Oversaturation of Non-Differentiated Marketplaces
As NFTs have risen in popularity so too have the marketplaces that sell them. Yet these marketplaces offer very little differentiation from each other. In fact, based on our research and experience, the marketplaces that succeed are either first-movers that have existing brand equity (Opensea, Rarible) or have had a track record of high-quality launches (SuperRare, Nifty Gateway). Without the benefit of a first-mover advantage, new incumbents need to substantially differentiate themselves from the existing market players in order to attract both existing market users as well as new ones.
So far, projects are still trying to ride the surge in NFT volume without considering the long-term value of their marketplaces. They are typically unfocused, trying to be all things to all people, offering endless categories and an under-curated selection of digital assets that make discovery of high-quality assets very difficult. Even very well designed NFTs stand to get lost in the sea of other NFTs potentially disrupting the growth of the market as a whole and at the very least, staving off any potential value creation for the NFTs themselves. As such, most are falling flat or stagnating. The result is not just an issue of the individual NFTs or their projects but one of the community as a whole. Strong communities are difficult to develop without the strong underpinnings of a well-designed and sustainable NFT economy.