Multi-chain development, functional aggregation, how to transform and upgrade the NFT trading platform?
Multi-chain development, functional aggregation, how to transform and upgrade the NFT trading platform?
The NFT deal boom started in the second half of 2020 and is still going strong. Last year's full-year NFT deal volume was $17.69 billion, and in the first quarter of this year NFT deal volume has reached $26 billion, surpassing last year's full-year total.
Among NFT trading platforms, OpenSea is the largest contributor to NFT trading volume. OpenSea's annual trading volume last year was about $15 billion, accounting for 84.8% of the total annual volume.
Although OpenSea has been challenged by competitors such as LooksRare, Rarible and Magic Eden this year, OpenSea still reached $4.98 billion and $3.58 billion in transaction volume in January and February this year, respectively, both higher than last year's record high monthly transaction volume.
The current NFT trading platform shows the following trends in general: multi-chain development, functional aggregation, NFT+SocialFi, and NFT liquidity enhancement.
Multi-chain development.Although NFT trading is currently concentrated on the ethereum chain, NFT trading platforms with a certain trading volume have also emerged on public chains such as Solana, Flow, Polygon, WAX, and BSC, holding a certain market share. Some NFT trading platforms choose to deploy on multiple public chains to expand their user base.
Functional aggregation.The NFT trading platform adds NFT project data, NFT project preview, batch trading and other functions in addition to the trading function, providing users with NFT one-stop service, adding new functions continuously according to user demand.
NFT+SocialFi.The NFT trading platform bridges the gap between creators and fans. Creators publish NFTs, spread them through Web3 social applications, and use NFTs as a link to form NFT fan communities.
NFT liquidity enhancement.NFT financialization applications such as skinned NFT trading, NFT liquidity mining, NFT collateralized lending and NFT trading platforms converge with NFT trading platforms, and NFT trading platforms with NFT liquidity solutions emerge.
The development of NFT trading platform is significant for the whole NFT industry. As a place for NFT project presentation and trading, the self-optimization of NFT trading platform brings project parties, creators, buyers and sellers closer together and promotes the benign development of NFT industry.
NFT Trading Overall
(i) Total NFT transactions
1. Transaction volume overview
Since last year, the NFT market has seen a spurt of growth. data published by NonFungible.com shows that NFT transactions reached $17.69 billion last year, up 21,350% year-over-year. the number of buyers reached 2,301,000, up 2,962% year-over-year, and the number of sellers reached 1,190,000, up 3,669% year-over-year.
The fervor of NFT trading has continued unabated this year, with NFT trading volume in the first quarter of this year already surpassing that of all of last year. As of March 24, NFT trading volume this year reached $26 billion, an increase of about 47% over last year's annual trading volume.
2. public chain transaction performance
Ether is the blockchain with the largest volume of NFT transactions, with $20.6 billion in NFT transactions on the Ether chain as of March 24, five times the volume of the second-place Ronin chain.
The public chain competition in the NFT industry is showing a swarm, with seven public chains exceeding $100 million in NFT transactions, namely Ether, Ronin, Solana, Flow, Polygon, WAX and Avalanche. among which Ronin, Flow and WAX are public chains built for NFT.
These three public chains built for NFT rank in the top three of all public chains in terms of the number of NFT transactions, with Flow ranking first with 18.627 million transactions and WAX and Ronin in second and third place.
(ii) Head NFT project transaction volume
As of March 24, a total of five NFT projects have surpassed $1 billion in volume: Axie Infinity ($4.03 billion), CryptoPunks ($2.14 billion), Bored Ape Yacht Club ($1.55 billion), Art Blocks ($1.21 billion), Mutant Ape Yacht Club ($1.05 billion).
Including these five projects, there have been 42 NFT projects that have surpassed $100 million in deal volume.
The most recent week saw a significant rise in the trading volume of headline NFT projects, with data from March 24 showing that among the top 10 projects in terms of weekly trading volume, six projects rose by more than 1,00% YoY. The biggest gainer was Bored Ape Chemistry Club, which rose by 538.18%.
Bored Ape Yacht Club and Mutant Ape Yacht Club saw trading volumes of $107 million and $59.15 million respectively, far exceeding other NFT programs, driven by the launch of ApeCoin.
