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Non-Fungible Tokens (NFTs) are one of the cutting-edge technology developments of blockchain that has disrupted diverse industries with its immutable ownership nature. Its ability to store data on the blockchain makes it a lifesaver for digital content and proves the ownership of assets anytime and anywhere in the world. By meaning assets, it can be anything from artwork, music, videos, in-game collectibles, digital collectibles, and much more. Acknowledging the potential of NFTs, many reputed brands have already started making the best use of them to leverage their global presence, build a strong web3 community, and enhance loyalty programs.

If you are a person seeking an ideal way to develop your NFT ecosystem, then this article will definitely assist you with the key steps right from scratch - Keep reading!

What is an NFT?
What are the Advantages of NFTs?
Applications of NFTs in Diverse Industries
A Guide to Creating an NFT Ecosystem
Revenue Model for Your NFT Ecosystem
Utility-backed NFTs: What Sets Them Apart From the Regular?

What is an NFT?

Have you ever thought why a boring monkey or other funky characters or even digital artworks in the crypto realm are selling for thousands and millions of dollars? Why do people show a big interest in buying them? The answer is very simple. It's just because they are all NFTs, which are the latest form of digital assets.

An NFT is a unique and verifiable cryptographic token that resides on the blockchain. It stores the data in the distributed ledger and makes it highly impossible for anyone to alter the information. Furthermore, NFTs jounce off copyright infringement issues of digital content with its exclusive ownership rights. It opens a brand-new door for creators and artists worldwide and allows them to monetize their skills by converting their masterpieces into digital collectibles.

What are the Advantages of NFTs?

Representing 1/1 Assets:

NFTs give users a remarkable opportunity to represent unique, one-of-one, and authentic assets by safeguarding the information in the blockchain.

Master Rights:

It provides unforgeable rights to its holders through the support of smart contracts written on the blockchain.

Tradability:

These digital collectibles are tradable and by simply using a crypto wallet, an individual can store the assets securely.

Economic Opportunities:

It significantly assists creators with good economic opportunities by allowing them to tokenize assets and eliminate intermediaries.

Divisibility:

The system of fractional NFTs provides a chance for everyone to own an NFT by fractionalizing a complete asset.

Applications of NFTs in Diverse Industries

While NFTs are getting mainstream, brands, investors, and venture capitalists are endlessly watching its curves to get the most out of it. Below are some of the sectors where NFTs are in prime form.

Identity Management:

One of the phenomenal use cases of NFTs is identity management. All the records of education, certifications, health, etc., can be converted into NFTs. These tokens will represent the proofs digitally and eliminate the need to carry original documents everywhere.

Logistics:

NFTs innovate the logistics industry by leaving digital footprints in the form of token IDs. It transforms the conventional arduous and lengthy process through the simplest way to track and provide updates in real-time with the help of blockchain.

Real Estate:

With its ability to represent both tangible and intangible assets, real estate is one of the crucial applications of NFTs. Real-world properties can be tokenized into NFTs and make the process paperless and straightforward without any complexities.

Healthcare:

The prevailing healthcare sector is plagued with poor handling of health records and shows a poor rate of efficiency and accuracy. Having these records as NFTs will enable hospitals or a group of people to access the data instantly. Truly convenient and faster!

Gaming:

The use of NFTs in the gaming industry has given gamers an incredible chance to monetize their gameplay. They can own the in-game assets as NFTs and can trade with other potential players to make good profits overall.

Apart from these sectors, the other common industries include art, music, collectibles, web domains, fashion, sports, e-commerce, and the list goes on. Put together, NFTs are the best suit for any use case where the concept of "ownership" kicks in.

A Guide to Creating an NFT Ecosystem

The following are the steps that well explain the creation of an NFT ecosystem.

Step 1: Asset Creation

For any NFT initiative, the base character is cardinal. This is because every generative art collection will have a common character on which the attributes will be defined. This is the first stage, where you have to decide on your base character. It can be a Tiger, Ape, Robot, Alien, or anything that strikes your creativity. Confirming this underlying asset will give you a good start to your project.

