Increased amount of NFT trading takes place on first-party NFT marketplaces.
While NFT marketplaces battle to have the highest trading volume and most sold NFTs on the market, the rise of tailored first–party marketplaces will empower individuals, communities, and decentralized organizations. Over the past 3 months tailored community NFT marketplaces have seen their market share increase from 3.9% to 5.5% of all trading activity.
At the time of writing, OpenSea is the undisputed market leader of all NFT marketplaces. They had 49.9% market share in Q3 2022, good for a yearly average of $1.38 billion in NFT trading volume.
However, during the year various contenders have entered the ring and successfully carved out a piece of the pie for themselves, with LooksRare and X2Y2 actively stealing OpenSea’s thunder.
What are the main NFT marketplaces?
The biggest contender in terms of trading volume is Magic Eden, a marketplace on the Solana blockchain. Just recently, they made the jump to Ethereum, becoming another contender for the multi millions in trading volume happening on Ethereum-based marketplaces.
In September, Magic Eden saw over $127 million worth of NFTs being traded on its platform as the leader on Solana, positioning itself strongly against OpenSea’s $350 million that month.
Within the Ethereum ecosystem Gem and Genie were able to pick up a significant percentage of buyers by aggregating listings from the other marketplaces. This way these services offer the best selection in a single marketplace. Their potential caused them to be acquired by OpenSea and Uniswap respectively.
Now this is where things get interesting, because NFT marketplace aggregators are likely to become even more useful in the years to come. Aside from all these third-party NFT marketplace battling for dominance, we see a much more interesting development happening: The rise of first-party NFT marketplaces.
The differences between 1st and 3rd party NFT marketplaces
A first-party marketplace:
- Allows trading of NFTs from one single project.
- Often has a more community oriented approach, for example by not taking trading fees or putting trading fees into the community-governed DAO.
- Keeps users on the project’s website and can be customized to help them own the brand experience.
A third-party marketplace:
- Allows all kinds of NFT collections to be traded
- Allows payments in a variety of cryptocurrencies, often set by the seller
- Often benefits the marketplace provider or a somewhat centralized organization
The rise of first-party marketplaces
First-party marketplaces are nothing new. Larva Labs created its own fee-free marketplace for CryptoPunks, which has seen a lifetime trading volume of $2.94 billion. That puts the marketplace in third place in terms of volume, behind market leader OpenSea and another first-party marketplace: Axie Marketplace.
- OpenSea ($32.49 billion)
- Axie Marketplace ($4.25 billion)
- CryptoPunks ($2.94 billion)
If we look further down in the top 10 NFT marketplaces sorted by lifetime trading volume, we are able to find NBA Top Shot in 6th place with $971 million. Mobox has the 8th spot with $693 million. Again, all these NFT marketplaces cater to single products or communities.
However, despite these impressive numbers, the reason for dapps to have their own native marketplace isn’t only based on trading volume. First-party marketplaces can be integrated into an existing ecosystem, matching the vibe, ethos and theme of a community. This brings a whole range of benefits to brands.
We spoke to Zach Heerwagen, CEO and co-founder of Snag Solutions, a company building NFT marketplaces as a service.
In every other Ecomm category brands do better when they own the buying experience to drive brand interaction and increase loyalty and usage by improving the buying experience. Unlike in some other categories where goods are relatively replaceable, NFT’s are entirely brand based, and overtime we’ll see creators flex their ability to keep holders on their own site so they can regularly surprise and delight.
Zach Heerwagen, CEO and co-founder of Snag Solutions
Having their own NFT marketplace gives project leaders or communities more control. Furthermore, they can integrate social features, reward mechanics, and drive interaction with content, events, and other community members.
It’s no wonder that Web3 projects like PlayDapp, The Sandbox, Aavegotchi, Decentraland, and MegaCryptoPolis have their own marketplace.
Snag Solutions has already provided the tools for Goblintown, Crypto Chicks, and Citizens of Tajigen to run their own NFT marketplaces. More impressively, Snag Solutions managed to get approval from the ApeCoin DAO community to build a marketplace for Yuga Labs’ Bored Ape Yacht Club, Otherside, and other original NFT projects.
We´ve already seen aggregators like Gem prove that they can steal market share by showing users the deepest NFT liquidity for projects. We have an incredible opportunity to create the go-to destination for the ApeCoin and Yuga community by aggregating selection, offering the lowest fees, and customizing the experience to the rich BAYC & Otherside lore by pulling in metadata and building social features around the buying experience.
Zach Heerwagen, CEO and co-founder of Snag Solutions
In the most recent DappRadar Industry Report, we reported that the number of NFT trades is on the rise as 21.9 million NFTs changed hands in the past third quarter of the year.
The number of NFTs traded per month went up from 5.88 million in June to 8.78 million in September, the highest monthly number since February. Arguably, adoption of NFTs is happening without the need for these digital assets to be valued at ridiculously high prices.
Closing words
As communities mature and become Web3 brands, the rise of custom NFT marketplaces and aggregators makes a lot of sense. During the bear market we can expect more projects to take control over their own communities and economics by having their own marketplace.
Brands like Adidas and Nike will move deeper into Web3 with their NFTs and Metaverse offerings, and they will want to tailor their own experiences.
