Whether you're new to the crypto world or have been in it for a while, you're probably wondering, what's all the hype about NFTs? Well, since the NFT industry revolves around visuals, perhaps the following chart will answer that question.
As of this writing, more than $22 billion has been generated in NFT sales over the past 365 days. So despite the bearish market sentiment, all signs point to NFTs being the next big thing.
That said, how can you profit from this lucrative market? This article will explain everything from what an NFT is to where to buy them, so let's get started without further ado!
What are NFTs?
If you Google what NFTs are, you will find all kinds of answers. Formally, the term NFT is an acronym for a non-fungible token, a unique digital asset stored in the blockchain's ledger. However, that definition does not come close to explaining the potential of this technology.
In plain English, you can think of NFTs as a digital version of almost anything you can imagine. A song, a family photo, a work of art, an avatar, a video, an identity document, a spreadsheet – literally, you can create an NFT from anything.
If you wonder what makes an NFT different from a photo stored in the cloud, the answer is simple. You can think of the photo as digital information (ones and zeros) that can be copied, transferred, deleted, edited, etc. On the other hand, each NFT is unique. Even two NFTs that are visually the same are actually two different tokens stored on the blockchain with unique identities.
In other words, the authenticity of an NFT can be easily verified since the assets part of the blockchain are publicly accessible and cannot be edited. This property of being unique opens the door to many use cases. For example, NFTs can be used to access websites, services, and exclusive offers, but you can also use them for staking and earning passive income. The possibilities are endless, hence the hype.
What are NFT marketplaces?
The traditional definition of an NFT marketplace is “a place to buy and sell NFTs”. Fortunately, most of today's marketplaces offer much more than that. But, before analyzing their features, you need to know that there are two types of NFT marketplaces:
- Developer/project NFT marketplaces. This type of NFT marketplace only offers collections created by a particular designer/artist/game. Examples of this type of NFT marketplace are found on CryptoPunks or Axie Infinity websites.
- Public NFT marketplaces. This is the kind of NFT marketplace that this article focuses on, as you can access NFT collections from different sources. For example, on OpenSea, you can get the famous Bored Apes Yacht Club (BAYC) NFTs and NFTs from games, artists, designers, and more. Nothing prevents a user from buying an NFT on an exclusive marketplace (such as CryptoPunks) and then selling it on this type of open marketplace.
With this in mind, open NFT marketplaces can offer several features such as:
- NFT trading. In its simplest form, an NFT marketplace allows users to buy and sell NFTs just like any other asset.
- NFT minting. In the crypto world, the term mint refers to creating the NFT. Minting NFTs used to be a complex process for the average user; however, some marketplaces offer the possibility to create unique NFTs from a picture, audio, doodle, etc.
- Staking. Staking cryptocurrencies was an activity that was reserved for DeFi (decentralized finance) platforms until recently. However, nothing prevents NFT marketplaces from combining art with DeFi, and that is precisely what some are doing.
NFT marketplaces fees
If you are interested in participating in the booming NFT industry, you should be aware that there are some costs associated with it. It’s not the intention of this review to bore you with this topic, so we have simplified the main costs into two categories:
Gas fees. When you use any blockchain to create, buy, or sell NFTs you are transacting through smart contracts. From approving a token to approving a purchase/sale, every transaction comes with an associated blockchain usage fee. The Ethereum blockchain, for example, is notorious for its high gas fees, which can exceed $250 per transaction at peak times. If you are buying or selling NFTs costing thousands of dollars these fees may not affect you, but using the Ethereum network for NFTs costing hundreds of dollars doesn't make much sense. On the other side of the spectrum, blockchains like BSC, Tezos, Flow, and others handle gas fees of $0.2 and below. In short, gas fees matter.
Transaction fees. All NFT marketplaces charge a fee for each transaction. It’s the way to maintain the platform, you can see it as the commission charged by PayPal or eBay. Most marketplaces handle fees between 2% and 3% per transaction, so it is another cost to keep in mind.
Now that you have a better idea of what to expect from NFT marketplaces, it's time to discuss the criteria used to create our list of the best NFT marketplaces in 2022.
