Marketplaces are the platforms where goods and services are bought and sold. In the last few years, the concept of Web3 marketplace development has emerged as an innovative opportunity for entrepreneurs.
The Web3 marketplace promises decentralized, secured, and private online experiences compared to Web2 marketplaces, which are controlled by centralized entities, not so secured, and lack transparency when it comes to user data collection and usage.
In this blog, you will read about Web3 marketplaces and how they work. Also, we have provided a strategic development process so that you can build a custom Web3 marketplace tailored to your needs. So, let’s start the conversation.
The Web3 Marketplace Landscape: Current Statistics and Insights
The following are some current statistics and insights related to the Web3 marketplace landscape.
1. The global Web3 market is projected to grow from $0.4 billion in 2023 to $5.5 billion in 2030, at a CAGR of 44.9%, during the forecast period.
2. The Web3 marketplaces have witnessed a 300% increase in transaction volume in recent times.
3. The Web3 industry is expected to save $174 billion in transaction expenses annually by 2030.
4. OpenSea is named as the top Web3 marketplace for October 2024.
5. North America accounts for 34% of the worldwide Web3 economy.
By looking at the statistics mentioned above, you can see that Web3 is gaining peoples’ attention and more users will adopt the Web3 version of the internet for various purposes. Moving forward, let’s talk about the Web3 marketplaces.
What are Web3 Marketplaces?
Web3 marketplaces are decentralized platforms built on blockchains such as Ethereum, Solana, or others. On these marketplaces, buying and selling of goods, services, and digital assets, such as NFTS (non-fungible tokens) takes place without the intervention of intermediaries. Smart contracts are used to facilitate the exchange of goods, services, and digital assets.
Moreover, in Web3 marketplaces, the users have complete ownership and retain full control over their data and transactions, unlike in Web2 or any other traditional marketplaces where centralized authorities own user data and use it as they want to.
Talking about payments, cryptocurrencies are mostly used to make payments in Web3 marketplace ecosystems. However, there would be some exceptions, that accept fiat currencies also, as payment methods.
The Web3 marketplaces are completely governed by the users through decentralized governance models, giving creators and consumers more power and reducing dependency on centralized entities.
Breaking Down How a Web3 Marketplace Works
Web3 marketplaces operate on the blockchain, ensuring seamless decentralized peer-to-peer transactions. Let’s understand how these marketplaces work and these decentralized transactions take place.
1. Blockchain Infrastructure
The Web3 marketplaces are built on blockchains. Some popularly used blockchains for Web3 marketplace development are Ethereum, Solana, Binance Smart Chain, and more. Blockchain technology ensures transparency in transactions, secure data storage, and immutability of the data.
2. Smart Contracts
Smart Contracts are the key element for the seamless operations of Web3 marketplaces. The role of smart contracts in Web3 marketplaces is to facilitate transactions automatically when particular conditions are met.
Smart contracts are programmed with terms and conditions, embedded in the form of codes, that are necessary to be met for a transaction to execute.
For instance, imagine there is a code that states to sell NFT “X” if a user pays 2 Bitcoins. When any user agrees to buy the “X” for 2 Bitcoins, the transaction will execute automatically without the need for any intermediary. The NFT will be sent to the user and 2 Bitcoins to the seller.
3. Wallet Integration
To store digital assets and make payments in the Web3 marketplaces, users require digital wallets. Some popular digital wallets are MetaMask, Trust Wallet, Coinbase Wallet, Fortmatic, and more.
Users can use these wallets to make payments and store digital assets traded on the Web3 marketplaces.
4. Ownership and Transactions
In Web3 marketplaces, users maintain full ownership of their digital assets, thanks to blockchain technology. Every transaction that takes place on the Web3 marketplace, is securely recorded on the blockchain, creating a transparent and traceable history.
Moreover, the decentralized nature of the Web3 marketplaces ensures that any third party can alter or tamper with the ownership of the digital assets. This gives a level of trust and security which is absent in traditional marketplaces.
Now, in Web3 marketplaces, users can have full control over their assets, and manage them as they want to, without relying on intermediaries to facilitate or authenticate transactions.
