An Exhaustive Guide to NFT Marketplace Development

BySara Suarez
NFT Marketplace Development

The crypto domain is booming rapidly, with billions of digital leaders trying to adopt the trend and capitalize on Blockchain solutions in various means. The good news is that technocrats can also obtain a fair share of the growing market with several variants of market entry. From exchange platforms to crypto banks, Blockchain restructures how digital assets are traded and the value is produced.

One such innovative application of Blockchain is Non-Fungible Tokens (NFTs). The advent and evolution of NFTs are reshaping digital ownership and value. This has prompted the development of NFT marketplaces, which are platforms intended for the exhibition, trade, and procurement of exclusive tokens. With their assorted applications and promising potential, NFT development is becoming a significant trend in the crypto world.

Perks of NFT Marketplace Development – Leaders’ Perspective

The client-side advantages of an NFT marketplace are obvious. Investors and artists obtain a highly secure medium to sell and promote their assets, and the process of trading digital assets becomes more transparent.

But what benefits does an NFT marketplace creator (business leader) obtain?

  • Perfectly Synergize Loyalty and NFT Marketplaces – Leaders are continuously seeking ways to redefine their customer management approaches and the establishment of more user-centric solutions. NFTs hold a range of opportunities in this regard, offering strategic leaders a chance to augment their operations and appreciate loyal partners and customers with valuable tokens. Likewise, NFT marketplace development can be used to gamify employee recognition and institute a system of achievements and rewards.
  • Steadfast Resilience – Despite unprecedented downturns impacting crypto users, leaders investing in NFT development can stay ahead in the competitive market. Offering utility tokens enables leaders to continually push the boundaries of revenue and innovation. According to a report, it has been mentioned that enterprises investing in NFT development can achieve a global market value of $50.1 million.
  • Transparent Transaction Audit – Transactions processed within an NFT marketplace are publicly available. This helps financial leaders, business stakeholders, and third-party accountants to audit NFT dealings. A robust trading environment helps leaders avoid deceitful or illegally procured digital assets.
  • Reward Systems – With NFT marketplaces, leaders can incentivize users to uphold tokens within their platform. By rewarding NFT users through discounts and exclusive governance rights, stakeholders can have the ability to produce passive income through asset trading. Asset exchanges are recorded on the Blockchain, a tamper-resistant database, while smart contracts process transactions without the involvement of third parties, thereby reducing the risk of fraud.

Building Reliable NFT Marketplaces – Checklist to Consider for Strategic Development

1. Comprehensive Research

For CIOs/CTOs, it is crucial to have a comprehensive understanding of their target audience and competitors before NFT marketplace development. During the research stage, leaders should think through the following aspects:

  • End-users – Who will be the platform users? Leaders should plan whether their marketplace focuses on the overall NFT investors, content creators, and art collectors or targets a specific social metaverse audience
  • Trends – NFT marketplace creators should assess the types of digital assets that are trending largely and understand which may gain popularity in the upcoming times
  • Concept – It is important to understand which NFT marketplace development concept is beneficial. Whether is it for first-party users, other corporations, or both?
  • Validation Guidelines – Before development, leaders should determine the copyright policies for regulating the use and distribution of tokens. This also helps in standardizing how outside NFT holders and actors use the platform for commercial purposes.

Apart from this, business leaders can also invest in physical tokens and use scan-to-trade technology that links real-world entities to the NFT marketplace. It is also important to consider that allowing users to exchange fractional NFTs will improve trading opportunities. Developers from a recognized NFT marketplace development services provider lay the base for the platform, including consensus protocols and Blockchain networks.

2. Determining the Revenue Model

NFT marketplace solutions should effectively balance end-user value and profitability. The main ways business leaders can generate income are transaction processing charges and bidding fees. Transaction processing charges are a must-have factor to be included in the NFT marketplace. Investors must pay when performing a peer-to-peer transaction in the NFT marketplace. This is also regarded as the NFT marketplace creator’s primary way to produce revenue. On average, an NFT marketplace should charge the investor around 2% to 5% per transaction. The transaction fee is to afford gas fees and uphold the function of the Blockchain network.

Bidding is another unique and incredible way for NFT marketplace creators to earn more money since it creates competition and chances for stakeholders. Hence, business leaders looking to build NFT trading platforms should choose the right monetization strategy.

