Binance, the world’s largest cryptocurrency exchange by trading volume, said Tuesday that it plans to introduce its own marketplace for digital items tied to nonfungible tokens, known as NFTs. This would create yet another major venue for the increasingly popular digital-assets market, and likely more competition to attract creators and investors alike.
NFTs are virtual items created on a blockchain—often used to certify unique ownership of a digital asset that could be anything from art, music, games, to sports trading cards. The NFT market has existed for some years since the invention of blockchain, but recently caught the attention of mainstream investors as some high-profile collectibles were sold at record-breaking prices. Total sales of NFTs soared to more than $2 billion in the first quarter of 2021, more than 20 times the volume of the previous quarter, according to NonFungible.com, a website that tracks data on NFTs.
Binance’s NFT marketplace is set to debut in June, with two venues that would allow artists and traders to create, buy, and sell digital assets. The premium event platform is for high-end auctions and exhibitions, where Binance would take a 10% cut from the proceeds. The standard trading market, on the other hand, allows anyone to create or deposit NFTs for sale or auction for a 1% processing fee. The creators or depositors will receive a 1% royalty payment for all subsequent trades.
“Binance serves millions of users around the world, many of whom will now be able to access the booming NFT space,” said Changpeng “CZ” Zhao, CEO of Binance, in a statement. “In line with our commitment to the freedom of money globally and building an inclusive ecosystem, the Binance NFT marketplace will also support small value creators by providing the highest liquidity and cheapest fees for users.”
Binance is the latest crypto exchange to develop its own NFT marketplace. Gemini’s Nifty Gateway has hosted auctions from sought-after artists like Eminem and Grimes. Crypto.com launched its invite-only marketplace in March, featuring content from the likes of Snoop Dogg, Lionel Richie, and Boy George. Other marketplaces include Super Rare and Foundation.
Crypto exchanges have already benefited from surging Bitcoin prices and investors’ rising interest in digital currencies. Coinbase, the largest crypto exchange in the U.S., went public through a direct listing earlier this month. Its shares are now trading near $300, about 20% up from the $250 reference price set by Nasdaq before the stock made its trading debut. The NFT marketplace would open up a new revenue stream for Binance, although artists and investors will likely become increasingly selective about which exchange they use as more NFT marketplaces become available.
However, a look at trading volumes and average prices suggests that the NFT hype has been declining over the past few weeks from its peak earlier this year. The volume of NFTs traded has fallen by about 50% from the mid-March peak—though is still elevated compared with just a few months ago. The average price of NFTs spiked to around $4,000 in mid-February, according to a recent report from NonFungible.com, but has since fallen to about $1,500. Still, the current average price is 10 times where it was merely six months ago.
Source: Barrons