5. Governance and Tokenomics
Like other marketplaces, Web3 marketplaces also need to update the platforms, revise fee structures, add new features, and more. However, as there is no centralized entity, the decisions to fulfill these requirements are taken by the users themselves. How? Let’s understand.
In Web3 marketplaces, governance plays a key role in decentralizing decision-making and financial operations. Most of the marketplaces issue native tokens that allow users to participate in governance by voting on important decisions, such as some of those mentioned previously.
This democratic approach gives users a feeling of being involved in the process of shaping the marketplace’s future. Additionally, Web3 marketplaces often use cryptocurrencies to conduct transactions, which offers fast, secure, and transparent payments.
The integration of both governance and tokenomics (the study of the economic principles and mechanisms behind a cryptocurrency or digital token) in the Web3 marketplaces, creates a more inclusive and user-driven ecosystem, benefitting both the platform and its community of users.
The Business Benefits of Creating a Web3 Marketplace
Now, let’s talk about the potential benefits that entrepreneurs can get by developing custom Web3 marketplaces.
1. Higher Profit Margins
The key benefit of developing a Web3 marketplace is higher profit margins. Web3 marketplaces are decentralized in nature, meaning there are no intermediaries.
Therefore, businesses can directly interact with the end users. This direct streamlined approach reduces the costs and fees (which is meant for the intermediaries in traditional marketplaces) and helps businesses enhance their overall profits.
2. Enhanced Security
With Web3 marketplace development, entrepreneurs can provide users with a trusted and highly secured platform for selling and buying digital assets.
The blockchain technology used for building Web3 marketplaces enhances security by offering transparent and tamper-proof transaction records.
Every transaction in the Web3 marketplace is encrypted and verified by a decentralized network, significantly decreasing the risk of fraud or data breaches.
3. Global Reach
Another benefit of developing Web3 marketplaces is that businesses can operate globally, and reach out to diverse customer bases beyond geographical boundaries.
This will allow businesses to enter into new markets, cater to new customers, increase sales opportunities, and drive exponential growth.
4. New Revenue Streams
By developing blockchain-powered Web3 marketplaces, businesses can create new revenue streams. On marketplaces, they can enable the sale of digital assets and NFTs and generate revenue.
This innovative approach allows businesses to diversify their offerings, engage customers, and capitalize on the growing demand for digital ownership.
5. Gain Customers’ Trust
Last but not least, Web3 marketplace development helps businesses win the trust of their customers.
Since all transactions that take place on the Web3 marketplaces are recorded on the blockchain, they are tamper-proof and publicly verifiable, which fosters customers’ confidence in the marketplace.
Also, users have complete control over their data and digital assets in Web3 marketplaces, which enhances trust by providing greater privacy and ownership in the digital ecosystem.
Step-by-Step Process to Develop a Web3 Marketplace
Here is the step-by-step development process for building a custom Web3 marketplace as per your requirements.
Step#1. Ideation and Defining Requirements
This is the foundation of the Web3 marketplace development process. You need to start by outlining the marketplace’s purpose and the type of assets you offer on the marketplace to be traded.
You can choose to trade goods, services, non-fungible tokens (NFTs), and other digital assets. Also, identify the target audience (the user base you are developing the Web3 marketplace for), as it will influence the marketplace’s design and functionalities.
Determine the features, governance models, security protocols, and the role of smart contracts beforehand, to streamline the entire development process.
Step#2. Choosing the Blockchain Platform
After determining the requirements, choose the blockchain platform to build your Web3 marketplace. While selecting the right blockchain, you must consider factors, such as scalability, transaction speed, security, and cost-efficiency.
There are various blockchains that are known for particular benefits, like Ethereum is known for its robust smart contract support, Solana for its high-speed and low-cost transactions, and Binance Smart Chain, for its compatibility with Ethereum but with lower fees.
You can choose any blockchain for your Web3 marketplace development, but keep in mind that it should align with your goals and requirements.
Step#3. Designing the UI/UX
The next step in the process is designing an intuitive user interface to ensure a seamless experience for buyers and sellers.
For your Web3 marketplace, the UI design should be easily navigated, must have clear call-to-actions, and a responsive layout. While designing the UI/UX, you must take care of providing your users a smooth access to key features like asset listings, wallet integration, and transaction history.
