Non-Fungible Token, popularly known as NFT, is a digital asset on the blockchain. These digital assets can be digital artworks, photos, audio recordings, etc. Digital assets aren't new neither is NFT. But the fact that NFT’s are taking over the crypto world right now and even selling for millions is one reason why I'm writing an article on how to build an NFT marketplace in 2022. Another reason is that many Bitcoiner, Altcoiner, Nocoiner, and "Whales" in the crypto market often slide my DM on Twitter wanting to know how they can build an NFT marketplace, website, or platform and its development cost.
Knowing the cost of developing an NFT website, marketplace, or platform is one thing, how to build it is another. As a digital asset, it means, you can own as many NFT as you want and they belong to you and you only. Music and Artwork are the most popular NFTs right now and each of them has a specific unique code saved on the Blockchain to differentiate them. No one can substitute an NFT item for another, not even on OpenSea, the Largest NFT Marketplace. But one thing is clear, NFTs are the Internet’s latest obsession with the potential to put millions of dollars in your pocket
Over the past few months, millionaires have emerged from selling NFT. The most popular being Beeple — Call him Mike Winkelmann. Mike earned $69.3 million in March for selling "Everydays: The First 5000 Days." People like Coinbase CEO believed that the NFT market could surpass their company’s Cryptocurrency business in the not-so-distant future. So how can one build an NFT platform or at least get into action?
Before I get to that, here is what anyone interested in building an NFT marketplace should know:
NFT Marketplace Concept
An NFT marketplace such as OpeanSea, AtomicMarket, Axie Infinity, NBA Top Shot, Decentraland are online marketplaces where a wide range of high-valued and rare NFTs, digital items, and crypto-collectibles are discovered, sold, and collected via auctions. Such an NFT marketplace gives creators the flexibility of selling their non-fungible virtual products to buyers or investors. Buyers or investors can purchase or bid on various types of digital artwork, fashion accessories, gaming assets, memes, and a wide range of other NFT items on the marketplace with cryptocurrencies such as Bitcoin, etc. For every transaction carried out on these NFT marketplaces, they charge a certain amount of crypto.
Immediately an NFT auction is won and bought, the winner, investor or buyer gets a token instantly. This helps them boost their liquidity quickly attracting newer buyers or investors to the NFT market. The token that NFT buyers received serves as proof of ownership. The token has a unique identifier code and details about the author, authenticity, and provenance. Like any other digital asset, NFTs are fully programmable, and Roscoe can help you build them on your terms. While these tokens are linked with mechanisms that are often complicated like crafting, forging, and random generation, their designs are limitless.
NFT Market Competitors
Name a successful startup or business that doesn't have a competitor. If you can name at least one, it means you either don't understand the startup or business or they have products and services nobody else wants. Neither option is good.
Competition is in every market and the NFT market is a fierce one. Take a look at the top NFT marketplaces in terms of the highest trading volume.
OpenSea ($1.45 million)
Axie Infinity ($1.26 million)
NBA Top Shot ($1.06 million)
Here are the top NFT marketplaces in terms of their highest sales.
Gods Unchained (572,996)
Ethereum Name Service (154,146)
In terms of having the highest number of traders, take a glance at these NFT platforms:
NBA Top Shot (19,380)
Axie Infinity (2860)
You need to know what the NFT market is like, how they’re competing against each other, their strengths, weaknesses, opportunities, and threats. With so much hype created around NFT marketplaces, there are a considerable number of blockchain enthusiasts planning to build one. If you're one of these entrepreneurs, don’t start building an NFT marketplace, website, or platform without knowing who you’ll be competing against and most importantly how to make their weaknesses your strength, their threats your opportunity. That’s one way to stand out from the crowd, you can't say no information is available.
One way I learned that is to open my mind to what my potential customers are doing, which software development shop or platform they’re contracting, and how they deliver as agreed. Writing this content is one way of attracting current and future NFT marketplace owners needing my programming skills. People are finding your NFT competitors to buy from them, know these people.
Although NFT development offers amazing possibilities, a suitable NFT standard is needed to define what they are capable of doing. These standards are NFT’s driving force making sure that NFT’s assets act in specific ways. At the moment, there three NFT standards used for creating non-fungible tokens:
- ERC721 NFT standard
ERC721 is the first NFT Ethereum standard developed in 2018 used in non-fungible token development. It ensures the token is unique or non-fungible. Because of its age or rarity, it can have a different value despite coming from the same smart contract. It uses an application programming interface (API) within a smart contract to help people interact with the token with proof by pointing to the addresses representing the owner of the identifier. With ERC721, NFT marketplaces can use the “TransferFrom” method to transfer assets to investors or buyers.
