Planning for the Future of NFTs at Impahla: Exploring the Landscape of Secondary Markets
A Discussion of NFT Marketplaces for the Impahla Platform
Introduction
We at Impahla are developing a secondary marketplace for Non-Fungible-Tokens (NFTs). During the exploratory phase, we have several marketplace types and design options. In this blog post, we will embark on a journey to unravel the intricacies of NFT secondary markets and delve into the different design decisions in which community members like you can have a say. But before diving into the specifics, let’s understand how secondary markets differentiate themselves from primary ones.
Primary vs. Secondary Markets: Understanding the Difference
Primary markets are typically where NFTs are initially minted and sold directly by creators or developers through auctions. This has been already developed in the Radix test network and tested by multiple community members.
On the other hand, secondary markets provide a platform for users to trade, buy, and sell existing NFTs amongst themselves. This secondary market ecosystem opens up possibilities, enabling users to discover, exchange, and invest in a wide range of unique digital assets.
Impahla team starts developing a secondary marketplace on the Radix test network while migrating primary sales blueprints to RCnet V2. We have been actively exploring various market types and designs, and we highly value the input of our community. We eagerly seek your opinions and feedback.
Secondary Market Types
Regarding secondary markets, two major types have gained significant traction: Peer-to-Peer (P2P) and Automated Market Maker (AMM) platforms. Each offers distinct features and benefits, catering to the diverse needs and preferences of NFT enthusiasts.
Peer-to-Peer (P2P) Markets: Empowering Community and Transparency
P2P markets, exemplified by industry giants like OpenSea, allow users to interact directly and trade with one another. This decentralized approach fosters community and transparency, where individuals can negotiate prices, engage in auctions, and establish personal connections with fellow collectors.
Automated Market Maker (AMM) Platforms: Streamlined Trading at Its Best
AMM markets, such as SudoSwap, employ automated algorithms to facilitate trading. These platforms rely on liquidity pools, smart contracts, and predetermined price mechanisms to ensure seamless and efficient transactions. AMM markets offer users instant liquidity and reduce the need for direct interactions, appealing to those seeking a more streamlined experience.
Managing User NFTs: Two Approaches for Secondary Markets
One crucial decision that arises when designing a secondary market is the management of user assets while they are listed for sales. Some platforms hold user assets within the smart contract, while others allow users to maintain complete control over the assets in their wallets while they list the asset for sales. Each approach has its own set of advantages and disadvantages.
Holding Assets Held in the Component
Pros –
Workflow: On a technical level, the work is much simpler.
UX: A simple workflow results in fewer steps on the part of the Buyer and Seller, producing a better user experience. A Seller list the NFT item for sales and get a badge in return.
Bugs & Errors: Fewer workflow steps result in fewer lines of code, reducing the possibility of bugs and errors.
Cons –
Safety: The NFT assets will leave the Seller’s wallet when a listing is produced, which could put user assets at risk, such as an exploit in the smart contract.
Custody: Although the NFT assets would be stored in the component, users do not have direct self-custody over the assets while listed.
Decentralization: The method of holdings assets within the component is less decentralized than the self-custody alternative.
Holding Assets Held in User Wallets
Pros –
Safety: By holding the NFT assets in the user’s wallet, the risk of potential exploits in the smart contract is minimized, ensuring excellent safety for the user’s assets.
Custody: Users have direct self-custody over their assets while stored in their wallets, giving them complete control and ownership.
Decentralization: Holding assets in the user’s wallet promotes a more decentralized approach, as it removes the reliance on a central component.
Cons –
Workflow: On a technical level, the workflow becomes more complex when assets are held in the user’s wallet, requiring additional steps for buyers and sellers. NFT item does not leave the wallet while listed for sales, however buyer can not buy the item without approval of the seller which might prolong transaction settlement time.
UX: A more complex workflow may result in a slightly less streamlined user experience, as users must navigate additional processes.
Bugs & Errors: With a more complex workflow, the lines of code increase, which could lead to a higher possibility of encountering bugs and errors.
Shaping the Future of Impahla’s NFT Marketplace: Community Input Needed
As a community launchpad, we at Impahla value input from readers like you. Whether the platform should develop a marketplace that resembles more of a P2P marketplace, such as OpenSea, or a novel NFT AMM marketplace, such as SudoSwap, we would like to hear from you. From here, does the community prefer the UX-friendly design where NFT assets are held in the component while listed for sales or a more decentralized, self-custody design such as storing NFT assets in their wallet until the time of sales settled? We will run polls on our Telegram channel, and we would like to see your participation.
