Where is the NFT trading market headed? Versatile aggregation and multi-chain competition
authorship | nobody (Twitter: @defioasis)
edits | Colin Wu
Last month, the author took stock of the current state of the first and second tier mainstream NFT trading markets. There is strong competitionBlur 和 OpenSea, there are those that have fallen into the end of transaction miningLooksRare 和 X2Y2, and some small but beautiful platforms that are in a corner. After experiencing the Bitcoin Ordinals boom in May and the explosion of Blend loan shares, future competitive trends in the NFT Marketplace have further emerged. This article will focus on this.
Trend 1: The multi-functional aggregated NFT trading market will become mainstream
As an NFT trading market, spot trading is the foundation, and how to provide users with a high-quality and comfortable trading experience is the key to market competition. The NFT spot trading function module has experienced at least two advances, moving from singleness to diversification. The first is transaction aggregation. In the initial transaction process, the seller is dominant, pending orders are the basis for the transaction, and the buyer's offer is not mainstream. Users have gone through the process of selecting and buying pending order buyers on an independent platform to selecting and purchasing from sellers who aggregate pending order buyers in all marketplaces. The second is Bid Pool. Bid Pool brought about a fundamental change in the trading model. The buyer's offer became a liquidity pool, and the buyer relinquished the right of choice to the seller, and the seller could choose to continue to wait for the order or directly lose it to the buyer's Bid Pool for monetization. Rare/image differentiation is no longer the focus of attention; instead, transaction wait times have been drastically reduced.
Bid Pool was first launched by Blur, and transaction aggregation was also promoted by Blur. Today, OpenSea/Pro also integrates these two trading methods, and it must be difficult for latecomers to bypass it. Open APIs are the new open source, and the new NFT Marketplace and the older generation will all merge with each other in the future;DeFiThe concept of a medium liquidity pool introduces depth to NFT transactions, and there are many areas worth digging into, such as how to build a pool on the NFT rarity characteristic transaction.
The path of the NFT trading market is actually no different from CEX; expansion is a powerful means of adding to the market's discourse. After spot trading, leveraging is almost inevitable. Currently, there are two paths. One is borrowing which favors on-chain DeFi, and the other is futures similar to perpetual contracts.
For NFT lending, X2Y2 and Blur should be the only two mainstream NFT marketplaces. Among them, X2Y2 should be the first trading market to establish its lending market. However, unlike its lending market X2y2FI, which has been around for a long time but it is difficult to shake the exclusive lending market share, Blur quickly eroded the original lending market with a trend of destruction and decay after launching Blend. According to DappRadar data, in the 22 days since its launch, Blend has accounted for 82% of the loan volume of all NFT lending protocols, and is gradually on par with Blur's spot trading volume in terms of lending transaction volume. Despite being blessed with Blur points, under Deep Bear, I have to say that leveraging is indeed a good business to increase the platform's growth. Furthermore, Binance is a trendsetter in the crypto sector, and although the Binance NFT market has been tepid since its launch, it also launched an NFT lending function in late May, which undoubtedly further validates this trend.
Data sources:https://dappradar.com/blog/blur-dominates-82-of-the-nft-lending-market
Futures are currently one of the most popular directions for NFT infrastructure startups. Good NFT futures protocols such as NFTPerp, NFEX, and tribe3 have sprung up in the past few months. According to CEX's revenue structure analysis, futures are the most important form of trading contribution far superior to spot. The high leverage provided by contract trading has infinitely amplified the gambler mentality in human nature. Volatility is the soul of contracts, and for NFTs with fewer quantities and less depth, they have higher volatility than FT. Blur Bid Pool not only makes it possible to trade NFTs instantly, but with the use of futures tools, large players can easily manipulate the NFT floor price and profit. However, on the positive side, futures provide an opportunity for ordinary users to enter high-net-worth NFTs, and are also a good way for the trading market to gain user growth.
Currently, no futures market has been launched or integrated from the native NFT Marketplace. Also, based on CEX's development experience, such as Bitget, etc., starting with futures and then gradually adding spot trading, this path may not be unsuitable for the NFT trading market. Whether there will be an NFT futures agreement in the future to gradually add to the spot market and seize the share of spot trading is worth paying attention to.