Step 2: Designing Base Character & Attributes

Once the base asset is finalized, proficient artists can be employed to design the characters as well as their attributes. The attributes play a paramount role in generating thousands and thousands of unique pieces. These traits mostly feature backgrounds, costumes, eyewear, headwear, special accessories, hairstyle, etc. These attributes will be stitched with the base character to turn it into a complete collectible. It is these traits that will decide the rarity score of the NFTs. The rarer the trait, the higher will be the rarity score for an NFT. The higher the rarity score, the lower will be the rarity rank, which in turn makes the NFT highly demanded.
Basically, the rarity of the NFTs can be checked with four different models. It includes,

Trait Rarity Model:

In this model, only one of the rarest traits in an NFT will be considered instead of counting all available traits in the piece. For eg: For every trait that an NFT has, there will be a percentage that denotes the total number of people having the same trait in the whole collection. Consider an NFT with background, eyes, and mouth traits. It will then show the background (13%), eyes (5%), and mouth (7%). So, only the "eyes" trait will be considered for checking the rarity score, and the score will be 5%. The limitation of this model is that it doesn't include the other traits in the same NFT.

Average/Mean Trait Rarity Model:

This model includes all the traits that an NFT has and utilizes averaging/mean method to calculate the rarity. It is calculated by the formula,
Average Trait Rarity = (Sum of traits in an NFT) / (Total number of traits in an NFT)
For instance, considering the aforementioned example, it will be,
Average Trait Rarity = (13+5+7) / (3) = 8.33%

Statistical Rarity Model:

This is a one-of-a-kind rarity model that calculates the score by multiplying all traits together. This will determine the overall rarity score of an NFT.
With the same example, the statistical rarity score = (13%)*(5%)*(7%) = 0.0004555

The Rarity Score Model:

This is the widely used and the most precise way to calculate the rarity of an NFT. It has the formula,
Rarity Score = 1 / {(Number of NFTs with that trait value) / (Total number of NFTs in the collection)}
(or)
Rarity Score = 1 / (Trait Rarity of that trait value)

Step 3: Build your NFT Platform

When the assets are ready, building the right platform to launch them is the next step. These NFT platforms give life to the NFTs and ensure a seamless experience of purchasing, selling, trading, minting, and bidding on the assets. Depending on the business requirements, you can launch your NFT platform in two ways.

NFT Launchpad
NFT Marketplace

NFT Launchpad Development:

NFT Launchpad is a platform suitable for owners who wish to have the scope of only primary sales for their NFTs. This platform will allow users to mint the NFTs through either the fixed-price sale method or the auction sale method. Considering this to be a decentralized platform, it will have a wallet connect option, where users can directly connect their wallet, such as MetaMask, to the platform and can purchase the digital assets. This platform will not have the scope to perform secondary trading, and users can take the purchased NFTs to open marketplaces like OpenSea to flip them. Our NFT launchpad development will offer you a feature-rich platform fully customized to meet your business needs.

Tech Stack Behind our NFT Launchpad Development Service
Front-End Technologies: HTML5, CSS, React JS
Back-End Technologies: Ruby on Rails, PHP - Laravel
Smart Contract Technologies: Solidity

Asset Storage in Pinata:
Insert below configuration in your credential file:

{
"pinata":{
"api_key":"api-key",
"api_secret":"secret-value",
"base_url":"https://api.pinata.cloud/pinning/pinFileToIPFS"
}
}

File upload using pinata API:
Example: Rails code as below.

def upload(collection)
attachment = collection.attachment
file_path = ActiveStorage::Blob.service.send(:path_for, attachment.key)
content_type = attachment.blob.content_type
file_io = Faraday::UploadIO.new(file_path, content_type)
ok, image_ipfs_hash = send_file(file_io)
return unless ok
metadata = {
name: collection.name,
description: collection.description,
image: 'https://ipfs.io/ipfs/' + image_ipfs_hash
}
File.write("tmp/metadata.json", metadata.to_json)

 metadata_io = Faraday::UploadIO.new("tmp/metadata.json",
                                    'application/json')

ok, metadata_ipfs_hash = send_file(metadata_io)

 collection.update(image_hash: image_ipfs_hash, metadata_hash:
                                    metadata_ipfs_hash)

ok ? metadata_ipfs_hash : nil
end

NFT Marketplace Development

On the flip side, our NFT marketplace creation service is for entrepreneurs who wish to provide both primary and secondary trade in the same platform. It is a typical platform that will allow your users to buy, sell, trade, mint, bid, and hold NFTs securely and easily within just a wink of an eye. Similar to a launchpad, building your NFT marketplace will also allow your users to trade NFTs in both the fixed price sale and auction sale, depending on their interests. Through this development service, you can launch a feature-rich, user-friendly, and highly sophisticated marketplace that provides frictionless transfer of NFTs all day.