- ERC1155 NFT standard
This standard uses IDs that do not just represent one asset but an entire class of assets. ERC1155 proves to be much more efficient as compared to the ERC721 standard. Enjin created RC-1155 and then it became an official token standard for NFTs using IDs that don’t represent one asset but an asset class.
Its multi-asset token “property” made it an ideal NFT standard to create both fungible and non-fungible assets on Ethereum. Yes, ERC-1155 also uses the Ethereum network Just like ERC-721.
Tokens developed using any of these two NFT standards are secure, tradable, and protected against hacking.
Why I like the ERC1155 NFT standard:
Aside from the fact that the ERC1155 NFT standard supports the creation of multiple assets, one thing I like about this standard is that it also saves transaction costs. Along with that, I can build escrow or atomic swaps of multiple tokens using ERC-1155 without the need to separately approve individual token contracts, amazing! In addition to that, both fungible and non-fungible tokens can be described in the same contract using this standard. As a result, it supports the safer and efficient trade of tokens.
- ERC-998 NFT standard
Sometimes, there's a need for developers building NFT marketplaces to take a step ahead by implementing the ERC-998 NFT standard. ERC-998 makes non-fungible tokens capable of owning other NFTs and ERC-20 tokens. This made many see the ERC-998 NFT standard as the portfolio of digital assets. However, the ERC-998 NFT standard is an extension of ERC-721. This means that NFTs that implement ERC998 also implement ERC-721 automatically.
The four more token standards that are under the ERC-998 token standard are:
- ERC998ERC721: These tokens implement the top-down composable approach to receive, hold, and transfer ERC721 tokens.
- ERC998ERC20: These tokens implement the top-down composable approach to receive, hold, and transfer ERC20 tokens
- ERC998ERC721: These tokens implement the bottom-up composable to attach themselves to other ERC721 tokens.
- ERC998ERC20: These tokens implement the Bottom-up composable approach to attach themselves to ERC20 tokens.
A composable token is a unique digital asset (or non-fungible token) that can own other non-fungible tokens and vice versa. The two different kinds of composable are top-down composable and bottom-up composable. It is very important to know which NFT token standard is perfect for the type of NFT marketplace you’d want to build.
So many elements are important in NFT smart contract but the most important of them all is the NFT Metadata which is a JSON file that carries data such as:
A link pointing to the hosted image
NFT MetaData has detailed information about the NFT enabling NFT marketplaces to easily find NFTs with the "ownerOf" concept.
Legal documents needed to create an NFT Marketplace
Legal Documentation is needed to build an NFT marketplace and it’s super important to have documents such as your company’s;
Terms of service
Details of intellectual property right processing
NFT Marketplace Process
Simply see NFT marketplace as a marketplace built on the Ethereum smart contract. It’s similar to e-commerce platforms that require a good thought out process. You’re in control of how much information and features that’ll be on your NFT platform but there are basic features that must be in place:
- Your NFT developer would need to design and build the sign-up feature for the NFT platform.
- The crypto wallet on the platform needs to be set up too for the storage of cryptocurrency and non-fungible tokens.
- NFT parameters need to be properly configured when creating an NFT, and the collection is listed for sale.
- An admin page is needed too for item moderation, banning members, etc.
- An auction function is needed to be built so members can list and bid on non-fungible tokens.
- A notification function is needed too to notify the creator or seller immediately after the auction closes showing the top bids.
- The NFT platform needs to transfer the items to the new buyer as well as funds to the seller and then charge a fee from the selling price.
Top Features that need to be built on an NFT Platform
A well thought out NFT platform needs a few major features such as:
- Storefront – It is the part of the NFT platform that gives members details of the NFT such as price history, NFT owner, number of bids and price, etc.
- Live Auction Feature – With the live auction, creators or sellers can sell their non-fungible tokens to the highest bidder via the live auction. This feature showcases various types of information such as the names of the sellers and the tokens put up on auction, their desired payment method, price, picture, the total number of bids placed by buyers, and the time left before the auction closes.
- Search Feature – The NFT platform or marketplace needs a search feature to make it easy for its members to search for items of their choice. This saves members from endless scrolling as they can type into the search bar and the system immediately displays NFTs based on the search keywords used and the category those NFTs are on.
