“How do NFT Marketplaces make money?” you might ask. Imagine that you want to develop the NFT Marketplace as you have considered this as the trending business model in the crypto work. Yet, you are not sure which types of NFT Marketplace Business Model to go for?
If the answer is yes, this blog is curated to help you make the right way of monetizing an NFT Marketplace.
1. Several Best NFT Examples And Proof Of NFT Marketplace Promising Future
Cryptocurrencies have been noticed for over a decade. Yet, the trend in NFTs has just been the talk of the town lately, and NFT Marketplaces have gradually registered appreciation and volume worldwide.
Investors keep investing in these unique cryptographic tokens, resulting in a multimillion-dollar revenue stream in the NFT sectors. Some of the best NFT examples for selling and purchasing that exist today:
- Coupons/Tickets that give you access to an event.
- Unique & Exclusive Digital Collectibles
- In-game Items
- Music Tracks/Music Royalties
- Writing essays
- Degree Certificates
Obviously, behind the booming number of NFTs’ transactions was the operation of NFT Marketplaces. The creation of the NFT platforms has allowed substantial and efficient investments thanks to a well-organized structure and a robust NFT Marketplace Business Model.
You have already heard of some of the most famous NFT trading platforms: OpenSea, Cryptopunks, NBA Top Shot, Rarible, Sorare, Superrare.
Here are interesting statistics to prove how promising the NFT future could be:
- The total market for NFTs reportedly grew to $41 billion in 2021 by the Business Insider.
- There are 20 NFT Marketplaces currently existing worldwide, according to Data from DappRadar.
- Thousands of NFT transactions have been made daily, with weekly sales reaching from $15,000 to $50,000.
- Open Sea and Cryptopunks are two NFT marketplaces with the highest trading volume at 35,32% and 26,84%, respectively.
- NBA Top Short Marketplace has witnessed the most significant sales (35,39,999)
2. Overview Of NFT Marketplace Business Model (Checklist Included)
To help you understand NFT Marketplace Business Model more easily, we classify NFT Business Model into four segments: Digital Collectibles, Strapping/Proven Communities, Corroborative/Proven Experience, and Elite Securing Personal Information.
- Digital Collectibles: This is most commonly known, and many popular NFT marketplaces opt for this kind of business model.
Digital collectibles may include but are not limited to music tracks/royalties, clips from sporting events, and even other forms related to intellectual property. A digital asset powered by blockchain technology allows you to display it to countless users yet clearly establish ownership just for you.
This addresses one of the unique characteristics of blockchain, which is decentralization. Every transaction would be recorded in a blockchain, and users could trace transactions’ history without any obstacles. Unlike bitcoin, NFTs are fungible and interchangeable tokens, this also means the owner of any NFT could earn much money if their NFT collectibles increase in value and attract many more sellers to exchange.
- Strapping/Robust Communities:
NFT communities are a group of investors and collectors who share a mutual belief in their own NFT projects. In order to succeed in NFT projects, besides creating their one-of-a-kind collections for trading, they first need to build their community. By utilizing social media, for example, they could spread their messages, cultures, and brands, then attract more and more users to become their legitimate members.
Most NFT Marketplaces nowadays start with around 10,000 avatars, and new users are typically required to own some of the tokens before being verified as official members. As the group expands, they also need to take on the responsibility of compiling a list of NFTs that everyone agrees on. This is such a tedious task as everyone has their own taste. The more members join the community, the harder it is to create a shared and identity culture.
As the trend in NFTs doesn’t seem to stop anytime soon, here comes the emergence of newer and less expensive NFT initiatives, with their intention of acquiring new users with a low budget. However, experts recommend that a beginner join some established communities first, to get some practice and learn the hard way before making any decisions about joining or founding any new NFT marketplaces.
If you are interested in robust communities, here are several popular communities that you might want to discover more: Bored Ape Yacht Club, CryptoPunks, VeeFriends, Cool Cats, The Flower Girls, Nuclear Nerds,…
- Proven Experience
In the past and even till now, we have been accustomed to using paper records to prove experience, such as degree certificates to apply for professional jobs, tickets to get access to events, coupons to get discounts, etc. This seems to be lagging behind, especially in the era of 4.0. As for now we can utilize blockchain technology to prevent records from being misplaced or duplicated and to eliminate the intermediary.
NFTs may soon be used for experiences like learning, joining a concert or sporting events, and even traveling, to name but a few. This is expected to save you more time and money. You don’t have to wait for such a long time to verify tickets or legal documents, as any procedures now could be taken online. You save money as you do not need to pay intermediaries’ fees.
In some broader cases, you might imagine that one day, NFTs will even transform offline events into virtual ones so that vendors and event organizers don’t need to rent and pay for venues anymore.
- Elite securing personal information
The ability to trace the history, store and verify information makes it easier than ever to identify documents in various sectors such as laws, healthcare, real estate, etc. NFT solutions are even worth considering for storing sensitive information. Some citizens are hopeful that one day the government could integrate NFTs solutions into voting purposes.