Criteria used to choose the best NFT marketplaces
Nothing is as subjective as art. What for some is a masterpiece, for many can be incomprehensible doodles. The NFT ecosystem is similar in that regard. For this reason, we consider it vital to establish what criteria we used to create our list of the best NFT marketplaces in 2022.
- Reliability. Unfortunately, NFTs are not free from scams. For that reason, we have only included trusted and established platforms in the market.
- Functionality. No two NFTs are the same, nor are there two marketplaces that offer exactly the same features. This has motivated us to include marketplaces with unique features so that you can choose the one that best suits your needs.
- Audience. In addition to functionality, there are NFT marketplaces aimed at different audiences. To this end, we have selected the most representative marketplaces for each target audience.
After explaining the criteria used, it only remains to clarify that there is no specific order in the list. Ready to explore the best NFT marketplaces?
Best NFT Marketplaces in 2022
As we explained a moment ago, our list does not follow a specific order. Our goal is to present a range of marketplaces so that you can decide which one is most suitable for your particular needs.
- Reliable, currently leads the sales of NFTs
- Easy to use thanks to its intuitive UI
- Provides a wealth of information and statistics
- Traditional marketplace (only offers NFT trading)
- Run on the Ethereum network (high gas fees)
Better suited for:
- People looking for exclusive collections of art, game items (including lands), avatars, and more.
OpenSea is the first and largest NFT marketplace in the world. Since its launch in 2017, it has become the benchmark for other marketplaces. Its ease of use and variety of NFTs is undoubtedly its strong point. On OpenSea you can get basically any kind of NFT. Video, audio, game lands, exclusive collections, you name it.
However, despite enjoying first-mover advantage, OpenSea is currently facing stiff competition. Other NFT marketplaces are competing directly against OpenSea by attacking its weaknesses, namely the high gas fees of the Ethereum network and the exclusivity of its content.
That said, OpenSea's sales volume allows it to continue to lead the market, and we would not be surprised to see this fabulous marketplace add more features and better cross-chain operability in the near future.
- Exhibitions, projects and works of art NFT
- High prestige platform reliable and easy to use
- Huge variety of NFTs available
- Even more exclusive than OpenSea's marketplace
- Only provides NFT trading functionality
Better suited for:
- Artists and lovers of exceptional quality NFTs
As its name suggests, SuperRare is home to the rarest, and therefore most exclusive, NFTs in the ecosystem. Simply put, SuperRare is the closest thing to a conventional art gallery, but in the NFT world. Proof of this is that SuperRare hosts a space called The Foundry by the Museum of Contemporary Digital Art (MoCDA) that according to the website, “is a virtual art residency that is decentralized, collaborative, and visionary.”
As you can imagine, SuperRare is not the best option to look for your next CryptoPunk, but rather a meeting place for artists. In fact, one of the highlights of SuperRare is its exquisite taste in curating NFT artwork.
- Zero gas fees when minting NFTs thanks to Immutable X blockchain
- Fast and easy to use
- Allows you to create your own NFTs with the Mintable app
- Up to 5% transaction fees on gasless NFTs and 10% on printable items
Better suited for:
- Lovers of NFTs of all types, looking for a decentralized platform.
There are several aspects that differentiate Mintable from the rest of the NFT marketplaces. On the one hand, anyone can create their own digital asset (NFT) using the app. This allows artists and entrepreneurs to enter the NFT trade and create their own collections without any coding knowledge. On the other hand, Mintable recently added Immutable X to the platform as an alternative to mint NFTs without paying gas fees.
Immutable X is a Layer-2 scalability protocol for NFTs on Ethereum that allows gasless minting. That is, you can choose between creating your NFT using gasless minting or advanced (traditional) minting by paying the corresponding gas fees. Keep in mind, however, that the transaction fee for NFTs created with Immutable X is double (5%) than when using the Ethereum network (2.5%). In other words, using gasless minting may or may not be convenient depending on the selling price of the NFT.
Finally, another important aspect of Mintable compared to other marketplaces is its decentralized nature. Mintable is the first NFT DAO (Decentralized Autonomous Organization) which means that the users of the platform participate in its governance.
