Problems

The Limitations of Volume-Centric NFT Marketplaces

Investors within a specific blockchain ecosystem often look at the NFT marketplace within that blockchain to explore investment opportunities. Both small and large blockchain ecosystems typically have user interfaces structured around trading volume. They recommend NFTs to invest in based on the highest trading volume. Since NFT marketplace revenue is heavily influenced by trading volume, a volume-centric UI can be seen as justified, as it helps increase marketplace profits. Initially, we also had this mindset.

The problem arises when there are manipulative forces at play in manipulating NFT volume. In smaller-volume NFT ecosystems, it becomes easier and cheaper to manipulate such volumes. This leads to projects with the intention of rugging start prioritizing the market where manipulating volume is the key. Individual investors fall for the volume and make investments, only to end up losing their funds. NFT investors within the blockchain get deceived by such volume manipulation, lose money, and eventually leave the ecosystem. An NFT ecosystem without investors soon faces a lack of NFT projects entering, leading to a vicious cycle.

Returning to the story of the NFT marketplace we operated within the Aptos ecosystem, we encountered this dilemma. While we recommended projects based on volume, we were aware that most of them were rug projects. Due to this ethical dilemma, it was difficult for us to recommend and encourage the use of this marketplace even to acquaintances. We believed that, at least ethically, we should refrain from operating the NFT marketplace until a solution to this problem emerged.

We aimed to create an NFT marketplace that could recommend worthy NFTs to investors correctly, even for the sake of a healthy NFT ecosystem.