Competition between NFT marketplaces to benefit users: Huobi Research Institute

Despite the bloodbath the NFT market has endured over the past three months, platforms in both the Web3 and Web2 spaces have continued to embrace NFTs. The NFT industry has most recently seen decentralized exchange (DEX) Uniswap and NFT trading platform OpenSea acquire NFT aggregators, while traditional e-commerce players eBay and Shopify have set up NFT marketplaces. Such movements in the NFT marketplace will bring advantages to users, according to a new report by Huobi Research Institute.

Titled “Big Moves in the NFT Sector – What Lies Ahead for NFTs?”, the report notes that NFTs have become one of the main uses of cryptocurrency — as of June, there were more unique NFT traders (375,000) than unique DEX traders (369,000), and NFTs play an important role in onboarding the next wave of Web3 users.

Uniswap and OpenSea’s acquisitions of aggregators Genie and Gem show the important role such market aggregators play in the NFT industry. As more NFT marketplaces emerge, the need for market aggregators capable of allowing users to browse and display listings across marketplaces within a single interface will be higher than ever. With these acquisitions, OpenSea and Uniswap have positioned themselves as leading trading platforms in the NFT space.

The Report states that future NFT trading platforms will compete around the areas of compatibility, flexibility and liquidity. It would be crucial for market aggregator to attain compatibility with new marketplaces as soon as possible, or risk losing users to other aggregators with better compatibility. Such a scenario happened with aggregator Genie, which lost a sizeable portion of its user base due to its failure to quickly provide compatibility with the LooksRare marketplace when the latter was launched.

While NFT trading in most marketplaces currently accept ETH as the only form of payment, Uniswap’s DEX infrastructure and prior experience with NFT liquidity pools will likely mean multi-coin payment methods and liquidity pool trading become mainstream methods for NFT trading in the future.

Established e-commerce platforms’ forays into the NFT space will likely liven the current NFT scene. Shopify’s NFT platform aims to become the ultimate online storefront for NFT projects, facilitating merchandise development, delivery, and payment; while eBay aims to further strength its niche in pee-to-peer trading of rare collectibles, bringing NFT trading to its existing users, which number more than 150 million.

Huobi Research Institute researcher Hanson Chan, the author of the report, said: “We will see more traditional e-commerce platforms integrating NFTs into their stores. To compete with existing marketplaces, they would need to offer niche and exclusive NFT collections on their platforms to build a loyal customer base.

The likes of Shopify and eBay will play an important role in driving mass adoption for NFTs, lowering the barriers to entry and simplifying crypto payments for the public.”

To download the full report, click here.