UX research
SWOT Analysis for Top NFT Marketplaces
In this article, we will research and analyze the marketplaces as major players in the NFT market that provide services to artists and other crypto-artists, using the SWOT strategic planning method, identify the strengths and weaknesses of each of them based on interviews and user research.
With the advent of non-interchangeable tokens, the world of digital art has changed beyond recognition, and NFTs themselves can bring considerable profit not only to their creator but also to the common man involved in their distribution. This market is gaining enormous popularity because of the interest of so many people, brands, and companies. Because NFTs represent virtually everything from the first tweet to works of art. Thus, the position of NFTs today is efficient and stable, with no signs of slowing down. First, let’s define the basic concepts of research. What is NFT, the role of marketplaces in crypto art, and what defines the SWOT research method?
NFT is a type of token that allows you to digitize any kind of merchandise. With them, you can make money with your creativity or just experiment with new technology. While one bitcoin is no different from another, each NFT is unique. This allows information about any object from the real world to be represented in the blockchain.
The role of NFT Marketplaces in crypto art
Unlike Bitcoin or Ethereum, you can’t trade non-exchangeable tokens directly on regular cryptocurrency exchanges. To buy and sell NFTs, you need special trading platforms that allow you to issue, store, and trade non-exchangeable tokens. Now, this market is dominated by large marketplaces OpenSea, Rarible, Superfarm, Zora, and Foundation. They generate NFTs using special smart contracts that add a set of unique information (metadata) to each such token and prescribe its main parameters (name, immutability, indivisibility, address/number, etc.). Non-exchangeable tokens can then be bought and sold on the platform at a fixed price or through auctions.
Purpose of Research
Determine what problems users face when using existing NFT marketplaces, and whether there are any improvements they would like to see. Understand what goals buyers and sellers want to achieve with NFT platforms, and find out the usage patterns.
Research Methods: SWOT analysis
SWOT analysis is a strategic planning tool that allows for describing the realistic state of affairs of any company. The abbreviation “SWOT” is formed from four words: “strengths, weaknesses, opportunities, threats. The advantage of SWOT analysis is a comprehensive study of the company, competitors, and industry as a whole. NFT does not exist in a vacuum — its development needs to take into account the company’s strengths, and risks. This is what the SWOT analysis is for: to assess from the outside the opportunities for growth and the obstacles.
SWOT is an acronym that consists of the following concepts:
S (Strengths) — strengths, characteristics of the business that make it stand out from its competitors;
W (Weaknesses) — weaknesses that make the company vulnerable to other players;
O (Opportunities) — opportunities, elements of the environment, which the company can use for development;
T (Threats) — threats, elements of the environment that may cause damage to the business.
For the study, we conducted an online survey using a google form to gain a deeper understanding of the problems NFT users face. We reached out to users in the 18–45 age group. We identified top NFT platforms and analyzed their business strategies to identify strengths and weaknesses and find opportunities and threats. Currently, there are many different trading platforms, each of which has its own characteristics. We identified some competitors and analyzed their business strategies to determine their strengths and weaknesses to find their opportunities and threats. We analyzed large marketplaces OpenSea, Rarible, Superfarm, Zora, and Foundation.
The primary target customers of the NFT Marketplace are artists and art galleries who want to enter the NFT space. One of their fundamental pain points is that they are not technologically savvy. Therefore, they do not understand blockchain technology well enough to approach the NFT market. They are curious about NFTs because they see and hear news about their lucrative potential. Ultimately, these art galleries want to utilize NFTs to generate new revenue streams.
OpenSea
OpenSea was founded in 2017 and it was the first NFT marketplace, it is a decentralized marketplace that allows users to buy and sell non-fungible tokens. It’s currently a marketplace for a wide variety of digital assets, including art, domain names, game items, and music. OpenSea makes use of the open-source blockchain Ethereum in addition to ERC721 and ERC1155 to confirm that NFT collectors own the assets they’re listing on the marketplace.
Pros:
- The commission rates are very competitive.
- No other marketplace offers the same level of security for every transaction.
- It has the biggest selection of NFT styles of any platform today (around 600).
- Opensea is one of the only marketplaces with a mobile app, which launched in October 2021.
Cons:
- You need to have an Ethereum digital wallet to use the Opensea platform, and you can only pay using cryptocurrency.
- Minting fees are high, so the buyer must pay more to cover the costs.
SWOT analysis of OpenSea:
Strengths: Largest marketpalce for user-owned digital goods, which inlude collectibles, gaming, items, domain name, digital art, and other assests backed by a blockchain. Good UX/UI. No platform fees or cuts. Anyone can register and mint on their site. Filter, suggestions, and FAQ feaures. Host for other market place’s such as super rare, rarible, or own NFT store. Provides tools and resources for onboarding. Ability to choose your own wallet.
