First-party NFT and tailored communities' marketplaces are platforms that allow NFT trading from one single project with a more community-oriented approach.
Over the last three months, tailored community NFT marketplaces' market share increased from 3.9% to 5.5% of all trading activity.
One primary driver of the rise of first-party NFT and tailored communities' marketplaces is that brands want to go direct-to-consumer, own the entire customer experience, and eliminate stakeholders who charge a fee without adding enough value.
The impact of 1st party NFT and tailored communities Marketplaces on NFT growth include resistance to censorship, decentralization, unique features, and mechanics.
Keywords: 1st party NFT, tailored communities marketplace, NFT growth, NFT project, DAO
Even though NFT projects are doing well on third-party marketplaces, there is a palpable trend of resurfacing 1st party and tailored communities NFT marketplaces. As NFT marketplaces compete for the most traded and sold NFTs, the rise of these tailored first-party platforms promises to empower individuals, communities, and decentralized organizations. Over the last three months, tailored community NFT marketplaces' market share increased from 3.9% to 5.5% of all trading activity.
What are first-party NFT and Tailored communities' marketplaces?
First-party NFT and tailored communities' marketplaces are platforms that allow NFT trading from one single project with a more community-oriented approach. This community-oriented approach reflects how they operate without a trading fee. In some instances, they put the trading fees into the community-governed DAO. Users are kept on the project's website, and can be tailored to help them own the brand experience. This category of NFT marketplace contrasts with the third-party marketplace, which allows trading all kinds of NFT collections. In third-party marketplaces, users can make transactions in different cryptocurrencies listed by the provider or the centralized organization, which reap the benefits of trading.
Features of a first-part and tailored communities' NFT marketplace
Among the numerous components of a first-party and community-tailored NFT marketplace, here are the top three.
1. Wallet for Cryptocurrency
The wallet is the repository for users' NFT assets, cryptocurrencies, and native tokens. The wallet can be built on the platform either internally or externally.
2. Portal for Bidding
Buyers can use this feature to place bids on their desired NFT assets and check the status
of the auction. Once the deadline has passed, the highest bidders can purchase the NFTs.
3. Portal for Resale
This feature allows NFT holders to resell NFT assets at a fixed price. The funds are transferred to the seller and the buyer's end functions, such as the bidding portal.
The Rise of First-party NFT Marketplaces
One primary driver of the rise of first-party NFT and tailored communities' marketplaces is that brands want to go direct-to-consumer, own the entire customer experience, and eliminate stakeholders who charge a fee without adding enough value. First-party marketplaces are not a new concept. Larva Labs built its fee-free marketplace for CryptoPunks, which has seen a total trading volume of $2.94 billion in its lifetime. First-party marketplaces can be integrated into an existing ecosystem to match a community's vibe, ethos, and theme. This provides numerous advantages to brands. Having their own NFT marketplace provides project leaders or communities with greater control. They can also incorporate social features and reward mechanics and encourage interaction with content, events, and other community members.
Web3 projects such as PlayDapp, The Sandbox, Aavegotchi, Decentraland, and MegaCryptoPolis have their marketplace.
Why NFT projects need their marketplaces
Surprisingly, brand-curated customer experience has been rare in NFT projects thus far. Third-party marketplaces handle the majority of trading.
Not to say that customized solutions do not exist. The original projects, such as CryptoPunks and CryptoKitties, had their custom, on-brand marketplaces five years ago, long before the NFT market took over mainstream culture.
However, the community marketplace trend is making a comeback. Meta Angels, Wanderers, Degenerate Ape Academy, and CryptoPunks V1 recently launched their marketplaces.
Because most PFP projects are about the community and network you gain access to, these teams have decided to create a safe space for the community to trade and navigate their NFTs within the brand's ecosystem.
Part of the trading fees in many community marketplaces also go towards the community/DAO wallet. Every trade thus directly benefits the community.
These custom marketplaces have custom branding, lower fees than third-party marketplaces, and ensure you're purchasing from an authentic collection.
How do first-party NFT and tailored communities NFT Marketplaces work?
Step 1: Register on the platform by providing all the required information.
Step 2: Following registration, you must create a digital wallet and link it to the platform.
Step 3: You can now purchase the governance token (the platform's native token).
Step 4: After purchasing the tokens, the marketplace platform allows you, as an authorized user, to search for and select your desired NFTs.
Step 5: You can create a community or join an existing community to buy/sell NFTs with the community members.
Step 6: Buying and selling NFTs is done with everyone in the community's knowledge. (Everyone has the right to vote and make decisions.)
Step 7: With the knowledge of the community you belong to, you can now purchase your favorite NFTs via auction or fixed price.
Step 8: You can resell the NFT if you purchased it solely to sell on the platform.
Step 9: After completing the payment, the NFT is transferred from the seller's wallet to the buyer's wallet. All of these actions are charged for by the owner of the community-focused NFT marketplace.
Understanding the impact of 1st party NFT and tailored communities Marketplaces on NFT growth
1. Resistance to censorship and decentralization
Currently, NFT trading takes place on only a few marketplaces. As much as Web3 proponents sermonize decentralization, the entire market relies heavily on five websites. If those were to fail, the ecosystem would come to a halt.
Whereas it's unlikely that all of them will vanish tomorrow, power is primarily concentrated. If only one or two marketplaces delist your project, your NFTs will cease trading almost anywhere. Meanwhile, your community will always be able to trade their NFTs if you have your marketplace and smart contract.
2. Special Features and Mechanics
Use cases vary depending on the marketplace. Some are designed for trading, while others are intended for viewing the art and getting to know the artist. NFT projects can build any feature or design they want when they have their marketplace. They can provide detailed analytics to their community if it's all about the numbers!
Not only that, but they can enable NFT trades with their native token, sell physical items alongside NFTs, and educate your community with customized content. They can have whatever they (or their developers) can code on the marketplace. And they can build their community around that marketplace by using it as the foundation for their NFT brand's ecosystem.
Other impacts include:
3. Enabling end-to-end encryption
4. Providing a fantastic opportunity to educate the target audience and engage local communities
5. Making new ideas implemented easily, whereas it is damn impossible on other trading platforms.
6. Allowing users to participate in the governance token creation process of the community-centric NFT platform.
Why aren't first-party and tailored communities' marketplaces commonplace?
1. NFT marketplaces are challenging to build from scratch
Most NFT project teams are small, and building a custom marketplace is demanding. The process is challenging compared to putting a "Buy on [MARKETPLACE]" on the website and calling it a day.
2. Difficulty in getting people to switch
If your project is well-established, your community is already accustomed to the default solution: third-party marketplaces. It can be challenging to persuade people to change.
Although many people like the idea of a community marketplace, the biggest issue is liquidity. Marketplaces have a virtuous cycle in which listings are required to generate sales, and sales are necessary to create listings. Hence, sellers go to the marketplace where there are the most buyers, and buyers go to the marketplace where there are the most sellers. Nevertheless, you can aggregate NFT sale orders on your marketplace because they are on-chain. As a result, your community marketplace is just as liquid as any third-party marketplace.
The rise of first-party NFT and tailored communities NFT marketplaces makes a lot of sense as communities mature and become Web3 brands. We can expect more projects to take control of their communities and economies by having their marketplace during the bear market. Moreso, first-party NFT allows the actual realization of decentralization and a community approach to projects. With their NFTs and Metaverse offerings, big brands in the industry will move deeper into Web3, and they will want to tailor their own experiences.
Author: Gate.io Observer: M. Olatunji
* This article represents only the views of the observers and does not constitute any investment suggestions.
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