Multicoin Capital: Community ownership of NFT trading market is unstoppable

Why is the user experience of OpenSea and Magic Eden basically the same (the home page is the discovery page, the collection page has a concise linear index bar on the left, the same search display, etc.)?

Or, to put it another way, why doesn’t the homepage of OpenSea or Magic Eden have event feeds (like Fractal or Hawku), live feeds (like Twitch), or NFT-related tournament results, etc.?

The answer is that the historical path determines.

OpenSea was founded in 2018 when there were only a few NFT series such as CryptoPunks. CryptoPunks is a collection of 10,000 pixelated NFTs with some simple and filterable properties. The Bored Ape Yacht Club (BAYC) is clearly heavily inspired by CryptoPunks: 10,000 algorithmically generated images with simple and filterable properties. For practical purposes, the two collections are similar. Most of the PFP families that have sprung up since then—Pudgy Penguins, Moonbirds, DeGods, Solana MonkeyBusiness (SMB), Azukis, etc., all map to the same structural model and historical paradigm. Aside from the artistic expressions themselves, the designs of the collections themselves are not significantly different (though apparently they have very different communities).

Clearly, the community is mapping to the market’s technical specifications, but it’s not ideal. The market should map to the unique characteristics of the community. Considering the ability to leverage and deploy new elements in DeFi, NFTs, DAOs, social tokens, and more, the design space for online communities is huge.

It is widely believed that the NFT market will further verticalize. This naturally makes sense, as it would actually be weird to have a domain name exchange (like .eth or .sol) have the same user experience as a PFP exchange (like BAYC or DeGods).The marketplace should optimize around the type of content it hosts.

But this line of thinking should not be a simple one-size-fits-all approach. This reasoning can go further. The NFT market is not only going to be vertical. At a minimum, they will:

  • owned by the communities they serve
  • Integrate more non-commercial features (e.g. live streaming, chat, forums, etc.).

Community-led NFT trading platform

Magic Eden and OpenSea are both very rich, where did the money come from?

It is actually the NFT community itself, as the platform charges a transaction fee of 2-2.5% per transaction.

Some might say transaction fees will eventually go to zero, they won’t. Instead, I would argue that transaction fees should not go to a third-party exchange separate from the NFT community, but should go back to the community itself. this

Transformation is a sign of community maturity. When the community and its brand are strong enough to operate independently, it will seize the opportunity to further solidify its finances and increase brand loyalty with features and engagement tailored to the community.

BAYC is already doing this: 2.5% of every transaction goes to Yuga Labs (in addition to OpenSea’s 2.5% fee). There is no reason to believe that BAYC holders are particularly loyal to OpenSea. Conversely, if Yuga Labs launched a BAYC exchange, 100% of the fees would flow back to the ApeCoin-controlled community treasury, where most of BAYC and MAYC’s trading volume would soon be moved just to increase brand loyalty and expand community finances wishes.

The problem is that third-party NFT exchanges are parasitic on the NFT community. They don’t really provide value to the community (of course there is value in price discovery around Launchpad, but only at one point in time, not on an ongoing basis), and they blatantly extract value. A market that survives must provide real value—whether it’s allowing players to mine insights, analytics, and data, giving potential players a way to discover new games, or creating a community that like-minded players can join. The NFT market has to provide more than just a financial intermediary.

If my theory is correct, why hasn’t this happened yet? I think this is because there is a lot of meaningful work in hosting NFT exchanges that has not yet been fully commoditized.

Metaplex and Grape Network and Reservoir, among others, are building all the necessary functionality to fully commoditize universal exchanges (e.g. indexing, querying, searching, curation, etc.).

For example, Grape Network just launched the first DAO-owned NFT exchange. Although it is still very early stage, it is growing rapidly.

Once this infrastructure is generally available and communities can easily host their own exchanges, some interesting things could happen:

  • The number of false and fraudulent PFPs will be close to zero. This is easy to understand. If there is an official BAYC trading platform, then this platform will obviously only present real BAYC NFT works. In this case, the user only needs to make sure that the domain name he accesses is OK, then it is almost impossible for him to buy a fake NFT.
  • The community will embed transaction functionality in any application it gathers. At present, this aspect mainly refers to social applications: Discord, Twitter, Reddit, etc. Web2 social apps could theoretically better integrate NFTs and support the NFT community, but they haven’t been able to. I think this will create an opportunity for crypto-native versions of these apps to flourish, like Satellite (crypto-native Discord) and Farcaster and Orbis (crypto-native Twitter).Users can bid/counter-offers within these social apps.

NFT exchanges need to be API-first products. There will be a single shared liquidity pool that can be accessed across many frontends. They will also be community-first products.

Building a transaction-based community event space

People love to hang out in various community online spaces. like:

  1. The halls of Fortnite
  2. Discord’s servers
  3. Subreddit of the Reddit forum
  4. Twitter
  5. Telegram

But these experiences are incoherent. People communicate on one channel, often just to regroup on another. There is little shared state between these community instances.

There are two ways to effectively string these spaces together: gaming and NFT marketplaces. People will talk about the game outside the game and then get into the game play. Likewise, they will find out what the NFT community is doing on social channels, and then go to the NFT marketplace to complete transactions.

Communities are less likely to congregate in one place. At the very least, there will always be a Twitter-like global flow of information that isn’t aimed at the community. So in addition to products like Reddit and Discord, the community wants to embed its marketplace in Twitter-like products. Therefore, it is crucial that the NFT trading platforms that support these communities prioritize open APIs. Such a trading platform should be one designed to run within other user interfaces, from chat to livestreaming to dedicated 2D HTML.

Given that communities naturally come together through various social channels, what does this mean for major sites such as bayc.com? A few things: bayc.com becomes an aggregator of community activity spaces, and the main user interface for that community marketplace.

As you can imagine, when a user visits bayc.com, they should see:

  • Trailer for the new BAYC brand movie
  • Live broadcasts of famous community members in the BAYC Metaverse (including streaming tips in community local currency)
  • Highlights from recent community events, real-world BAYC graffiti and more

As users browse, business elements should be embedded naturally throughout the site. The content itself may be dynamically adjusted based on the user’s on-chain credentials and current assets (movie trailers above the fold for new users, live broadcasts of their favorite community members in the BAYC Metaverse for old BAYC users).

Of all the major consumer Web2 products in existence today, the closest thing to what I’ve described is probably Twitch.However, Twitch is 1) not community-centric enough, and 2) clearly not designed to support the aforementioned diversity and nuances.

The more the community grows, the more complex the product operation becomes. This presents natural challenges and opportunities, which become more complex when multiplied across countless communities. This is why the NFT community will stay away from general NFT trading markets.

NFTs, like everything else in the crypto world, are fundamentally about user sovereignty. Their trading platform is no exception.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/multicoin-capital-community-ownership-of-nft-trading-market-is-unstoppable/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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