Weaknesses: Similar to Ebay in that it is over saturated market which makes it difficult to discover quality goods. Most corporate feeling. You have to pay a platform fee when collecting an NFT. Users have to pay a platform fee when collecting and selling an NFT.
Rarible
Rarible runs a business template similar to that of OpenSea where users are offered a seamless and peer-to-peer gateway into the NFT market. In essence, it offers easy-to-use minting and trading features designed solely for NFTs. Like OpenSea, Rarible boasts a dynamic ecosystem that houses a variety of digital items, including artworks, collectibles, in-game assets, and much more. All the transactions and trades executed on the platform are settled immediately on the blockchain.
Pros:
- Rarible permits peer-to-peer trading, and it carries a low cost for NFTs.
- The platform is non-custodial and open-source, and this makes improvements easier and faster in implementation.
- Rarible’s site provides folks with zero coding experience with a genuinely user-friendly experience.
- Users can find tools to mint their own digital tokens.
- Creators on the platform have easy access to a vast market of buyers.
- The platform’s protocols can help it solve the issues surrounding constant fraud, licensing of paperwork, and the problems of the intellectual property market.
Cons:
- Only tokens on the Ethereum blockchain are supported on Rarible
- There is a high risk of scammers and other fraudsters who can manipulate the market to gain RARI
- Prolonged bidding might be really expensive as bidders pay an Ethereum gas fee for every bid
- Wash traders who buy NFTs from themselves to get RARI rewards are becoming a menace.
- The platform is not a true DAO yet, as the voting power of its community is only advisory. The Rarible team may choose not to act on suggestions.
- Sellers pay gas twice. First for placing their NFT art on auction, and secondly for the completion of their sale.
SWOT analysis of Rarible:
Strengths: The most open and permissinless NFT marketplace. Anyone can create an NFT right away without needing an invite. Good UX/UI. Filter and search features. Marketplace for user-owned digital goods, which include collectibles, gaming items, domain names, digital art, and other assests backed by a blockchain.
Weaknesses: No about page. Doesn’t provide many tools and resources for onboarding. Users have to pay a platform fee when collecting and selling an NFT.
Zora
The newest NFT marketplace on our list, Zora launched its site in 2020 based on the Ethereum blockchain. Digital art is the main focus of the NFTs sold on the platform, and artists can create communities through this marketplace. They focus on helping their creators and giving them the freedom to connect with the audience and community. What sets Zora apart is that the platform doesn’t charge transaction fees to mint or sell NFTs in the marketplace. A gas fee will still have to be paid, but this will be minimal compared to other marketplace commissions and fees.
Pros:
- Auction option to increase time pressure on exclusive listings
- No transaction fees to mint your NFT
- Creator-centered platform
Cons:
- Royalty figures are unchangeable once set
- New platform with smaller following
SWOT analysis of Zora:
Strengths: Less of a marketplace and more a space for creators to publish creative media, earn money on their work, and have others build and share what they create. No platform fees or cuts. NFT platform in which the market of each piece is embedded into the NFT itself and not run by the platform. Radical, less corporate and more geared towards community building.
Weaknesses: For artists to get eyes on their work, they would need to have a bigger following because the community is nay as engaged. This site is invite only, so only artists who mint an NFT on the site can invite two other people at a time. No filter options.
Foundation
Foundation has established itself as a reliable and curated NFT marketplace. It describes itself as a bridge between crypto and culture to foster a network of mutual support between artists, creators, and collectors.
The platform is built on the Ethereum network, and to use it, you need to connect a wallet like MetaMask.
Creators can easily access the “Creator Invites” feature after selling their first NFT. It supports payments in Ether and the seller receives 10 % royalty on every resale.
At Foundation, you will have to pay 5% service fees. Meanwhile, the fee is excluding the Ethereum gas fees that the Ethereum network requires to process transactions.
Pros:
- Curated and limited NFTs
- Artist-run NFT marketplace
- High-quality art and projects
Cons:
- Limited and exclusive creator list
- Relatively high gas fees
SWOT analysis of Foundation:
Strengths: Well curated NFT marketplace. Feed-style UI. Has a big community. Has a discord channel where users can connect with others and share their work.
Weaknesses: Has no filter options. Does not provide an about page or any type of informational page where users can learn on what to expect. This site is invite only, so only artists who mint an NFT on the site can invite two other people at a time. Users have to pay a transaction fee on every sale.
The main issues creators face in a marketplace are related to using their crypto wallets. Branding and marketing yourself online and being well-known as an artist space is important to get more NFT sales. Most users think gas fees should be reduced to enable more buying and selling. Users want to easily connect Metamask to their crypto wallet like Coinbase, Coinswitch, etc.
