The Ecosystem of NFTs NFT projects are developed mainly in the Ethereum network, as well as on the basis of second-level solutions and sidechains.
Release platforms and marketplaces can be categorized as follows:
- Aggregators for buying and selling NFTs.
- Generic release protocols enabling NFT creation.
- Niche marketplaces: Marketplaces or art issuers dominate, but NFT blogs like the Mirror and music marketplaces like EulerBeats are also slowly emerging.
The most well-known place to release and trade NFTs is OpenSea. Founded in 2017, OpenSea is a marketplace for digital goods, including collectibles, gaming items, digital art, and other digital assets that are backed by a blockchain like Ethereum.
In March, OpenSea closed a $23 million round of funding led by Andreessen Horowitz with participation from a laundry list of angels and firms including Naval Ravikant, Mark Cuban, Alexis Ohanian, Dylan Field and Linda Xie.
NFTs and DeFi NFT is not only a tool for tokenizing digital art and various collectibles. During its short history, this technology has reached financial services, primarily decentralized ones. Over the past few months, projects have begun to emerge that work in the DeFi market and use NFTs.
One of them is yinsure.finance,
created by aforementioned DeFi-evangelist Andre Cronier. It offers users the service of a tokenized insurance of their assets — for example, tokens in which loans are issued in various DeFi services.
At yearn.finance, liquidity providers act as insurers — they receive commissions from users who want to insure their assets. In this scheme, the role of the insurance policy is played by the NFT, which can be either transferred or sold to another user, or bought back.
A Way Ahead There are three main obstacles to mass adoption of NFTs: Ethereum fees, liquidity, Wash Trading. Since the first two are quite obvious, let's discuss the third one. Wash Trading is a situation in which the seller artificially overestimates trading activity with a token, buying and selling an asset from himself. This is a fairly common phenomenon in the cryptocurrency market - for example, quite recently, the Coinbase exchange paid a fine of $6.5 million for such actions on the part of its users and even one of its own employees.
In the NFT market, this problem is exacerbated by the fact that it is extremely difficult to assess the scale of this form of fraud — the market is still too small to easily track such transactions. Nevertheless, such cases have already been recorded — for example, Nonfungible analysts noticed how the cost of characters in the games Blockchain Cuties and CryptoKitties was overstated with the help of vashtrading.
As we see it, the development of a secondary market with clear rules of the game can be the first step in solving this problem, and in general in the development of a new assets class.