LaunchPad is receiving more and more attention from the NFT Marketplace. For example, OpenSea placed the sale project on the UI homepage and occupied a large amount of space. Element launched the EPG/EPS equity pass card around the NFT distribution. There is also Mint Fun, a marketplace dedicated to LaunchPad. For a long time, project sales have often been the project party's own business, but if the trading market can use its influence and resources to guide it, it is expected that it can create more high-quality projects and drive the overall development of the market.
The future NFT trading market will be a multi-functional integrated one-stop market integrating diversified spot transactions (pending orders+pool+rarity transactions), leverage (borrowing+futures), and LaunchPad.
Trend 2: The multi-chain narrative will evolve into a multi-chain war
Over the past month, we've seen Bitcoin Ordinals and BRC-20 shine. CryptoSlam data shows that in the past 30 days, Bitcoin NFT trading volume reached $189 million (including BRC-20), with the first BRC-20 ORDI reaching $40 million. Bitcoin has also officially surpassed Solana to become the second-largest NFT trading chain after Ethereum, close to 50% of Ethereum's NFT trading volume. Currently, in addition to the native mainstream market UniSat Marketplace, NFT trading markets such as Magic Eden, Element, and OKX NFT Marketplace have integrated Ordinals NFTs or BRC-20 or both, and Bitcoin NFTs have become a part that cannot be ignored.
Since Ordinals only follows the security and rules of the Bitcoin network and does not rely on the participation of any centralized forces, it has almost a natural advantage in storing NFTs, so many communities believe that Bitcoin NFTs will be the key to driving the next round of the NFT bull market, as well as the emergence of ultra-high net worth NFT collections. It should be pointed out that the Bitcoin NFTs in this article all refer to a collection of Bitcoin Ordinals NFTs and BRC-20; currently, there are frequent discussions about BRC-20 as an NFT that is not commonly understood. Focusing on whether it belongs or does not belong, the differentiated characteristics of the Bitcoin NFT trading market may be born in the future.
Polygon cannot be ignored. Relying on gas fees and quick transactions, it has become the first choice for Web2 companies to enter NFTs. For example, Starbucks launched a Polygon-based Odyssey stamp collection tour for loyal customers, and Platinum Group, a major Formula 1 (F1) ticket publisher, launched NFT tickets based on the Polygon chain for global racing events.
Currently, many NFT marketplaces are multi-chain parallel. OpenSea supports 8 public chains such as Ethereum, Polygon, Arbitrum, and Optimism; OKX NFT Marketplace supports 5 public chains of Ethereum, Polygon, Avalanche, BNB Chain, and Bitcoin; Element supports Ethereum, BNB Chain, and 7 public chains such as zkSync and Bitcoin, etc.
When taking stock of the current situation, the author also mentioned that multi-chain will be an important narrative in the context of the NFT bear market, because the multi-chain strategy is an inevitable result of internal entanglement. When the competitiveness of the main chain is limited or the growth of the main chain market is insufficient, use the experience learned by the main chain in competition to expand to other chains, use downsizing strategies (incentives, subsidies, etc.) and popularity to attack other native platforms on the chain and occupy market share. This strategy is very suitable for small platforms that cannot get a share of the main chain competition. When more main chain platforms realize this and expand to other chains, a war over native users of the extended chain will be inevitable.
As the functionality of the single NFT trading market continues to increase and the multi-chain process accelerates, this is essentially a competition between trading platforms for the right to speak on the racetrack, but there is still a long way to go to truly become capable of sustainable racetrack pricing. With its first-mover advantage, OpenSea has defined royalty revenue for the project side. SudoSwap, X2Y2, Blur, etc. have successively charged against zero royalties. While weakening OpenSea's voice, they have not been able to properly explore other sustainable income paths for the project party and creators; Blur first launched Bid Pool, which made instant NFT transactions possible, but it has become a tool for NFT giant whales to manipulate the market dump and pump. Ordinary users dare to get angry and dare not speak up; they can only get in the middle Surviving has exacerbated the continued loss of NFT users.
On the other hand, various players such as the trading market should participate in the definition of track/industry standardization to inject new vitality into the market. For example, UniSat launched the BRC-20 protocol for the Ordinals market, which led to the explosion of Bitcoin NFTs, and the launch of the Metaplex protocol re-aggregated loose Solana NFT players.