Tech Stack Behind our NFT Launchpad Development Service
Front-End Technologies: HTML5, CSS, React JS
Back-End Technologies: Ruby on Rails, PHP - Laravel
Smart Contract Technologies: Solidity
Storage Platform: IPFS, Filecoin, Pinata

Step 4: Choosing a Suitable Blockchain

Here's where you have to decide the blockchain network on which you wish to build your NFT platform. We know that the market has plenty of blockchain networks available, and the ideal network can be chosen based on your business requirements. We can create NFT marketplaces and NFT launchpads development can be developed across a wide range of networks, including

Ethereum
BNB Chain
Polygon
Solana
Harmony
Avalanche
Cardano

Choosing the ideal blockchain network can always be challenging. If reliability is your first choice, then you can prefer Ethereum, one of the world's eminent blockchains. If you wish to increase the adoption of NFTs worldwide at a low gas fee, then Polygon, the layer-two solution for Ethereum., would top the list. If scalability is your option, then sticking to Solana will be the right choice. Therefore, every blockchain has its own advantages and disadvantages. Choose your desired blockchain based on your demands.

Step 5: Deploying Smart Contracts and Creating the NFTs

After preferring the desired network, you have to deploy the smart contracts in the chosen blockchain and tokenize the digital artworks into NFTs. Each blockchain will have its own NFT standards, similar to regular crypto token standards, and developers will use them to create the NFT. For instance, if your base network is Ethereum, some of the popular NFT standards include,

Hardhat is a development environment that helps developers compile, deploy, test, and debug their Ethereum applications.

1. Install hardhat

$ npm install --save-dev hardhat

2. Run npx hardhat and select “Create an empty hardhat.config.js”.

3. Install some Node packages

$ npm install --save-dev @nomiclabs/hardhat-waffle ethereum-waffle
                                    chai @nomiclabs/hardhat-ethers ethers @openzeppelin/contracts dotenv
                                    hardhat-deploy

4. Setting up the contract

Update the hardhat-config with ethereum-network-credentials.
Create .env file in the root to store account private key.
Add Etherscan API key to .env file to verify the contract on Etherscan.

Configuration File:

require('dotenv').config();
require("@nomiclabs/hardhat-ethers");
require("@nomiclabs/hardhat-etherscan");
module.exports = {
networks: {
hardhat: {
},
ethereum: {
url: "https://eth-mainnet.g.alchemy.com/v2/process.env.RPC_KEY",
accounts: [process.env.PRIVATE_KEY]
}
},
etherscan: {
apiKey: process.env.ETHERSCAN_API_KEY
},
solidity: {
version: "0.8.17",
settings: {
optimizer: {
enabled: true,
runs: 200
}
}
},
}

Deploy Script File:

const hre = require("hardhat");
async function main() {
const Sample = await hre.ethers.getContractFactory("NFT721");
const sample = await Sample.deploy();
await sample.deployed();
console.log(
`Sample NFT contract deployed to ${sample.address}`
);
}
// We recommend this pattern to be able to use async/await everywhere
// and properly handle errors.
main().catch((error) => {
console.error(error);
process.exitCode = 1;
});

Compile Contract:

npx hardhat compile

Deploy:

npx hardhat run scripts/deploy.js --network ethereum

The contract address will be printed on the terminal.

ERC721 / EIP721: A slightly advanced non-fungible token standard that is used to represent each token is unique. No two similar tokens of this standard can hold the same data.

function safeMint(address to, string memory uri) public onlyOwner {
uint256 tokenId = _tokenIdCounter.current();
_tokenIdCounter.increment();
_safeMint(to, tokenId);
_setTokenURI(tokenId, uri);
}

ERC1155 / EIP1155: It is a multi-token standard that utilizes a single smart contract to represent both fungible and non-fungible tokens at once.