NFT trading platform in general
(i) Trading volume of head NFT trading platform
DappRadar data shows that as of March 24, OpenSea ranked first with a total transaction volume of $23.5 billion, while LooksRare ranked second with $18.16 billion. Magic Eden and Solanart, the two NFT trading platforms on the Solana chain, ranked third and fourth.
OpenSea is the absolute dominant player in the current NFT trading platform.
OpenSea hit a new monthly volume high of $4.96 billion in January this year, with the three highest trading months exceeding $3 billion ($4.96 billion in January this year, $3.58 billion in February this year, and $3.42 billion in August last year).
In the last 7 days, OpenSea ranked first with $630 million in trading volume.
LooksRare is a rising star in the NFT market, which was officially launched in January this year. After its launch, it relied on its trading mining and once exceeded $800 million in daily trading volume.
Its trading volume has now gradually stabilized, with a recent 7-day volume of $500 million, second only to OpenSea.
Magic Eden and Solanart, the NFT trading platforms on Solana chain, ranked third and fourth. The total transaction volume of Magic Eden and Solanart is $736 million and $636 million respectively, which are not in the same volume compared with OpenSea and LooksRare on Etherchain.
(ii) Functions of the NFT trading platform
1. Creators on line works
Creating and putting online NFT works is the basic function of the NFT trading platform. Both project parties and ordinary users can create NFTs through the NFT trading platform and wait for buyers to buy them.
Take OpenSea as an example, OpenSea launched the "Collection Manager" feature in 2020, which allows users to freely create NFT works without the need for Gas fees to put NFT works online.
The NFT trading platform can be understood as a Launchpad for NFT projects, where new NFT projects get promoted through the NFT trading platform and expand the NFT holder base.
2. Trading
Trading is the basic function of the NFT trading platform, where buyers can make offers to sellers and both parties agree on a transaction price. When NFT projects are hotter, sellers hope to sell NFT at a high price within the acceptable range of the market. rising NFT transaction prices drive up NFT floor prices.
During the transaction process, the NFT trading platform will receive a certain trading commission from which the creator can determine the royalty. The transaction cost mainly includes platform transaction commission, royalty, Gas fee, etc.
3. Trading aggregator batch trading
Trading aggregators support users to buy NFTs issued by all platforms. trading aggregators Genie and Gem both have the function of bulk trading, users can buy NFTs in bulk from the market by setting the budget, the NFT items they want to buy. one transaction contains multiple NFTs, reducing transaction costs and time costs of searching for NFTs.
4. Platform Token Pledge
There are two main ways for users to pledge platform tokens. The first is simple single coin pledging, in the case of LooksRare, LOOKS holders are rewarded with LOOKS or WETH by pledging LOOKS tokens. The second type is Yield Farming, where the holder receives revenue by providing liquidity to the liquidity pool.
5. Social function
The NFT trading platform is a bridge between creators and fans. Creators with certain influence create accounts on the NFT trading platform, publish NFT works on the platform, and attract fans to buy NFT works.
NFT works are well suited for dissemination through social media, where the influence of NFT creators is enhanced and fan communities are gradually formed.
(iii) Investment institutions
This year there were two billion dollar plus funding rounds related to NFT trading platforms, namely OpenSea's $300 million Series C funding round and Immutable X development team Immutable's $200 million Series C funding round.
OpenSea's lead investors in this round were Paradigm and Coatue, while Immutable's participants in this round included Temasek and Tencent. From the investment lineup of these two financing rounds, we can see that investment banks in the traditional financial world are focusing on the NFT trading platform track.
Of the 68 NFT trading platforms collated, 29 have completed funding. Among the investment lineup, the most frequent investors include Paradigm, Animoca Brands, D1 Ventures, Spartan Group, LD Capital, and Coinbase Ventures.
(iv) Community building
Among the 68 NFT trading platforms counted, 24 NFT trading platforms have more than 10,000 Discord members. Among them, OpenSea, Rarible and Magic Eden have more than 100,000 Discord members.
Discord is the most important community for the NFT trading platform. Rarible uses Discord as a platform for DAO governance, and RARI coin holders can become Discord members to participate in DAO governance and in the decision-making process for Rarible platform improvements, RARI economic model improvements, etc.
NFT trading platform to build a community is to better listen to user feedback, to facilitate contact with users, to provide users with better service, and thus enhance the user stickiness of the platform.
Introduction to NFT Trading Platform
(i) Comprehensive NFT trading platform
1.OpenSea
OpenSea's functions include making and putting online NFT, trading NFT, managing NFT, and searching NFT project trading information.