- Trending Feature – This is somewhat similar to the Twitter trending feature. The more people look into an NFT item on the platform, the more likely it will start trending. It is believed that most non-fungible tokens that get into the trending list end up getting the highest price. Therefore, it’s super important that creators or sellers sell NFTs buyers are often looking for. As people keep searching for such NFTs, it keeps increasing their chance of getting to trend on the marketplace. The trending list or collection section has insights that will help prospective buyers know the trending NFTs price, their sellers’ names, total supply, trading volume, and even what the crypto collectible is like.
- Create Listing Feature – This feature allows sellers to list their NFTs on the marketplace. Hence, it should be built in a way that allows sellers to enter as much information as they can about NFTs they’re putting up for sale.
- Auction and Buy – Most successfully NFT marketplaces have the auction and buy feature. This feature allows members of an NFT platform to easily add their bid price, expiring date, and a watch list showing the status of their NFT bids.
- Wallet – If you’re on Hourspent, know that the NFT marketplace wallet is not similar to your Hourspent wallet. With your Hourspent wallet, you can make a USD deposit to hire talents, and have the deposit saved on your escrow wallet until the talent delivers. You will then need to approve the talent invoice after work is done and Hourspent will release the escrow deposits to the talents. With the Hourspent wallet, you can also receive and send USD to other members but on the NFT marketplace wallet, members receive, send, and store non-fungible tokens and cryptocurrencies. Therefore, your NFT platform will be needing the wallet feature for receiving, sending, and storing NFTs and cryptocurrencies for members. Popular NFT marketplace either built their wallet like Hourspent did or integrated a 3rd party wallet for a seamless user experience.
- Payment Methods Options – For NFT marketplaces, cart abandonments and lost revenues can be mitigated by offering different payment methods members would want to use or are accustomed to. Many years ago, there weren’t many payment options. Money orders, bank deposits, and cheques were how most online payments were made. The story is different now with advanced fintech’s springing up. Many fintech startups like Stripe can help NFT marketplaces process debit cards, wire transfers, credit cards, in addition to crypto wallets seamlessly.
- Notification Feature – This feature may likely be underrated but it shouldn’t be. NFT marketplace members need to be informed of the latest trends etc. and the notification feature in place will help the admin send the latest information either through emails or push notifications in real-time. Information to be sent could be a welcome email, new non-fungible tokens put up, upcoming auction, etc. Some of these notifications should be automated to save time.
- Customer Support – For an NFT marketplace team to easily provide help when members have trouble while using their NFT platform, products, or services, the customer support feature needs to be in place. Having the customer support feature will also boost your member's retention rate. It could be a support page with a live chat option, email, and phone numbers displayed.
Steps To Create A Highly Scalable NFT Marketplace
Now you’ve known the features needed in an NFT marketplace, let us discuss the steps to build one.
Although NFT marketplaces compete against each other, they’re not the same. Each focuses on a particular segment of the market, offering a different or a particular kind of product or service. Hence you shouldn't dabble into building an NFT marketplace. Instead, you need to define your niche.
At the moment, the NFT market is of two types; The vertical and horizontal market. By vertical, it means that their suppliers, sellers, or creators only sell NFT items that satisfy the needs of a particular target audience. I recommend NFT startups to start with this niche. It’s far more affordable and faster to build. It does not need huge capital or investment to start.
The horizontal market is versatile, focusing on different products and services at the same time hence it's why it's for the “heavyweights”. If you don’t have enough funding and good talents in your team, or hire top freelance talents to build an NFT platform, don’t try the NFT horizontal market. It’ll not just eat up your investment, it’ll eat up your mental health too.
Members on NFT marketplaces play different roles. Their choice of role to play is determined by what brought them to the platform.
- Buyers – They have the purchasing power and are often looking for the next NFT item to buy. It could be digital artwork or any other NFT asset. Hence, while they’re known as the buyers.
- Sellers/Creators – They have the skills to design digital assets that will then get tokenized as NFT. Most NFT marketplaces ignore the creators and give their full attention to the buyers due to their buying power. It is better to give attention to both the buyers and creators because creators on NFT platforms are what's keeping buyers on those NFT marketplaces.
- Administrators – Because there is a need to run the platform, administrators are assigned. Most of these NFT platform administrators are members of the platform team while some are hired to work as the admin on contract. Their role is to manage members' accounts, their NFT assets, exchange of funds as well as managing ownership transfers.
