Client

Based in Germany, the client is a technology startup that sees its mission in providing game-changing user experience and ensuring data privacy through the decentralized Internet. Observing the hype around non-fungible tokens, the company aims to enter global markets, attract investors, and generate revenue with an NFT marketplace platform.

Background

Initially introduced in 2014, non-fungible tokens gained high popularity over the past years. With NFT marketplaces, businesses and individual content authors received an effective way to promote their goods, engage customers, and get profit from trading digital items that cannot be forged by a third party.
Circulating on the blockchain, NFTs are a part of Web 3.0, which is the third version of the Internet focused on decentralization, data confidentiality, and tokenized economics. As Web 3.0 was gathering pace, so did NFT marketplace platforms.
Recognizing an opportunity to catch the wave and raise funds, the startup aimed to build an NFT marketplace similar to OpenSea that would connect digital content creators with consumers around the world.

Project goal

The key objective was to develop a web NFT marketplace that would include 4 modules:
  • Functionality for authors
  • Functionality for customers
  • An auction
  • An administrator panel for platform owners
An important task was to enable digital content creators to generate sales reports for different periods and see the most viewed tokens.

Project duration

6 months

Team

2 frontend developers, 2 backend developers, 2 blockchain developers, a UI/UX designer, 2 quality assurance engineers, a project manager, a business analyst.

Technologies

TypeScript, React, Redux, Redux-Saga, Web 3.0, Polygon, Matic, Ethereum Virtual Machine (EVM), Solidity, Python, Django, Django Channels, Celery, AWS, Amazon S3, Amazon EC2, Amazon CloudFront, Amazon Elastic Load Balancing, WebSockets, RabbitMQ, Redis, Memcached, InterPlanetary File System (IPFS), WalletConnect API, PostgreSQL.

Solution

case study, features of the NFT marketplace
After collecting and processing the company’s requirements, our team proceeded to a business analysis, vital to delivering the solution that would align with project goals and user expectations. To find out how to make an NFT marketplace stand out from rivals, we researched the audience’s needs and analyzed ten competitive solutions leading the market.
As a consequence, our business analyst designed user stories describing platform features from an end-user perspective. Finally, we prioritized features and outlined a roadmap for delivery, as well as provided the client with meaningful recommendations on what blockchain platform and token standard to employ.

Issues resolved due to business analysis

  1. The client was looking to build an NFT marketplace on the Ethereum blockchain. In the Ethereum network, however, users have to pay transaction commission, or gas fees, as a compensation for the computing energy necessary to process and confirm transactions. The gas cost is determined by supply and demand between miners, who can decline to validate a transaction if the remuneration is not in line with their threshold. As a result, gas fees may reach hundreds of dollars.
    In order to minimize gas fees while preserving the benefits of Ethereum, our software experts advised the startup to make an NFT marketplace on Polygon. Known as "Ethereum's Internet of blockchains", Polygon enables businesses to significantly reduce transaction commissions. In fact, a typical transaction fee is nearly $0.01.
  2. To process transactions and create new blocks, the blockchain distributed ledger uses the proof-of-work (PoW) or proof-of-stake (PoS) cryptocurrency consensus mechanism. Serving to secure the blockchain database, both PoW and PoS require time to complete. This results in slow block confirmation and therefore, low transaction speed, that might interrupt the user experience.
    In order to mitigate the restrictions imposed by blockchain, our software developers advised the client to build an online NFT marketplace on Polygon, formerly known as Matic Network. The Polygon scaling framework utilizes a modified PoS mechanism and Commit Chain connectivity, which enabled our team to address the inefficiencies of blockchain technology.
    With Polygon’s Matic PoS Chain, we added a security layer to an NFT marketplace platform. Technically, the PoS mechanism leverages the network of validators outside of the decentralized ledger whilst validating transactions on the Ethereum main network.
    Additionally, instead of processing many blocks to achieve consensus, Polygon’s PoS makes it possible to achieve consensus with every block. Thanks to this, Polygon allowed us to improve transaction speed and scalability.
    case study, features of the NFT marketplace
  3. Prior to NFT marketplace development, an important task was to choose a non-fungible token standard, each having its own characteristics.
    ERC-721 and ERC-1155 are two NFT standards that can be used by software engineers. ERC-721 allows for creating a single unique NFT that cannot be duplicated. Representing a multi-token standard, ERC-1155 enables content owners to release and manage any number of the same NFTs.
    To identify a token standard that would meet project requirements, our team analyzed the goals of digital content makers and researched similar NFT marketplaces. As a result, we recommended the client use the ERC-1155 standard that performs the same functions as ERC-721 while also eliminating its implementation errors. Thanks to this, authors can design as many unique NFTs as they want to engage consumers and generate profit.
  4. Since NFTs are stored on the blockchain open network, they can be accessed by a third party and used in other marketplaces. Managed by smart contracts that bear no relation to the initial platform, these marketplaces may not provide content authors with royalties for token sales. As a consequence, NFT holders do not have a guarantee that they will receive royalties for each sale, so they risk losing revenue. Meanwhile, customers might not want to be limited by a single platform to buy the same NFTs. Therefore, it was crucial to find a business model that would meet the needs of all stakeholders.
    After researching the target audience’s needs and analyzing competitors, our team decided to write a smart contract that would prevent third parties from taking tokens out of the NFT marketplace. Our software experts revealed that consumers felt rather positive about purchasing NFTs via a single app while authors had a negative attitude towards the risk of losing income.
    Furthermore, as the startup strove to attract as many digital content creators as possible, it aimed to provide a guarantee that royalties would always be paid.
  5. With the view to attract a large audience and deliver an engaging user experience, the company needed to enable payments via at least 30 popular cryptocurrency wallets.
    Our software experts suggested the client use WalletConnect, which allows for connecting over 100 crypto wallets, involving MetaMask, Coinbase, Trust Wallet, MyEtherWallet, BitPay, Fortmatic, Torus, and Blocto. Thanks to this all-in-one solution, the startup avoided the need to integrate dozens of digital wallet APIs into an NFT marketplace, this way saving time and costs.

