NFT marketplaces

A space to discuss the ‘NFT marketplaces’ market sector available on Token Terminal.

What are NFT marketplaces?

NFT marketplaces are smart contract-based exchanges that allow for the permissionless trading of non-fungible assets globally.

What problems do NFT marketplaces aim to solve?

NFTs (ERC-721 and ERC-1155 contracts/tokens) allow new kinds of value to be tokenized and brought onchain. NFT marketplaces allow consumers to trade their items freely and creators to launch and monetize new digital works.

How do NFT marketplaces solve those problems?

NFT marketplaces, analogously to DEXs, bring down the cost of an art collection “drop” & trading to one function call. Once an artwork is represented as an NFT token onchain, it inherits the advantageous features of blockchains: global liquidity, predefined rules of operation, immutable audit trail, and open-source transparency.

Why is now the right time to build and invest in NFT marketplaces?

The NFT marketplace was initially dominated by p2p trading, which suffered from low liquidity. Bidding pools, introduced by marketplaces like Blur, pool liquidity to solve this liquidity bootstrapping problem.

What is the business model of NFT marketplaces?

The primary business model for NFT marketplaces is to generate revenue by charging marketplace fees as a percentage of the trading volume. That is, the NFT marketplaces take a portion of the creators’ revenue.

Where can I view the current and historical (financial) performance of NFT marketplaces?

NFT marketplaces dashboard: NFT marketplaces | Markets | Token Terminal

Methodology for DEX-specific metrics

Total value locked: liquidity deposited into the NFT bidding pools.
Trading volume: trading volume of the NFTs listed on the NFT marketplace.
Fees: total royalties and marketplace fees paid by traders.
Supply-side fees: share of royalties and marketplace fees paid to creators & NFT marketplaces.
Revenue: share of fees paid to the protocol (and its tokenholders).
Token incentives: value of governance tokens distributed to traders and/or creators.
Daily active users: daily distinct addresses making trades on the NFT marketplace.

Example project documentation

Relevant links