NFT Project Documentation
Building an NFT marketplace or platform is a huge project hence the need to create detailed documentation of the entire project. Most times, it could involve weekly meetings with your NFT developer and your team. Lots of time and effort will be invested too. Proper documentation will help you track the NFT developer’s work progress and also help in saving money.
Prototyping is an experimental process. While prototyping, the design team brainstorms, sketches, or drag and drop their ideas to capture their design concepts and test them on potential members. If you’re on a tight budget, I’ll recommend you go with a full-stack NFT developer. He or she is like a “one-man squad” working both on the porotypes, frontend, and backend of your NFT marketplace.
With prototypes, you can refine and validate your NFT idea so you can release the right platform. To some, prototyping slows the NFT developer’s work progress but It’s a good thing to prototype. Yes, it slows NFT developers down to speed them up. Most NFT marketplaces become too complex early on while some keep running in circles but by taking the time to prototype, you’ll prevent most of these complexities and circle runs early on. You’ll see the forest, not just the trees. When prototyping, aim for a better UI and UX for your members because the overall look and feel matter a lot before the actual development starts.is an experimental process. While prototyping, the design team brainstorms, sketches, or drag and drop their ideas to capture their design concepts and test them on potential members. If you’re on a tight budget, I’ll recommend you go with a full-stack NFT developer. He or she is like a “one-man squad” working both on the porotypes, frontend, and backend of your NFT marketplace.
Front End Development
Back End Development
The front-end development is the one you can see and can interact with. The back-end development work is the ones you cannot see and contain behind-the-scenes that happen when you click on anything on the front end of a website or platform. When building the back end of your NFT marketplace, the developer will be focusing on your platform databases, backend logic, APIs, and Servers. Therefore, the developer will need to keep in mind your NFT platform's scalability, security, and stability while building the backend of your NFT platform.
This is a stage where the developed NFT platform is put to test to check for existing and potential errors in the platform code. Without debugging a developed NFT marketplace, the errors will likely conflict with others to unexpectedly crash the platform. Also, these errors may likely be loopholes hackers will easily leverage on. The debugging stage is aimed at finding bugs (also known as error codes) and fixing them.
To make your NFT marketplace available to the public to use, you’ll need to deploy it on a server. When deploying an NFT platform, several interrelated activities come into play. Estimate the number of visitors your NFT platform will attract and choose a server plan suitable for it. Consult with your developer on this as most developers already know the good and shitty server providers.
Cost Of Building An NFT Marketplace
There is no such thing as free lunch when building an NFT marketplace. With the level of technology and complexities involved, a considerable amount of funding would be incurred. The total cost of building an NFT marketplace depends on many factors such as:
- Number of features to be built
- Level of customization
- Technology stack to be used
- Developers hourly or fixed price
- Third-party integration costs
Several other factors such as the level of expertise and experience the developer have, his or her location, etc. can influence the cost of building an NFT marketplace. Nonetheless, here is a brief breakdown of the costs involved:
Factors Average Costs
|UX/UI Development||$2395 – $5040|
|Authorization and Security||$3285 – $8640|
|User Profiles||$2385 – $5040|
|Landing Pages||$3645 – $10,080|
|Search and Filters||$4005 – $11,520|
|Product Pages||$2385 – $5040|
|Reviews & Ratings||$2565 – $5760|
|Shopping Cart||$2565 – $5760|
|Payments||$2385 – $5040|
|Notifications||$2085 – $3840|
|Ethereum Integration||$4005 – $11,520|
|NFT management||$4005 – $11,520|
|Inventory Management||$2385 – $5040|
|Buyer Panel||$3045 – $7680|
|Author Panel||$5085 – $15.840|
|Admin Panel||$3775 – $10,200|
|Total||$50,000 – $116,040|
The above calculation is based on my experience developing an NFT marketplace in the past. I believe the cost breakdown would give potential clients a rough idea about the cost of developing an NFT marketplace. If you've built non-NFT platforms in the past, you'll know that good work done is not cheap and cheap work done is not good.
With the rising trends and values of non-fungible tokens, people are getting attracted to the NFT platform. On the other side, investors are heavily investing in blockchain platforms due to their increasing values and high trending graph. NFT trends are not going off anytime soon. If you have the funding and want to build an NFT platform, website, or marketplace, now is the perfect time to start. Starting early has its advantages.