You need to focus on creating user-friendly interfaces so that users can easily browse, buy, and sell digital assets using your Web3 marketplace.
Step#4. Smart Contracts Development
In Web3 marketplaces, the smart contracts automate transactions and enforce marketplace rules. Hence, it is crucial to be extra careful while developing smart contracts, as a single mistake in the code can affect the overall performance of your marketplace.
Smart contracts are self-executing programs that trigger when predefined conditions are met. These eliminate the need for middlemen to ensure trustful transactions between buyers and sellers.
To maintain this trust, you need to add security measures while developing smart contacts to make them hack-resistant and tamper-proof. Also, you need to thoroughly audit them to prevent vulnerabilities, such as hacks or bugs, that could lead to any asset loss.
Step#5. Integrating Digital Wallets
Along with smart contract development, you must ensure that your users can connect their digital wallets with your Web3 marketplace.
Wallets like Coinbase Wallet, Trust Wallet, and MetaMask, are used to store and manage digital assets and make payments using mostly cryptocurrencies.
Moreover, these digital wallets are also used as authentication tools, enabling users to log in and perform transactions. So, it is crucial to allow your users to integrate wallets into the Web3 marketplace seamlessly.
Step#6. Set Up Payment and Token Systems
This step involves integrating payment options to facilitate transactions between buyers and sellers, enhancing user experience and accessibility.
Also, you need to create native tokens to reward users who engage with your Web3 marketplace the most.
The token system should include mechanisms for minting, distributing, and managing tokens while ensuring security and compliance with regulations.
Step#7. Develop the Back-End Infrastructure
Develop a decentralized architecture that supports smart contracts, user data management, and transaction processing.
While building the backend for the Web3 marketplace, utilize decentralized storage solutions, ensuring that digital assets and their metadata are securely hosted and easily accessible.
Also, implement robust security protocols to maintain data integrity and protect users’ assets and personal data within the marketplace.
Step#8. Test Smart Contracts & Marketplace Platform
Post backend development, test the smart contract to check they are functioning as per the expectations, and executing transactions accurately while adhering to defined rules.
Also, test the marketplace rigorously to identify and fix bugs that could lead to security breaches or financial losses.
Additionally, test the overall Web3 marketplace platform to ensure its usability, performance, and scalability under various conditions.
Step#9. Launch the Marketplace
Once the testing is done, deploy the Web3 marketplace on the chosen blockchain network. Also, promote the marketplace to educate people about your Web3 marketplace using SEO, advertisements, email marketing, influencer marketing, and more.
Step#10. Continuous Upgradation
After the launch of our Web3 marketplace, monitor its performance using different KPIs. Engage with your users through virtual sessions and gather feedback to improve the platform.
Also upgrade the marketplace with new functionalities, better UI, and integrate emerging technologies, such as AI to ensure its relevancy and competitiveness. Additionally, implementing robust governance models allows community members to participate in decision-making, fostering a sense of ownership.
So, this is the proven process of how you can develop a custom Web3 marketplace tailored to specific requirements.
Key Features That Make a Web3 Marketplace Unique
By integrating the following features into your Web3 marketplace, you can enhance your users’ digital asset trading experiences and make your platform distinctive from other marketplaces.
1. User-Friendly Interface
An intuitive and responsive UI/UX that simplifies navigation and enhances user engagement.
2. Listed Assets
List of various digital assets with their prices and other necessary details.
3. Digital Wallet
Digital wallet integrated to store and manage cryptocurrencies and digital assets.
4. Smart Contract Automation
Smart contracts to automate transactions when the defined conditions are met.
5. Search and Filter Options
Robust search and filtering to help users easily find specific assets or categories.
6. Analytics Dashboard
To provide users with analytics and insights about their transactions, asset performance, and marketplace trends.
7. NFT Support
To allow users to create, buy, and sell non-fungible tokens (NFTs), expanding the marketplace’s asset offerings.
8. Decentralized Governance
To enable community governance through DAO (Decentralized Autonomous Organization) structures, and allow users to participate in decision-making.
9. Community Features
Forums, chat features, and social media integration, to enhance user interaction
10. Educational Resources
Tutorials, FAQs, and guides to help users understand how to navigate the marketplace.
