors are all looking for newer and better ways to trade NFTs.
Whether you’re an artist, a game developer, or a blockchain developer, there are many compelling reasons to launch your own NFT marketplace. No matter your goals, knowing how NFT marketplaces work can help you create your own platform to stand out from the competition.
Let’s dive into what exactly goes into developing an NFT marketplace.
The Basics of NFT Marketplaces
According to the latest economic estimates, the non-fungible token market reached $22 billion in 2021; compare that to the $100 million estimate for 2020. What makes it even more exciting is that there’s no sign of this growth slowing down.
NFTs are a product of blockchain and cryptocurrency technology, which power the future of the Internet: Web 3.0 (Web3). Similarly, an NFT marketplace is a type of Web3 application. It functions like a traditional Internet marketplace but specializes in NFT sales.
On an NFT marketplace, anyone with a valid cryptocurrency wallet can buy NFTs or list NFTs for sale. NFT marketplaces may be public (open to anyone), semi-private (anyone can buy, but only approved sellers can list NFTs), or private (open only to select members).
Why You Should Build Your Own NFT Marketplace
Although the existing NFT trading applications are among the first-ever of their kind, they have some limitations. For example, most NFT marketplaces today rely on the Ethereum blockchain, meaning the only currency accepted on these platforms is ETH. If you prefer using a different coin, you’ll have to face the inevitable conversion fees.
Building an NFT marketplace gives you the chance to develop a platform with different features or one that solves problems that may exist in the more popular NFT markets. You can choose the cryptocurrency that serves as the foundation of the platform or target a specific audience. You could also choose to create a platform that’s open to all, or one that’s exclusive. Maybe you have an idea for a feature that could make for a better marketplace, or maybe you think you can design a platform or interface that will serve users better.
Because the NFT industry is still in its infancy, many opportunities exist to develop a killer app. There’s still a good chance someone will create an NFT marketplace application that can outshine the existing players with smart new features or the right combination of functions and design.
Who Your NFT Marketplace Should Target
Defining your marketplace’s intended clientele is critical if you wish to run an NFT marketplace as a personal business. Targeting a specific type of customer can be the factor that makes your application unique before even starting your NFT marketplace’s development.
If you are looking to build a general-purpose NFT marketplace where multiple artists and customers can connect and trade, you may benefit the most from a public app. Under the public model, anyone can sign up, list NFTs for sale, and purchase or bid on auctions for listings.
While a public marketplace has the potential to become highly successful, you should also expect to face stiff competition. Public marketplaces already exist, so the only way to beat the competition is to offer a better experience with features and functions that really stand out.
If you’re an artist primarily looking to sell your own creations, a semi-private store may be the best solution. Semi-private marketplaces are essentially personal storefronts, where only you (and users you curate) can put listings on the site. Anyone can open an account, but the average user is typically limited to the role of buyer.
While semi-private apps limit who can sell NFTs, you have greater control over the quality of the listings posted. This gives the storefront the air of exclusivity, and it can ensure buyers that the quality and value of the art will be higher.
A private marketplace not only restricts who can post listings, like a semi-private app, but it also restricts who can sign up as a buyer. While this model is the hardest to market, it gives you the most control over who can trade on your platform.
The private marketplace approach may be preferable if you’re looking to create a marketplace intended for a specific group or organization. This model is also suitable if you need to implement a customer screening process and curate your buyers. As an example, it might be necessary if you are looking to create a marketplace that strictly deals in the auction of high-value NFTs.
How to Build an NFT Marketplace
Before you start your application’s development process, you should establish a list of features and functions for your application. Although UI, design, and standout features should be up to you, you need to ensure your marketplace has the essential functions necessary to run an NFT marketplace.
Basic NFT marketplace features include the following:
The ability to create accounts and user profiles
Easy access to viewing the crypto balance in the user’s connected wallet
An easy way for users to see all of the NFTs they currently hold in their connected wallet
A storefront that shows all of the NFTs for sale
A search function to help users look for specific NFTs
Filters that allow users to browse by type, features, artists, and more
The ability for users to create new listings
A display of the user’s recent NFT purchases and sales
Consider creating a mockup of your marketplace before starting your NFT app’s development. Mockups are an effective prototyping technique that can help you visualize what the finished app will look like.
Such tools allow you to create and place UI elements (buttons, images, bars, text, etc.) and simulate what the app should look like when ready for deployment. Produce different drafts, run tests, and refine your designs until you land on one that possesses the features your marketplace needs while still being simple and satisfying to use.
Once you establish your application’s intended clientele, looks, and features, you can start the development process.
The first step is to create a complete project specification document. Project specification documents are critical for two reasons: They give your development team a comprehensive list of objectives and features to build and inform them of the vision and intentions of the project.
The next step is to find developers for the app. If you have an in-house development team, you’re at least halfway there. If not, you will need to outsource the project to professionals who specialize in blockchain development.
Launch Your NFT Marketplace
As you can see, it takes a lot of work to build an NFT marketplace — and that’s before you have to plan for the launch. Even with a functional marketplace, you need to have a launch strategy in place months before release. Your strategy will require additional detail, but there will be two critical factors in your launch strategy: marketing and user support. You’ll need to develop a plan to raise awareness and attract new users. Along with that, you need to be ready to respond to users if they have any issues.