NFT, or non-interchangeable tokens is perhaps the fastest-growing sector of the crypto-economy. According to NonFungible.com, the total capitalization of significant NFT-projects since 2020 grow up tenfold from $100 million to as much as $10 trillion. According to NonFungible.com, the total capitalization of important NFT projects has increased tenfold since 2020, from $100 million to as much as $10 trillion. Meanwhile, the primary beneficiaries of this growth are the NFT platforms to produce and sell your NFTs. This guide can help you understand what an NFT trading platform is and design one with your budget and time frame.
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Universal trading platform. These are trading platforms like OpenSea, Rarible, or Mintable that offer all kinds of non-interchangeable tokens for sale, from simple pixel pictures, domain names, lines of code, music, and collectible sports cards. They are usually free and allow anyone to create their own NFTs on Ethereum or Binance Smart Chain (BSC) basis.
Development of such NFT-platform implies the creation of an online store with integration of a smart contract and using the primary standards for producing non-mutually exchangeable tokens (ERC-721, ERC-1155, dGoods, NFT Cosmos, BEP-7, TRC-721, FA2, and others). Such projects earn primarily on commissions.
Specialized NFT-platform. These are niche projects focused on certain types of NFTs. For example, the NBA Top Shot platform is where you can buy NFTs with short videos and GIFs of the best NBA moments, Valuables sells tweets, Looking Glass Factory sells holograms, and Foundation sells art by selected artists. Then there are NFT platforms, where artists, athletes, film stars, and other celebrities release their own NFTs to raise money for charity.
Technological platform development is almost identical to creating universal platform development. Still, the niche option is preferable because such projects are less risky due to the ability to focus on a single target niche and target audience. This increases the effectiveness of UX/UI and marketing.
The ten largest NFT-platforms according to DappRadar. Source
Online galleries of NFT collections. In contrast to marketplaces, galleries do not allow you to produce, sell, buy, or exchange non-exchangeable tokens. They are simply an Internet variation of regular galleries where the owners show their NFTs and organize thematic exhibitions and shows. They are made to promote the concept of non-exchangeable assets and to attract users to other sites where you can buy or sell NFTs displayed in the gallery.
Online galleries are the most straightforward and most affordable option for an NFT platform, which requires much less time and money to develop, as there is no need for integration with blockchain and smart contracts. Usually, such sites earn through advertising and referral programs.
Possible platforms for NFT-platform launching. Source
Business-model and monetization
The NFT platform you have developed can function as a regular commercial company with centralized management, the majority of the market. However, this is not the only option. Blockchain allows you to create a decentralized trading platform, the operation, and management of which will be fully or partially given to algorithms and distributed between the platform’s users (the owners of the native tokens of the NFT-platform).
In terms of monetization, NFT producing and selling platforms usually profit from a variety of streams. Here are the most popular options.
- Trade commissions. This is probably the most common (because it's the easiest) way to monetize NFT marketplaces. Its essence is that every time a marketplace sells tokens, a relatively small commission is charged on the transaction. On OpenSea, for example, it's 2.5% of the NFT value, and it's paid by the buyer, while the creator of the token only pays the gas on the first placement. On Ethernity Chain, the commission is 10% (5% - site revenue, 5% - operational fees).
- Deposit/withdrawal fees. The site may also charge a fee for using traditional financial instruments (bank account, card, PayPal) when paying for an item or withdrawing coins received (e.g., 1-5%). In this case, the fee is charged for speed, convenience, and availability.
- Advertising and promotion. This can be the usual contextual advertising and tools to promote lots within the NFT-platform: getting to the top of the listing, a different color of the lot, a place in the recommendations, etc.).
- Listing fees. This is a reasonably rare monetization model, the essence of which is to charge a small amount of money or a percentage of the cost of the NFT for its placement on the site. This monetization option is suitable for NFT galleries and viral platforms but not for all types of NFT.
NFT-platform working principles
If you are going to create an NFT-platform, you need to understand who will use it and how. So, if it is a trading platform where users can coin, sell, and buy tokens on their own, you will have three user roles: seller, buyer, and administrator. This is how they will use your marketplace to achieve their goals.