ERC2981 / EIP2981: It is a royalty standard for Ethereum NFTs, where it supports creators with global royalty across all the marketplaces for their NFTs.

ERC2309 / EIP2309: It is a consecutive transfer extension for a standardized event emitted when creating or transferring NFTs using consecutive token identifiers.

ERC4519 / ERC4519: It is a standard for SmartNFT, the one that is tied to a physical asset and has the ability to ensure if it is genuine or not.

ERC4906 / EIP4906: This is an extension standard that assists in updating the metadata event to those EIP721 NFTs.

ERC4907 / EIP4907: This is a rental NFT standard that allows users to rent their NFTs by transferring ownership rights. It automatically withdraws the rights upon the agreed period.

If your base network is Binance Smart Chain, the following are the NFT standards available.

BEP721: It is a non-fungible token standard in the BSC network, similar to the ERC721 standard that makes each token unique.

BEP1155: It is a multi-token standard that combines the fungibility of the BEP20 standard and the non-fungibility of the BEP721 standard in a single contract.

With these standards, you can deploy the smart contracts for the NFT and convert the digital artworks into NFTs.

Step 6: List the NFT for Sale

Once the assets are tokenized into NFTs, they can now be listed in the NFT platforms for sale. It can either be a fixed-price sale or an auction sale, depending on the demand of the NFTs. If you plan to launch a collection with 3-5 varieties of NFTs, then a blend of both listings will be the right option. The hottest and most demanding pieces can be listed on auction sale, while others are on fixed price sale.

Sample code for NFT sale order

async function signSellOrder(amount, decimals, paymentAssetAddress, tokenId,
                                    assetAddress, collectionId) {

try {
amount = roundNumber(mulBy(amount, 10 ** decimals), 0);
var nonce_value = await getNonceValue(collectionId);

var messageHash =
                                    ethers.utils.solidityKeccak256(["address","uint256","address","uint256","uint256"],[assetAddress,
                                    tokenId, paymentAssetAddress, amount, nonce_value]);

messageHash = ethers.utils.arrayify(messageHash);
var account = window.ethereum.selectedAddress

var fixedPriceSignature = await signer.signMessage(messageHash,
                                    account);

return window.updateSignFixedSuccess(collectionId)
} catch (err) {
return window.updateSignFixedFailed(err['message'])
}
}

Sample code for transfer ownership

function transferOwnership(address newOwner)
external
onlyRole("ADMIN_ROLE")
returns (bool)
{
require(
newOwner != address(0),
"Ownable: new owner is the zero address"
);
_revokeRole("ADMIN_ROLE", owner);
emit OwnershipTransferred(owner, newOwner);
owner = newOwner;
_setupRole("ADMIN_ROLE", newOwner);
return true;
}

Step 7: NFT Aggregator Platform - The Universal Marketplace

As a decentralized NFT marketplace, NFT aggregators are the hottest trends worldwide. It simplifies the purchase by aggregating all the essential data of a particular NFT listed across other marketplaces under your platform. It functions as a unified interface, provides a clear picture of the market, and helps your users to arrive at a purchase decision.

The best part of the NFT aggregator is that it allows your users to purchase NFTs in bulk. Similar to an e-commerce platform, the marketplace will have an add-to-cart functionality where users can purchase the NFTs listed on other marketplaces directly from your platform in bulk quantity. This greatly benefits them by reducing the overall gas fee.

If you have plans to launch an open NFT ecosystem, then NFT aggregator platform development would further increase your scope with amazing features and functionalities.

NFT Aggregator Platform Development:

The development process of the NFT aggregator platform development is more or less similar to a regular process involved in building an NFT marketplace. Some of the main differences that these platforms will have to go through are

Asset Profiling:

Asset profiling is a method to categorize NFT assets to a particular theme. It may be artwork, music, in-game assets, sports, collectible, or any other domain. This profiling of assets present in the user’s wallet will be categorized accordingly. This will provide more insights about the assets and their attributes like volume, hype, and application.

Smart Contract Repository:

A smart contract repository allows the aggregator platform to access OG smart contracts anytime and anywhere in the world for improved version control, real-time data analytics, and robust security. The platform will query the collection's smart contract, gather inputs, and present it to the participants, thereby making their work simple and straightforward.

