NFT marketplaces are more than simple buy/sell interfaces. They need to handle royalties, auctions, bundles, and complex ownership structures while maintaining good UX and low gas costs.

Here’s how we architect NFT marketplaces at NsisongLabs.

Core marketplace components

A production NFT marketplace consists of:

Smart contracts: Handle listing, bidding, purchasing, and royalty distribution on-chain.

Indexing layer: Off-chain indexers track events, maintain searchable metadata, and provide fast queries.

Metadata service: IPFS or centralized storage for NFT images, attributes, and descriptions.

Frontend application: User interface for browsing, creating, and trading NFTs.

Payment processing: Handle fiat-to-crypto conversions and payment method integrations.

Listing and trading mechanics

Design trading logic carefully:

Fixed-price listings: Simple buy-now functionality with clear pricing and expiration.

Auction systems: Time-based or reserve auctions with automatic settlement.

Bundle sales: Allow selling multiple NFTs as a single unit.

Offer systems: Let buyers make offers that sellers can accept.

Royalty enforcement: Ensure creator royalties are paid on secondary sales, even across marketplaces.

Gas optimization strategies

NFT transactions can be expensive. Optimize:

Batch operations: Allow users to list, buy, or transfer multiple NFTs in single transactions.

Lazy minting: Create NFTs only when first sold, not when listed.

Off-chain signatures: Use EIP-712 signatures for listings, only putting transactions on-chain when executed.

Layer 2 integration: Support Polygon, Arbitrum, or Optimism for lower fees.

Metadata and IPFS

NFT metadata is critical for discoverability:

IPFS storage: Store images and metadata on IPFS for decentralization, but pin important content.

Fallback mechanisms: Have centralized CDN fallbacks if IPFS nodes are slow or unavailable.

Metadata standards: Follow ERC-721 or ERC-1155 metadata standards for compatibility.

Dynamic metadata: For NFTs that change over time, design update mechanisms carefully.

Search and discovery

Help users find NFTs they want:

Indexing strategy: Index by collection, traits, price range, and recent activity.

Filtering and sorting: Fast filters by attributes, price, rarity, and date.

Recommendation engines: Suggest similar NFTs or collections based on user behavior.

Trending algorithms: Surface popular or rising collections without gaming.

Security considerations

NFT marketplaces handle valuable assets:

Reentrancy protection: Protect against attacks when transferring NFTs and payments.

Price manipulation: Prevent wash trading and artificial price inflation.

Front-running protection: Use commit-reveal schemes or private mempools for auctions.

Access control: Ensure only authorized contracts can execute trades.

Building an NFT marketplace requires balancing decentralization with user experience, on-chain security with off-chain performance, and creator needs with buyer expectations. The architecture above provides a solid foundation.