A deeper dive into NFTs: NFT swapping and bridging

NFT swapping and bridging
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Non-Fungible Token is a new-age digital asset that has changed how asset trading is done worldwide. Previously before the introduction of NFT, ownership of digital assets was not possible; NFT allows the users to tokenize and have ownership of the asset. The emergence of NFTs has allowed digital artists and content creators to better monetize their work and reach out to secondary markets that generate revenue through loyalty earnings. Parallelly, NFT collectors, gamers, crypto investors, and others are making profits through NFT trading, which is booming exponentially. The increasing popularity of NFTs can also be witnessed by the market volume of the top 5 NFTs listed by CoinGecko, which is more than 10 billion USD in April 2022.

Blockchain is a notable technology that powers non-fungible tokens and the NFT marketplace. The number of networks supporting NFTs is expanding, but most of these networks are cut off from each other, making it difficult to perform cross-chain trading across different networks. However, NFT trading in cross-platform networks can significantly expand the scope of NFT monetization, and in this context, we will discuss NFT swapping and NFT bridging today. These are two techniques for improving the NFT trading experience. While NFT swapping allows a trader to get a better price for his token, NFT bridging allows for trading NFTs in a cross-platform network. In this Insight, we will dive deep into NFT swapping and its functionality and impact on the gaming industry. Also, we will be shedding light on NFT bridging and how does it work?

What is NFT swapping?

NFTs tend to lose their value over time, and the history of NFT shows that a very small percentage of NFTs stay relevant over time. NFTs quickly become less valuable, forbidding the sellers to trade. In NFT swapping, a user of the NFT marketplace can easily buy and sell the asset at a high-value price. As new NFT collections arrive every day in the NFT market, more people think of opting for the NFT swap to profit. To make a profit through NFT swapping is by securing an NFT from a new collection that holds the potential to become a rage among NFT collectors. It is never easy to predetermine whether a new collection will be successful or not; however, the NFT market is booming, and many investors have been profited from jumping on a new release and reselling the NFT for a high price. The end goal of this process is to grab an NFT at a low floor price and sell later when the floor price is increased, or the value of the NFT token is on the rise.

How to swap NFTs?

Numerous NFT trading ecosystems have developed a relatively large-scale market for NFTs. The cross-chain interoperability of NFTs is still a crucial point for its further expansion and development. NFT swapping allows the users of the NFT platform to buy, sell or trade directly to another user.

NFT swapping allows you to trade-in :

  • NFT(s) for NFT(s)
  • NFT(s) for Crypto
  • NFT(s) for ‘NFT(s) + Crypto’

Users will browse a library of listed NFT assets up for sale, trade, swap and buy, etc. Buyers will engage in trades that have been predetermined by those selling their NFT assets. Most marketplaces provide NFT swapping as a service. Let us see the steps of swapping an NFT in a sample NFT marketplace :

Step 1: For swapping, you will have access to two libraries, one is the library of the NFTs you own, and another is the NFTs or tokens you want to swap with.

Step 2: First, choose whether you want to Swap an NFT or Token.

Step 3: If you choose NFT, then from the library, choose the particular NFT you want to swap.

Step 4: From the other library, choose which NFTs/ tokens you want in exchange for your NFT.

Step 5: Once your listing is ready, you can initiate the swapping.

Step 6: Complete your NFT Swap.

How does NFT swapping empower the Gaming industry?

In all video games, especially those with interactive multiplayer gaming worlds, trading gaming items is an essential part of the gaming experience. But the problem is that the gamers do not have ownership of the gaming items as the developers of the game can remove or replicate the item with the click of a button, removing it or swamping the market and making it competently worthless. NFT swapping steps in, allowing users to own unique in-game items fully. Like traditional gaming in role-playing games, you can easily trade with other gamers, but with NFT swap, you know the value of the items you are swapping.

The capturing value

In Peer-to-peer NFT, swapping trade can be done without the necessity of an intermediary, which was earlier not possible through the online dominion before blockchain technology came into existence. Now, anyone can conduct transactions with whomever they wish, all through a fine trading process that only involves the parties within the trade. With NFT swaps, this is done off-chain without any transaction fee, making the trade seamless and easy to perform. It provides a massive opportunity for the gaming industry, as there is now a sincere, open market where gamers can realize the concrete value of their items.

What is NFT bridging?

An NFT bridge is responsible for connecting two different networks and allowing the transfer of NFT tokens or data between them. Even though the different networks have their protocols, the bridge provides a compatible solution to communicate securely on both sides. So similar to a bridge in our real world, a blockchain-based NFT bridge establishes a connection between two distinct places. It makes it feasible for the resources to transcend from one ecosystem (place) to another (place). An NFT cross-chain bridge is a set of properly written code and smart contracts, enabling the NFT marketplace user to transfer tokens, smart contract events or instructions, or even data between different blockchains.

The concept of bridging between the network applies to NFTs, and it provides an NFT marketplace user with several features :

  • The facility to move NFTs to the desired blockchain networks.
  • Making the NFTs accessible to all the marketplaces with the cross-chain portal.
  • Facilitating cross-chain auctions and sales.
  • Even if the network changes, the price value will be intact with the NFTs.
  • Sell your NFTs on all the marketplaces featuring prominent blockchain networks.

How does NFT bridging work?

A user has to deposit an NFT into a Smart Contract of Network A, and the NFT will get locked. After that, the user has to get signatures from the oracle to confirm that he deposited in network A. With the signatures, the user can call the same smart contract in network B, where a duplicate NFT gets minted & sent to the user. Suppose the user wants the original back on network A. In that case, the user needs to send the duplicate NFT to the bridge to get it burned, ask the oracle again for signatures to confirm that it happened & then call the contract in network A where the original will be released.

EndNote

Startups and enterprises are looking to develop web3 based NFT marketplaces that can use the open-source and trusted exchange infrastructure of swapping and bridging to significantly reduce the effort required to deliver a seamless multi-chain experience to their NFT marketplace users. These NFT marketplace uses the smart contracts technology to offer swapping between non-fungible tokens of the cross-chain network. NFT swapping and NFT bridging tackle the interoperability issue in NFT trading across multiple blockchains. NFT trading is booming, and the NFT marketplaces will expand further with different blockchains networks focusing on interoperability. In that regard, NFT swapping and bridging are two promising trading techniques to serve the interest of the NFT creators and traders.

We are happy to collaborate with you to build NFT platforms for Swapping and Bridging. Please connect with our blockchain experts to discuss your project requirements.

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Author’s Bio

Akash Takyar
Akash Takyar
CEO LeewayHertz
Akash Takyar is the founder and CEO at LeewayHertz. The experience of building over 100+ platforms for startups and enterprises allows Akash to rapidly architect and design solutions that are scalable and beautiful.
Akash's ability to build enterprise-grade technology solutions has attracted over 30 Fortune 500 companies, including Siemens, 3M, P&G and Hershey’s. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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