NFTs Buyer's Side:
NFTs Seller’s Side:
- The buyer/seller will be able to use the NFT-platform after registration. If an account is already created, the user must authorize: login/email + password, sometimes — 2fa.
- Next, the user must set up their cryptocurrency wallet (TrustWallet or another Web3-wallet). It is necessary to link the account on the site / in the application with exchanges for trading / storing digital assets. This step is also common for both the seller and the buyer.
- If a buyer wants to buy a digital asset, he must search and list to select the NFT he is interested in. The purchase process is standard, and payment is fixed or auctioned.
- The cost of buying an NFT usually consists of the price of the NFT itself (indicated by the seller) + the site margin + the gas fee.
- Typically, on an NFT platform, sellers can create their own space for producing and managing their NFTs and their collections. At the same time, sellers should be able to easily and quickly transfer their NFT collections from other platforms to your trading platform.
- Before creating non-interchangeable tokens, sellers must choose a platform to store their token and a way to keep the attached image, video, gif, or another file (typically IPFS).
- Next, the seller must specify the specifications and important details: the name, NFT price, key figures, token allocation, and indicate which category the created token or collection of tokens will belong to.
- After the transaction fees are paid, the smart contract will produce an NFT, and the seller can put it up for sale. The parties can agree on a payment method and possibly revise the price when a buyer is found.
- List of created on the NFT-platform.
- A users’ list with their trading story.
- Ability to remove unnecessary or duplicated NFT.
- Search filters editing and adding categories.
- Setting up adding users to allowlists and blocklists.
- Editing the way and structure of seller and buyer fees.
- Setting up integration with IPFS for file storage.
- Ability to edit the list of services.
- CMS for editing FAQ, etc.
- Other abilities.
Basic and additional functions
The next thing you need to decide on when developing your own NFT wallet or platform is to choose the features you want. If you want to create a forum like OpenSea, the most critical components of its architecture are:
Blockchain integration. Your trading platform must work with all popular blockchain networks — Ethereum, Binance Smart Chain (BSC), Ripple, Cords — and IBM Blockchain-based networks. This is necessary to increase audience reach and transfer NFTs to your trading floor easily and quickly.
Quick login via social networking sites. Gone are the days when people had the patience to fill out login forms with multiple fields. Today, one-click login is not a bonus but a necessity, so when designing your NFT site, don't forget to provide your users with this option.
Producing/creating NFTs assets. To do this, you need to develop or use a smart contract template to generate non-interchangeable tokens, verify the data, create new blocks and write them to the blockchain. By doing so, you need to think in advance whether you want to implement an NFT with prepaid gas or whether you want to introduce a slow-moving mining solution that does not require gas.
Token standards. In addition, you should also consider in advance which NFT asset standards your platform will use. For example, OpenSea supports all popular standards, including ERC-721 and ERC-1155.
NFT-asset window. This is the face of your platform, where users can view the tokens for sale, their description, and transaction terms such as title, value, price history, creator, auction window, and others.
Navigation and search bar. To ensure a smooth journey through the platform and a pleasant user experience using your platform, it is essential to plan what the navigation should be like - how users will search for the features and tokens they want. It should be as simple as possible.
Advanced search filters. Make sure that the tokens presented on the NFT-platform can be easily and quickly found by the search engine and filters: price, status, category, date of addition to the listing, and so on.
Effective advertisements. A token page can both promote its sale and discourage buyers. For the trading cards to sell effectively, they should be both concise and informative, i.e., include all the significant descriptions and details of the NFT assets for sale.
Token producing algorithm. Source
Example of an effective advertisement on OpenSea.
Secure access to the wallet. Because of the hacks of cryptocurrency exchanges, this option has become one of the most important when developing blockchain projects.
Analytics (price history). Most NFT trading platforms offer several options for analyzing the market and your trading activity.
Reviews and ratings. These things are helpful to build confidence in the platform and prevent cheating and unethical behavior (insulting, racist, xenophobic, harassing minorities, etc.).