Take the case study of OpenSea, a US-based leading NFT Marketplace. Their digital manager reported that transaction fees are the primary source of generating revenue. The platform charges around 2.5% per sale to any investor. This means if a user buys an asset for 15 ETH, the OpenSea platform would charge 0.25 ETH. Hence, the community was able to exempt 82% of gas fees from the revenue.

3. Blockchain Integration

Blockchain offers the quintessential structure for secure exchanges on an NFT marketplace platform. Integrating a robust network allows leaders to leverage recognized validation mechanisms. Ethereum, being the majorly used network for marketplace development, usually possesses higher costs due to network demand and overcrowding. Other Blockchain networks like Solana and Polygon have minimal gas fees. While choosing a Blockchain platform, leaders should consider:

  • Processing Capacity – considering the number of transactions that a Blockchain network can process per second is crucial. Ethereum can process up to 35 transactions within a second, whereas Solana can handle 750,000 transactions per second.
  • Interoperability – The Blockchain network should allow an NFT marketplace to support other tokens and networks

Leaders must collaborate with skilled developers when constructing an NFT marketplace’s mockup, UI elements, and navigation. With the initial analysis feedback, developers create a Minimum Viable Product of an NFT marketplace with elementary features. This will help leaders practically validate their product and understand the scope of the NFT marketplace and the feasibility of the revenue model.

4. Development of Contract Layers

Smart contracts process transactions inside an NFT marketplace without third-party arbitrators. This stage involves a lot of work. That’s why partnering with an offshore NFT marketplace development company is the right decision. Developers consider all essential functionality, determine governing rules, and set a resolution framework to address issues. Furthermore, developers choose the programming language and libraries for smart contract programming that is compatible with the chosen Blockchain.

Developers ensure that the contract layer effectively automates trading operations (like minting, bidding, buying, and selling) in the NFT marketplace. Managing creator royalties, maintaining ownership account for each digital asset, and enabling access to content can be modified through smart contract programming.

Also read – Top NFT Trends to Watch Out For in 2024 and Beyond

NFT Marketplace Platform Development – Challenges & Solutions

Contract Algorithm Exploitation

Blockchain smart contract algorithms can present vulnerabilities in the NFT marketplace. The improper application of contract signatures or asset transfer methodologies may lead to unintended issues. Malicious actors can also exploit the contract’s algorithmic conditions to modify the desired actions.

To overcome this, business leaders need to embrace a systematic development methodology. Through periodic testing, debugging, and verification, experts can prevent logic errors and vulnerabilities in their NFT marketplace.

Scalability Trilemma

Blockchain-based NFT marketplaces face scalability concerns, even though security and decentralization are effective. Tech leaders can navigate these issues by encoding Layer-1 and Layer-2 Blockchain protocols.

With Layer-1 protocol programming, leaders can alter the consensus protocol and execute sharding. Sharding splits exchanges into minor datasets and helps in improving the scalability of marketplace solutions since transactions are simultaneously processed in parallel.

Layer-2 programming includes Sidechains. Sidechains are self-governing transactional mechanisms that use an intelligent consensus system for large-scale transactions. This contract system reduces the processing burden and improves interoperability between different Blockchain networks and off-network transactions.

Storage Limitations

In general, a Blockchain network is suited to storing and managing large-sized media files. Assets in a typical NFT marketplace contain metadata that directs to the related media hosted on a Blockchain server. These metadata are fragile. When an NFT marketplace becomes inaccessible due to server outages, the investors may lose the ability to validate the digital ownership of the assets.

To address these issues, leaders can incorporate additional backup mechanisms like Filecoin with an NFT marketplace to store larger files. It’s also advisable to integrate the Interplanetary File System (IPFS) protocol to record assets using content-referencing. This protocol utilizes cryptographic hashes depending on the content rather than location links. When the file’s location varies, the hash remains untampered and investors can retain their assets.

Closing Thoughts

NFT marketplace development holds enormous potential in the digital era. Once a business leader understands the project’s scope and ways to monetize it, they can create a user-centric NFT marketplace suitable for investors and creators. The leaders should also establish an effective back-end featuring APIs, databases, and other mechanisms essential for decentralized execution.