Production of NFT.Currently users can create NFT without Gas fee and shelve NFT in a short time and accept offers from buyers.
Trading NFT.Buyers and sellers finalize their intentions and transaction prices through repeated offers.
Managing NFT.Users connect their wallets and open an account with OpenSea, where they can see their NFT holdings and current offers. Users can add NFTs to their "like list" and find a time to buy them based on their NFT project floor prices and offers.
Search for information on NFT project transactions.Information includes transaction volume, floor price, number of NFTs and their holders, and users can check the transaction history and scarcity of specific NFTs.
OpenSea's fee model is relatively clear, charging a transaction commission of 2.5% per transaction, which is the most direct source of income for OpenSea.
2. Rarible
Rarible is roughly the same as OpenSea in terms of producing live NFTs, trading NFTs, and managing NFTs, and Rarible has certain features in NFT giant whale monitoring and DAO governance.
Rarible not only has a ranking of popular NFT projects on its home page, but also sets up a ranking of NFT buyer data, making it easy for users to monitor which NFT giants are buying NFTs recently and determine the current heat of the NFT market.
RARI tokens are governance tokens issued by Rarible, which is the biggest difference between Rarible and OpenSea. RARI holders can join the Rarible DAO, participate in DAO governance, and use collective wisdom to promote Rarible's development.
The Rarible team developed the Rarible Protocol to provide developers with open source NFT tools, with tools covering the scope of NFT casting, NFT management, NFT mobility, and more.
Rarible has the same revenue stream as OpenSea, charging a transaction commission of 2.5% per transaction. rarible requires creators to bear a certain amount of NFT casting fees.
3. LooksRare
LooksRare features include creating live NFTs, trading NFTs, trading mining, and pledging LOOKS for revenue. Among them, trading mining and pledging LOOKS for revenue are the highlights of its attraction to users.
Trading mining: The official website of LooksRare shows that when users buy and sell NFT on the platform they generate a certain amount of LOOKS rewards, which will keep accumulating and will be distributed to users every day. On March 24, for example, about 1.4 million LOOKS were distributed to traders as rewards that day.
Pledge LOOKS to get revenue: Users pledging LOOKS tokens can be rewarded with LOOKS or WETH, with an APR of over 170% shown on the official website.
LooksRare's source of revenue is also transaction commissions, charging 2% per transaction.
(ii) NFT Transaction Aggregator
Genie
The most important feature of Genie is the bulk transaction, where users select their favorite NFT items, enter the quantity they want to buy, and can buy the expected number of NFTs in one transaction, paying only one Gas fee to complete the transaction.
In addition to the relatively low Gas fee, Genie aggregates all the purchasable content of this NFT project on the NFT trading platform, reducing the user's search cost.
As of now, the Genie platform does not charge transaction fees and it is not clear where its revenue comes from.
(iii) NFT liquidity protocol
1.Fractional
Fractional is a protocol to unlock liquidity in NFT assets by allowing users to lock NFT assets into a vault of smart contracts and then issue ERC20 tokens for trading.
Fractional has two types of stakeholders: buyers and curators.
Buyers: purchase fragmented NFT to gain access to these cultural assets.
Curator: Earn revenue by minting NFT as fragmented ERC20 tokens through a protocol.
2.Unicly
Unicly is a fragmented NFT protocol. Unicly allows users to encapsulate any number of NFTs into a "uToken". uToken is an ERC20 token that can be used for trading, and users need to add liquidity to the uToken pool.
Unicly issues UNIC tokens, which are allocated to the liquidity provider of uToken. Through liquidity mining, Unicly officials get the platform revenue from the fees.
(iv) Music NFT trading platform
sound.xyz
sound.xyz does more than just NFT transactions, sound.xyz connects music creators and fans.
NFT collectors are able to show up in the sitting area below after purchasing a music NFT, which is equivalent to all users being able to see the information of the purchaser of this NFT and browse the music NFTs already purchased by these collectors.
Music NFT creators can post updates to show fans information about NFT releases and the mood of the releases. Users can learn about the hottest music NFT producers, top music NFT collectors, and communicate with them through their Twitter accounts.