3. How To Monetize An NFT Marketplace (How to make money)
An NFT trading platform could only work and function efficiently with a proper NFT business model. Current NFT marketplace revenue comes from a wide range of streams:
- Listing Fees: NFT Marketplaces is like cybermarket, and content creators are sellers. If they want to display their work, they need to pay some fees for NFT Marketplaces’ owners; this is what we call “listing fees”. And then crypto collectibles developed by creators would be well-categorized based on types, price, demand from investors, and other factors.
Some NFT marketplaces currently don’t charge fees for minting NFTs but charge some fees in case users want to list them for trading. And some allow you to create and list NFTs on their marketplace for free and then charge you 2,5% per NFT that you sell successfully.
As the listing fees vary in different marketplaces, make sure to check out the FAQs or related docs of marketplaces carefully.
- Transaction processing charges: This is one must-have cost you must pay when joining a peer-to-peer transaction. This is also regarded as NFT trading platforms’ primary method to generate revenue. Most marketplaces will only charge the buyer around 2% – 5% per transaction. The transaction charges are to pay for gas fees to maintain the function of the blockchain network.
- Setup Fees: This is not a fixed cost as NFT marketplaces charge this fee differently, even some do not charge you any, LIQNFT, for example. As every NFT platform is backed up with a blockchain protocol, creators need to pay a specific fee to be able to update their collection on the platforms and list it for sale.
- Private Sale: Private sale is often conducted for exclusive and unique collectibles as it restricts how many investors can access assets and have the right to buy. This process might take some time for NFT sellers, from listing their sales as private, and deciding which wallet addresses are eligible to purchase to finding a potential buyer, so some NFT marketplaces charge a fee for any sellers who organize a private sale.
- Bidding Charges: Bidding is one of the unique and awesome NFT marketplace features as it creates competition and chances for sellers to earn more money. Hence, the NFT Trading platform often charges some fees for buyers who successfully bid for any collectibles.
- Affiliate program: This is an exclusive program for partners of NFT marketplaces. They would get more incentives, such as real-time updates on the demand for collectibles they sell, the ability to host airdrop and bounty programs, and the integration of HTTP API to filter information, for example, bids, digital assets, and wallet addresses.
|You may need this article: List of NFT Marketplaces with Gasless or Low Gas Fee to Save You Money|
An NFT Business Model not onlyconsiders revenue streams but also considers expenses thoroughly. There are 3 significant costs that NFT Marketplace needs to pay for:
- Blockchain Network’s Maintenance: Each NFT Marketplace would be established on a specific blockchain network such as Binance Smart Chain (BSC), Ethereum, Tezos or TRON. As thousands of transactions have been made daily, NFT Marketplaces have to spend money on gas fees because of the consumption of computing energy.
- Smart Contract Audit: This is one of the must-do tasks every NFT trading platform must execute regularly. They should constantly update and audit smart contracts to keep them in optimal working conditions to prevent any technical bugs and vulnerabilities.
- Safeguarding: Each NFT is a distinct digital asset, and the NFT Marketplace has to comply with copyrights, intellectual property, and trademarks. Hence, they often need to pay an amount of money for legal expenses to eliminate copyright infringement or counterfeiting.
4. Examples Of Successful NFT Marketplace Business Models
There is nothing better than learning NFT Marketplace Business Models from successful cases. Here are 3 monetization strategies from OpenSea, Rarible, and Superare:
OpenSea is one of the biggest NFT Marketplaces worldwide, and transaction fees are the primary source of generating revenues for this platform. Open Sea charges 2.5% per sale to any buyers. This means if you buy an NFT for 10 ETH, Open Sea would make 0.25 ETH.
Some other fees may include account registration fees, which are a one-time fee to allow users to sell on this platform, a one-time contract approval fee, and gas fees. Yet, the gas fees are excluded from revenues.
Rarible has two main revenue streams: transaction fees and $RARI exchange cost. Unlike OpenSea, which charges a buyer per sale, Rarible charge 2.5% per transaction on both buyers and sellers. This means if you buy an NFT for 10 ETH on Rarible, they would make 0.5 ETH, double that of Open Sea.
Rarible also earns money thanks to its own token, $RARI. This token is mainly used for governance and paying for those making transactions on Rarible, and this platform could generate revenues from exchanging these tokens.
Similar to Rarible, Superare generates revenues by transaction fees and exchanging its own token – $RARE. Superrare charges 3% per any transactions on buyers. This means if you buy an NFT for 10 ETH on Superrare, they will make 0.3 ETH.
Its token, $RARE was issued to 7.500 early adopters (founders included). Based on the demand of the total market, early adopters could decide to bid, trade and exchange to raise the value of these tokens, and this is how SuperRare earns money.
5. Final Thoughts
There came a time when NFT Market lost its own attractiveness, yet we can’t deny that the cryptocurrency economy is the future! In the years to come, we may see more and more NFT marketplaces launching. It could be NFT platforms that don’t target the majority but choose some niches to get started. Be it customized NFT selling platforms or all-in-one marketplaces, longing for a sustainable NFT Marketplace business model is always a good idea to earn huge profits.
Let Synodus help you realize your big ideas and consult you with the most profitable NFT Marketplace Business Model you could go for!
More related posts from Synodus you shouldn’t skip:
- NFT Marketplace Royalties: A Definite Guide On How It Works
- How To Estimate NFT Marketplace Development Cost
- Top 15+ NFT Marketplace Development Companies To Partner With In 2023
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