Understanding the Different Types of Web3 Marketplaces
Here are the different types of Web3 marketplaces that you can develop:
1. NFT Marketplaces
The NFT marketplaces are the popular Web3 marketplaces that are designed for buying, selling, and trading NFTs (non-fungible tokens). These platforms focus on digital arts, collectibles, and other unique digital assets.
Examples: OpenSea, Rarible, and Foundation.
2. Decentralized Finance (DeFi) Marketplaces
Another type of marketplace that you can develop is decentralized finance (DeFi) marketplaces that are used to trade cryptocurrencies, tokens, and financial instruments. Using these marketplaces, users can swap, lend, and borrow assets without any intermediaries.
Examples: Uniswap and Aave.
3. Gaming Web3 Marketplaces
The Gaming Web3 marketplaces are focused on trading in-game assets, such as virtual items and characters. As the gaming industry is gaining popularity, developing a gaming marketplace would be a profitable business idea.
Examples: Axie Infinity
4. Token Exchange Marketplaces
These Web3 marketplaces facilitate trading various cryptocurrencies and tokens directly and are operated on decentralized protocols.
Examples: SushiSwap and PancakeSwap
5. Social Marketplaces
The social marketplaces combine social networking and commerce. These exchanges allow users to share content as well as trade digital assets.
Examples: SuperRare, Mirror, and Cent
6. Supply Chain Marketplaces
These Web3 marketplaces are developed to facilitate transactions and track assets within supply chains using blockchain technology. These exchanges help in improving transparency and efficiency in logistics.
Examples: VeChain, and OriginTrail
7. Real Estate Web3 Marketplaces
The real estate Web3 marketplaces are developed to enable users to buy, sell, and lease real estate properties using blockchain technology, often involving tokenized property ownership.
Examples: Ubitquity, Realty, and Landshare
8. Crowdfunding and Token Launch Platforms
These Web3 marketplaces enable startups to raise funds by issuing tokens in exchange for investments.
Examples: WeFunder, TrustSwap, and CoinList
9. Content Marketplaces
Content marketplaces are another popular Web3 marketplaces that are used by content creators to monetize their work directly by selling them as digital assets. These assets include music, writing, videos, and more.
Examples: BitClout, and Audius
10. Decentralized Autonomous Organizations (DAOs)
While DAOs are not typical marketplaces, they can function as governance token marketplaces, allowing users to purchase, sell, and exchange governance rights within decentralized projects.
Examples: MakerDAO, DXdao, and FlamingoDAO
Top Streams to Maximizing Revenue from Web3 Marketplaces
Only developing a Web3 marketplace is not enough, but generating revenue from it is equally important. So, here are some proven monetizing strategies to generate income from Web3 marketplaces.
1. Transaction Fees
First is transaction fees. You can charge a percentage fee on every transaction, such as the sale of NFTs, that takes place on the Web3 marketplace.
2. Listing Fees
You can also charge fees from users and businesses for listing their assets or products on the marketplace to generate revenue.
3. Token Launches and Sales
To generate income, you can also choose to launch native tokens and sell them to users for governance, participation, or staking.
4. Staking and Yield Farming
It is another proven tactic to earn income from a Web3 marketplace. You can allow users to stake tokens in exchange for rewards and benefit the marketplace from increased liquidity.
5. Subscription Models
Lastly, you can offer premium features and exclusive access to certain segments of the Web3 marketplace in exchange for a monthly or annual subscription.
Using these monetization models, you can generate revenue from the Web3 marketplace and unlock new opportunities for success.
Conclusion
It is the right time to invest in developing a Web3 marketplace. Users love trading on these decentralized marketplaces because of their decentralized nature, complete control over their assets and data, and most importantly, no intermediaries.
For businesses, Web3 marketplace development is a highly profitable idea, as it attracts users more rapidly than any other traditional marketplace. Also, monetizing Web3 marketplaces also enables entrepreneurs to get decent ROIs (returns on investments). They can use that revenue to reinvest in business and grow or use it for different purposes.
If you also want to get on the list of successful Web3 marketplace businesses, contact Quytech and get your Web3 marketplace developed according to your requirements. For more information, visit www.quytech.com