Probabilistic Correlation:

This is a statistical measure that graphically analyses all the users’ wallet addresses and their profiles. A candidate pool will be present to retrieve users’ wallet addresses through logs and event listeners. The data retrieved from this pool will be used for correlation analysis, where it matches users who own the wallet and also profiles the wallets. Probabilistic correlation plays a crucial role in determining key metrics for the watchlist and other wallet-related queries.

Marketplace Analytics:

The NFT aggregator platform will show the transaction details, previous owner histories, and other details accurately. Right from the day of its mint, transfer details and every other information will be recorded and displayed accordingly.

Profiling Outcomes:

The result of profiling will benefit intelligence-based markers such as trends and forecasts. It assists in identifying the key metrics, such as crypto whales, NFT whales, NFT collectors, NFT holders, exchanges, etc.

Revenue Model for Your NFT Ecosystem

Initial Minting Fees:

It is the fees levied by the business models on creators. This fee serves as an entry fee for them to tokenize their masterpieces in the NFT ecosystem.

Service Fees:

There are numerous services that a creator can avail of in the NFT ecosystem, such as lending, renting, listing, and much more. These services come at an affordable cost and generate a good income for your NFT platform.

NFTs Trading Fees:

NFT ecosystems are competent in facilitating the users to carry out primary and secondary NFT sales. Moreover, these platforms are bridging the gap between creators and potential collectors. To continue extending this service, your NFT platforms can charge users a small percentage of the sale.

Aggregator API:

Sharing your NFT platform's APIs can be a revenue-generating opportunity for your NFT venture. As a renowned NFT ecosystem in the future, you can lend your aggregator APIs to reliable upcoming projects in the NFT space and widen revenue sources.

Utility-backed NFTs: What Sets Them Apart From the Regular?

Non-fungible tokens are unique and can offer immutable ownership to the rightful holders. No doubt about that. People are no longer ready to simply lock a digital collectible in their wallet and sit idle for years and years to see its price surge. This is because they see NFTs as more than an asset class. People expect some real-time benefits from investing in these digital assets. This is where utilities come into play. Apart from holding these digital assets, utility-backed NFTs give users a solid purpose for collecting them. Anything a project has to offer back to its loyal NFT holders can be considered under utilities. However, utilities can be classified into two groups.

Real-World Utilities

Digital assets stored on the blockchain network can provide effective solutions for real-world challenges and problems. Having the potential to ease our real-life operations through NFTs. This game-changing technology can be integrated with numerous real-world applications, which include but are not limited to ticketing, real estate, documentation purposes, access to real-time events, and acting as an authenticator for luxury goods.

Metaverse Utilities

Metaverse could be the 'Black Box Fallacy' in the near future, meaning it could be the sole technology that can house numerous applications. Apart from this futuristic potential for Metaverse, NFTs can play a game-changing role in the metaverse, showering the platform users with immense utilities.

Non-Fungible Tokens can serve as digital goods to metaverse platform users, and these goods can be anything like avatars, skins, avatar emotes, footwear, and other accessories. In addition, virtual stores which are open on the metaverse platform can enable customers to shop and credit their wallets with redeemable NFTs, which can be exchanged for physical products in the real world.

There is no limit to the applications in the physical and digital world, as NFTs can do wonders anywhere.

The Bottom Line

Keeping all the potential of NFTs aside, if we ourselves take a trip down memory lane to our childhood days, we were all collectors at some point. It may be a gaming card, cartoon, athlete, celebrity, or toy; we have the habit of collecting our favorites and cherishing them for our whole life. The years may change, but not our emotions. This emotion is the untold secret tied behind every NFT out there. People will always show a big thumbs up for things they love the most, and NFTs are the macro-components that leverage the concept of collectibles.

So, building a secure, feature-packed, and user-friendly NFT ecosystem will be one of the lucrative business models for 2023. Creating an NFT marketplace or an NFT launchpad development would definitely assist you in conquering the web3 realm in the near future.

If you plan to develop your NFT ecosystem, consult our team creating NFT marketplaces to get the best advice from industry-leading experts.

How to Develop your NFT Ecosystem? The Only Guide for NFT Marketplace Development