While non-fungible tokens (NFTs) have emerged as one of the most popular investments for new initiatives to the crypto ecosystem, navigating the choppy waters of digital assets can be an intimidating task for Web3 newbies.These days, before a new user can even begin picking the right collection to buy their first NFT, they first need to choose which NFT marketplace they’ll use to start their journey. Across the Web3 landscape, dozens of marketplaces exist on a spectrum of centralized to decentralized, cater to specific market niches, offer competing rewards programs, and vary greatly in their depth of inventory and liquidity. Additionally, depending on the type of NFT you’re looking for – a unique piece of art, a profile picture, or an item in a metaverse game, for instance – the best NFT marketplace for your purchase could vary significantly. It’s important to get a sense for the types of NFTs available and determine what subsector of the NFT market appeals to you. The range of options is such that there may not be a definitive “best NFT marketplace,” but sophisticated buyers who know about the perks of different NFT markets can leverage the different options to their advantage and secure superior deals -- much like with picking a traditional liquid crypto exchange.
This article will analyze a number of popular Ethereum marketplaces according to their pros and cons in an effort to help new buyers navigate the NFT market. Let’s dive in!
If measured purely terms of market share and inventory, OpenSea is without question the largest NFT marketplace. The leading NFT marketplace in almost every major category including trading volume, daily active users, and individual transactions, OpenSea is the “superstore” of NFTs. There users can find almost all of the leading collections, and are likely to find competitive prices as well. However, with size comes a lack of specialization – if you’re looking for particular art collections or a velvet-glove browsing experience, it’s best to take your NFT shopping elsewhere.
Additionally, OpenSea is a centralized entity. Unlike newer platforms that rewards users with tokens for buying and selling NFTs, OpenSea does not offer any token incentives or benefits. Finally, the platform charges a flat 2.5% transaction fee on sales – the combination of which may impact the overall cost-benefit analysis of a particular purchase, particularly for more expensive purchases.
LooksRare emerged on the scene in January 2022, and has been battling to carve out a slice of OpenSea’s marketshare ever since. The platform has a similar browsing, buying, and listing experience when compared to their behemoth competitor, and likewise casts a wide net in terms of listing a remarkably wide range of collections – buyers can find all but the most select pieces listed for sale. What makes LooksRare stand out compared to OpenSea, however, is that the platform shares its revenues with users via the dedicated LOOKS native token. While a beginner might want to make their first NFT market purchase on OpenSea, more active and experienced users can earn rewards and a share of trading fees on LooksRare.
Due to it's incentive programs at launch, LooksRare gained a ton of traction early on. However, most of it's volume was due to wash trading, where users would trade NFTs between wallets that they own to farm LOOKS tokens. Fast forward 12 months and we see that volume has died off and the platform is struggling to keep up with other competitors.
X2Y2 launched shortly after LooksRare and was built with the aim of providing users with features that OpenSea was missing at that time - batch purchasing/listings, rarity rankings. OpenSea has since added those features, while X2Y2 continues expand its feature set and now offers a way to borrow/lend ETH using your NFTs. Similar to LooksRare, X2Y2 has it's own token where users can earn the tokens by listing NFTs and stake the token to earn yield. The platform shares 100% of it's revenue with it's token stakers.
Sudoswap launched in July 2022 and is the most unique and innovative of the bunch. The platform is decentralized and fully on-chain whereas other platforms have much of their processes off-chain. Sudoswap is a Automated Market Maker (AMM) for NFTs and operates on a similar concept to DeFi AMMs such as Uniswap. NFTs that are listed get deposited into liquidity pools and trades are facilitated by those liquidity pools instead of directly from user to user. Platform fees are extremely low at 0.5%.
While the other platforms mentioned above function as silo-ed marketplaces, Gem is an aggregator. Users are able to purchase NFTs that are listed on X2Y2, LooksRare, Sudoswap and OpenSea on Gem's site. The platform grew in popularity when it launched in January 2022 largely due to it's efficient sweeping function that resulted in users spending significantly less gas per transaction. Gem's popularity certainly did not go unnoticed and Opensea acquired them in April 2022. The user experience for Gem users hasn't been affected by the acquisition as the platform operates independently and as a standalone product from OpenSea.
Blur is the newest kid on the block, launching in October 2022. The platform positions itself as the fastest NFT marketplace, with lower gas fees than it's competitors and has 0 marketplace fees. Unlike the other platforms above that function as either a marketplace or aggregator, Blur is both a marketplace and a aggregator. Users are not only able to view and purchase NFTs that have been listed on Blur but also OpenSea, X2Y2 and LooksRare without leaving the platform. Similar to X2Y2 and LooksRare, Blur has it's own incentive program. Users who actively use the platform have been given airdrops, with the largest and final airdrop occurring in Feb 2023. The speed and lower cost of transactions on the platform make it a favorite amongst sophisticated NFT traders.
While the platforms above can accommodate most buyers when it comes to profile picture collections and other collectibles, when it comes to fine art NFTs platforms like SuperRare are a better bet for the discerning investor. SuperRare often hosts auctions with leading digital artists and celebrities – if your favorite film director or pop star is planning an NFT drop, odds are that it’s happening on SuperRare. Additionally, the platform often hosts themed sales, such as a recent event focusing on Asian American digital creators. Art NFTs are a popular sub-sector for collectors, though they don’t tend to generate the same degree of hype and buzz as collectibles and profile pics. Collectors looking to dip their toes into this niche should likely start with SuperRare, but also expand to platforms like Foundation, KnownOrigin, and Art Blocks, all of which offer a wide range of options and experiences for buyers. Much like the broader NFT market, pinning down the “best” NFT marketplace for art is somewhat subjective, but SuperRare tends to have an interesting selection for beginners.
The Best NFT Marketplace
While still very much an emerging asset class, Non-fungible tokens are mature enough of a market that there is no all-in-all “best NFT marketplace” or crypto exchange that can suit every buyer in every subsector. In order to determine which digital assets market is best for a newcomer, a user should analyze which type of NFTs interests them the most and might have the highest growth upside – a task that Nansen makes easier with its dedicated NFT Paradise data dashboard. Once a user has chosen the sector where they want to make their first purchase, there are strong entry-level NFT markets for each option, as well as more niche outlets to choose from once a new buyer has gained more experience. The world of NFT markets is growing and changing all the time, and the best way to keep up-to-date on this world of digital tokens is to dive in!