If you’ve ever been involved in the cryptocurrency industry, you’re likely acquainted with NFTs. They’ve been the buzz of the town for a long time, and the publication of CryptoPunks in 2017 increased their fame even more. Although NFTs are volatile and the market for NFTs endures considerable ups and downs, they have certainly become one of the greatest breakthroughs of the century, with countless uses. This volatility is symptomatic of the vast number of newcomers to the NFT industry.
Even though NFTs are part of the crypto world, they cannot be bought on centralised crypto exchanges like Coinbase or Kraken. However, they are generally accessible on NFT-specific markets. NFT markets offer a secure setting for artists and producers to exhibit their talents and sell their works.
Each day more NFTs are released, the number of NFT marketplaces increases. NonFungible.com reports that weekly NFT sales average between $10 million and $20 million. Similarly, the NFT trading volume surged by 704% between the second and third quarters of 2021, indicating that the NFT industry had an eightfold growth in quarterly trading volumes.
How do NFT markets Operate?
Minting and trading are the two main activities in NFT marketplaces. During minting, you may transform any digital file (JPEG/MP3/MP4) into an NFT, which can subsequently be securely kept on the host blockchain of the marketplace. Then, these NFTs can be exchanged for profit.
Minting
The process of creating NFTs is simple. Before creating a website for minting, we must adhere to a procedure. You must first install a wallet browser plugin, such as Metamask, that is compatible with your desired marketplace, such as OpenSea. As an Ethereum wallet, Metamask enables the creation of accounts on all Ethereum-based marketplaces.
After making an account, you must submit or upload the file or artwork for conversion into an NFT to the marketplace. Similar to submitting a photo or video to Instagram, you must name the work, offer a description, and establish royalties. Some marketplaces, such as OpenSea, let you to further personalise your NFTs by adding them to an existing collection or by modifying their statistics, features, and levels. After completing these steps, you are prepared to sell the item.
Trading
When an NFT is issued on a market, anyone with the required number of cryptocurrencies can acquire it. To get an NFT, you must have a compatible crypto wallet with the marketplace. For example, Ethereum-based markets require a Metamask wallet. The subsequent step is to acquire the necessary cryptocurrency and connect the wallet to the market.
A non-fungible token may be acquired by auction or fixed-price listing. To acquire an NFT through auction, simply submit a bid and wait for the results. If your bid appears successful, the corresponding amount will be deducted from your wallet and your NFT wallet will be credited with the newly acquired NFT.
What should not be done while building an NFT marketplace?
Not Following Appropriate NFT Standards
ERC-721 is the most recognised and commonly adopted NFT standard at present. Therefore, if you are developing a marketplace, ensure that it adheres to ERC-721 requirements. OpenSea, for instance, is based on Ethereum and complies with the Ethereum NFT standard, ERC-721, which is also the most widely used standard to date.
The format of NFT data or metadata should also correspond to the naming convention of the ERC-721 standard. This guarantees that other markets may access NFTs produced on your marketplace. Following suitable standards guarantees that users may access and trade NFTs between markets that utilise the same standard. Likewise, your NFT market should be able to list and trade NFTs generated on other markets.
Database Data Retrieval
One of the key motivations for the creation of blockchain was to encourage decentralisation so that no centralised company could establish a monopoly and seize control of user data. Therefore, all information associated with an NFT, such as its name, collection name, price, etc., should be immediately retrievable from its host blockchain and not the marketplace’s database.
Because the data in a marketplace’s database is modifiable, anybody working in the system’s backend can modify the information for personal advantage.
However, data maintained on a distributed ledger (blockchain) cannot be altered. In other words, it cannot be changed or erased, providing total transparency. Thus, all NFT-related data and transactions on your marketplace are protected.
Blockchain backend Write Operation
Both the front end and the back end can begin transactions in NFT markets. The user signs the transaction with their private key saved in their crypto wallet as part of the frontend procedure. The backend procedure, on the other hand, is conducted by platform developers working with their private keys in the backend.
It is never advised to do write operations on a blockchain from the backend. Permit customers to sign their own transactions, pay the gas fees, and take all other required activities when buying NFTs.
Not carrying out NFT Commissions
Royalty fees and marketplace commissions are two forms of commissions that may be implemented on a marketplace. You may improve your revenue and that of the artists when you create an NFT marketplace by applying the following two commissions.
Royalty Settlement
When a user sells their NFT and it is purchased by another user, a royalty commission (determined by collection owners) should be credited to the seller’s wallet.
Royalties on non-fiat currencies are monetary payments paid to the producers of non-fiat currencies for their continuous commerce. They give artists a portion of the price at which a piece of art is resold. Thanks to smart contracts, the original inventor will always earn a percentage of the profit, regardless of the number of secondary sales.
Market Authority
When customers publish their NFTs on a marketplace, the marketplace owner’s account should be rewarded with a predetermined commission %.
The marketplace commission varies per platform and is quite similar to the royalty commission in that the marketplace receives a certain proportion of each sale. The Binance marketplace has the lowest fee rate of 1%, followed by LooksRare with a commission rate of 2% and OpenSea with a commission rate of 2.5%. APIs of third-parties
Instead of maintaining crucial information about an NFT in your marketplace database, such as its trading history and listing information, you may consider utilising third-party APIs. An NFT API comprises all data regarding NFT collections, transactions, users, etc. It streamlines the backend marketplace’s NFT-related data or information collecting.
Conclusion
NFT marketplaces are unquestionably lucrative. To fulfil your own and your users’ demands, however, extensive planning is required. When constructed with particular dos and don’ts in mind, your NFT’s marketplace will dependably provide the intended outcomes, as is the case with this NFT marketplace for memes. In addition, engaging an NFT’s market development organisation may make your work one hundred times simpler and more efficient.
Blockchain Development Company 