The future of NFT trading platform
(i) The importance of the NFT trading platform
1.NFT trading platform is the pivot of NFT industry
The NFT trading platform is a bridge between creators and collectors, both of whom need a secondary market. nft increases its trading value by constantly changing hands in the secondary market, with both gaining additional revenue in the process. The current floor price is an important basis for determining the market value of NFT, and cases exist where NFT projects have seen multiples or even tens of times increase in floor price after going live.
Take Azuki for example, Azuki's floor price rose from less than 3ETH in early January to a recent high of 18ETH, a floor price increase of over 500%.
The rapid rise in floor prices has made NFT holders look to sell NFT at prices that are at a high point. In the face of rapidly changing floor prices, the length of time NFT is held is gradually shortening and the liquidity of NFT in the secondary market is strengthening.
The data shows that the average length of NFT ownership drops from 156 days in 2020 to 48 days in 2021, with users holding NFTs with the hope of reselling them at a higher price afterwards.
2.NFT trading platform provides more ways for users to play
NFT trading platforms tend to build features around traders, communities.
The NFT trading platform introduces transaction mining, batch trading, token pledging, fragmented NFT trading and other functions to reduce users' time cost and transaction cost, increase additional revenue for users and enhance the platform's user stickiness.
OpenSea is like the Uniswap of the NFT industry field. If the functions are highly overlapping with OpenSea, it is difficult for homogeneous platforms to gain market against the background of OpenSea's huge user volume.
This has forced NFT trading platforms to introduce features with their own characteristics, combined with specific users and communities, to gain market share in the competition of differentiation. Benign differentiation provides users with more options to play and trade.
(II) The development trend of NFT trading platform
NFT trading platforms currently have these trends: increased number of features, aggregated trading, increased NFT liquidity, and socialized NFT trading.
1. Increase in the number of functions
Users are no longer satisfied with the trading platform to complete only the simple functions of creating and trading. If the trading platform has a single function, in order to meet the demand, users need to enter multiple NFT trading platform, switching between trading platforms will reduce the user experience.
NFT trading platform is adding a variety of features that can enhance user stickiness (such as transaction mining, NFT pledge lending, etc.), NFT trading platform is developing in the direction of cross-chain, one-stop platform.
Among the top 20 NFT trading platforms in the number of Twitter followers, NFT trading platforms have features such as creating NFT, trading NFT, managing NFT, DAO governance, Launchpad, liquidity mining, social, etc. The trend of diversification and differentiation of NFT trading platforms has been more obvious competition.
2. Aggregate transactions
NFT transaction aggregator to facilitate the user "sweep", compatible with all platforms allows users to complete all operations on the NFT transaction aggregator, and the transaction aggregator only requires users to enter the budget, quantity, target NFT items and other information, faster and lower transaction costs.
As you can see from Twitter, Discord and other social media, NFT collectors have been using the NFT Trade Aggregator more frequently. The use of NFT trade aggregators is more suitable for sweeping NFT items with relatively low floor prices, items at the head of the line, and with upside.
3.NFT liquidity
NFT liquidity is an important issue encountered in the development of the NFT industry. Through the NFT liquidity protocol, the form of ERC20 tokens is added to NFT to enhance the liquidity of NFT projects.
Currently, in addition to fragmented NFT, lending and liquidity mining are also important solutions to enhance NFT liquidity, and these solutions are being integrated into the NFT trading platform.
Taking unicly as an example, the platform establishes a liquidity pool by decomposing NFTs such as CryptoPunks and Loot into uTokens, determining the price and market value of the uToken, and the liquidity provider can trade the ERC20 tokens associated with the NFT at a determined price. This is currently the most common NFT liquidity scheme. Taking uPUNK as an example, the current uPUNK market cap is $13.913 million, with liquidity of over $1 million and relatively sufficient popularity.
4. Socialized NFT trading
NFT is an important medium for the connection between creators and fans, creators are increasingly focusing on the role of fan economy and community, and NFT creation and trading is accelerating in social media distribution.
Currently socialized NFT trading has already seen some cases in crypto art and music NFT trading platforms, and in the future NFT trading will be more integrated with SocialFi. The current cases of fan token issuance in SocialFi track are more mature, and the logic between NFT and fan tokens is similar, and NFT can also be a medium for the fan community to prove their identity and enhance the interaction between stars and fans.
Take the music NFT trading platform sound.xyz as an example, music NFT creators who are resident on the platform can post dynamics to show their fans the NFT release information and the mood of the release. Users can learn about the hottest music NFT producers, top music NFT collectors and communicate with them through their Twitter accounts.
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