NFT collections. The ability to group NFTs into collections for sellers or offer them for purchase resonates well with user requests. So when you launch your own NFT platform, implement such an option as well.
Bidding/auction. Sites such as OpenSea or Rarible have the following available bidding types (but are not limited by them):
- Fixed-price ads. As the name implies, in this case, tokens are sold at a fixed price specified in the lot. The seller determines the price, and he can change it at any time at his discretion.
- The first-price auction with sealed bids. In this case, all bidders bid simultaneously, and no one knows the price offered by the other players. The highest bidder wins.
- Second Price Auction, or Vickrey Auction. The terms are the same as in the first-price auction, but the winner pays the second-highest bid rather than his own.
- Dutch auction lists. The seller specifies the starting and ending prices and the time frame for selling the token.
- English auction. This is where the seller sets the minimum price for their ads and waits for bids. The deal is closed as soon as the seller finds an acceptable rate. This type of bidding is popular on eBay.
Architecture, technological stack, and API
Platform architecture. This term usually refers to the structure of the pages and the software part of the site. It is created to visually represent the software’s logic and navigation and how its components interact.
Here are the examples of NFT-platform architecture:
WizKey nodes, services, and client architecture and their connection to the Ethereum blockchain. Source
Examples of the technical stack of the NFT-platform server part:
NFT-platform technical frontend stack examples:
- Blockchain: Ethereum, Binance Smart Chain.
- Token standard: ERC721, ERC1155, BEP-721, BEP-1155.
- Smart contracts: Ethereum and BSC virtual machines.
- Databases SQL: MySQL, PostgreSQL, MariaDB, MS SQL, Oracle.
- DevOps: GitLab CI, TeamCity, GoCD Jenkins, WS CodeBuild, Terraform.
- Databases NoSQL: MongoDB, Cassandra, DynamoDB.
- Searching systems: Apache Solr, Elasticsearch.
- Programming languages: Java, PHP, Python.
- Frameworks: Spring, Symphony, Flask.
- Cash: Redis, Memcached.
- Programming languages for web: Angular.JS, React.JS, and Vue.JS.
- Programming languages for App: Java, Kotlin для Android и Swift для iOS.
- Architecture: MVVM for Android and MVC, MVP, MVVM, and VIPER for iOS.
- IDE: Android Studio and Xcode for iOS.
- SDK: Android SDK and iOS SDK.
NFT-platform development process
The process of custom NFT marketplace development typically consists of four main steps: project discovery, design and development, quality assurance, and launch — deployment and post-development support.
Step № 1. Project Discovery
The first step requires you and your development team to examine the details of your project and determine:
When you get the preliminary answers, you need to do a business analysis and draw up terms of reference. The business analysis will help you understand better - an open or invite-only platform, which niche you have more prospects in, etc. At the same time, the terms of reference should include the entire technical infrastructure of the site, design, backend, and frontend.
- your project niche;
- unique commercial proposition;
- NFT standard (ERC-721, ERC-1155, BSC, etc.);
- goals, pains, behavioral patterns of the target audience;
- marketing strategy of the product.
Step № 2: design and development
When the technical aspects and other nuances are agreed upon and approved by the customer, the team of designers and software engineers starts to develop all the necessary elements of the NFT platform: interface, backend, smart contracts, mobile applications, if required. This process is usually divided into stages - steps and is carried out sequentially with the involvement of subject-matter experts to solve technical problems and consulting the development team or the customer.
Here is a summary of the crucial points:
- UX/UI-design. You need to create a prototype, choose brand colors, develop custom page layouts, and develop the final platform design. Don't underestimate this stage because the interface is what your end-users will see. And it is its appearance, simplicity, and usability that most of all determine the project’s success.
- Back-end and smart contracts. This stage is where the entire server-side of your NFT-platform is implemented. And because it is blockchain-based, the process is a bit different from that of a typical marketplace. For example, your marketplace must support transactions with smart contracts, cryptocurrencies and provide an auction mechanism.