- Supports different blockchains (multichain)
- Allows to create NFTs with the app
- Rewards buyers and sellers of NFTs with RARI tokens
- It is difficult to find exclusive collections
Better suited for:
- Audiences seeking low-cost NFTs
Rarible is one of the most popular digital asset marketplaces today. Why? Like Mintable, it allows users to create NFTs of all types using the platform, but additionally, it allows you to choose which blockchain to mint your NFT on.
Currently, Rarible supports Ethereum, Flow, and Tezos networks, but they have already announced that they will incorporate more blockchain in the future. Given that Rarible's audience are users willing to invest on average between 0.01 ETH and 1 ETH per NFT, multichain support (and the associated low gas fees) is important. In other words, creating NFTs in Rarible is cheap, which allows them to be sold at very competitive prices.
To this end, Rarible is positioned as an NFT marketplace for the masses. Look at it this way, OpenSea and SuperRare are like luxury car dealerships, while Rarible is an everyday car dealership. Another advantage of Rarible is that it is also a DAO. However, unlike Mintable which uses NFTs to determine voting power, Rarible uses the RARI token which is distributed as reward to platform users and freely tradable on DeFi exchanges.
- Earn rewards by buying/selling NFTs
- Earn up to 200%+ APY by staking the LOOKS token
- Relatively new to the NFT market
- Rewards will go down as more people use the marketplace
Better suited for:
- DeFi platform enthusiasts looking for a way to generate passive income with or without NFTs
You can think of LooksRare as the new kid on the block. This is both an advantage and a disadvantage.
On the plus side, since its launch, LooksRare has been very aggressive in its marketing strategy. Their business model is innovative, as in addition to trading NFTs they offer juicy rewards to platform users. LooksRare charges 2% of each transaction which is collected in ETH. However, what is new is that “LOOKS token stakers earn 100% of the trading fees on LooksRare” In other words, you can profit from all transactions by staking LOOKS. Moreover, LooksRare offers passive and active staking, with incredible APY paid in both LOOKS and ETH.
If all this sounds too good to be true, that's because it partly is. If you are knowledgeable about DeFi, then you know that there are risks involved with this type of mechanism, especially in a highly volatile market. Nevertheless, we suspect that other marketplaces will soon follow in LooksRare's footsteps as the success of their staking program is spectacular.
All in all, if you are looking for an innovative NFT marketplace that offers you the possibility to earn an income (with or without NFTs) then LooksRare is for you.
What to look for in an NFT?
At this point, you may already have one or more marketplaces in mind for doing business. The question is, what should you look for in an NFT? The topic of how to invest in NFTs would take an entire article; however, here are some pro tips that you can follow during your quest.
- Rarity. Undoubtedly, this is a crucial aspect since the rarer the NFT, the higher its value. Usually, collections classify NFTs into categories that include common, rare, super rare, ultra-rare, and unique NFTs. A boss-level, unique, singular NFT from a famous collection can be valued in millions of dollars.
- Collection. Similar to rarity, there are collections that have thousands of NFTs while others have only a few dozen or are dedicated to a special occasion. As you can guess, “special edition” collections are more valued than the common ones.
- Traits. Although this aspect is related to rarity, we consider it appropriate to point out that some NFTs possess traits that are more sought after than others. Beyond the visual, it’s important to investigate which properties or traits are more popular.
- Popularity. If you view NFTs as an investment, you should never underestimate popularity. Regardless of the fad of the moment, there are certain collections and themes that tend to be more popular than others. Take BAYC for example; they have proven that (almost) everyone loves monkeys.
- Utility. Last but not least is the usefulness of the NFT. Recently Dolce & Gabbana launched a collection of NFTs that gave exclusive access to offers and physical items from the brand. Similarly, different brands are studying similar utilities for their NFTs, such as access to events, private forums, exclusive clubs, and more.
- Price history. It’s always better to trade NFTs that appreciate in value over time. Some marketplaces make this easy with charts (see below).
This review has taken a tour of the fascinating NFT ecosystem, starting with its concept, moving on to the best marketplaces in 2022, and ending with tips on what to look for to get the most value from your investment. There are still many other topics to cover in relation to NFTs and cryptocurrencies, so we suggest you stay tuned to our posts.