Technical issues addressed by our engineers

  1. An NFT marketplace was intended to serve the audience across multiple countries and list thousands of collectibles, including heavyweight interactive images. In this regard, ensuring stable and uninterrupted performance was of the highest concern. However, carrying out even simple operations (e.g., token search, subscription to favorite authors) on the blockchain would be too slow and costly.
    Our software engineers created two identical marketplaces while providing synchronization between them. Making the first NFT marketplace on Polygon, our team used web technologies, like React, Redux, Python, and Django to build the second web version of the platform.
    With a web marketplace, users can quickly and easily perform various activities, for example, search for NFTs, add tokens to wishlists, and follow favorite authors. A blockchain-powered marketplace, in its turn, serves for recording and processing transactions. When a transaction is verified, it is recorded in the web NFT marketplace, too.
    Employing Celery, our software developers created workers to enable synchronization between the two marketplaces. Workers regularly check the display of all changes and make data updates (e.g., account replenishment after the token sale, transfer of intellectual property rights) if needed to ensure information relevance in the web version of an NFT marketplace.
  2. Representing a copy of a blockchain-based marketplace, a web NFT marketplace had to maintain a continuously growing number of users and handle heavy loads (caused, for instance, by thousands of bids and transactions made by customers per second). Hence, it was essential to achieve scalability and high availability.
    Our software developers built a microservices architecture, creating a set of loosely coupled services around critical features, like NFT search, listing, analytics, and reporting. For this purpose, we employed Amazon Web Services (AWS), which provides the required tooling to meet the company’s needs.
    Using Elastic Load Balancing, our engineers set up auto scaling of computing resources up or down. With Memcached and Redis, the team was able to improve page load speed.
  3. To ensure the proper operation of auction functionality, it is crucial to display the history of current and past bids in real time. Additionally, the system had to monitor the beginning and end of auctions, as well as trigger prices set up by NFT holders.
    Our software developers built an auction as a separate web application acting as a microservice. Using WebSockets, we enabled real-time tracking and display of all operations carried out on the auction. Additionally, our team created a comprehensive dashboard to visualize the history of current and past bids.
    case study, features of the NFT marketplace

Features of an NFT marketplace platform

Our software engineers developed an online NFT marketplace that includes four modules, serving the needs of NFT creators, customers, and platform owners (the startup).

Features for digital content authors:

  1. Sign in/up via a crypto wallet
  2. Listing creation
  3. Notifications
  4. Online payments
  5. Reports (sales, the most viewed digital items, etc.)

Functionality for customers:

  1. Sign in/up via a crypto wallet
  2. Search
  3. Shop window
  4. Online payments
  5. Notifications
  6. Wish lists

Auction functionality:

  1. Bidding functionality
  2. The history of past and current bids
  3. Monitoring of live and past auctions

An admin panel for platform operators:

  1. Listing management
  2. Payment tracking
  3. Commission management
  4. Analytics and reporting

Result

Collaborating with Arateg, the client developed an NFT marketplace on Polygon, which allowed for minimizing gas fees and mitigating limitations caused by insufficient blockchain scalability. With a microservices architecture, the company achieved high availability and fault tolerance.
By integrating the WalletConnect API, the startup made it possible to connect over 100 cryptocurrency wallets, this way improving user satisfaction. Following recommendations provided by our team, the client was able to engage the audience and increase retention.
To date, the company managed to attract more than 11,000 users in a few months and raise funds. Before the next funding round, the startup is going to launch a marketing promotion campaign to attract 150,000 users around the globe and maximize return on investment.

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