Sustainable NFT Marketplaces: A 2021 Case Study

In this case study we walk through how we chose the technology for a sustainable, cost-effective and user-friendly NFT exchange marketplace. The research ran across the end of 2021 and the start of 2022, and the constraints we set ourselves were unusual for the moment: environmental cost mattered as much as transaction fees and user experience.

Finding the right sustainable and cost-effective technology

We started from the standards themselves: ERC-721, ERC-1155 and ERC-20, and how they were being applied across gaming, collectibles and publishing, with CryptoPunks as the reference point for what the market considered valuable.

What the market looked like

Q3 2021 saw roughly $10.7 billion in NFT sales according to DappRadar. Around 75% of NFTs were priced below $1,000, which told us the audience was far broader than the headline sales suggested. Ethereum hosted the majority of transactions at the time, per NonFungible.com.

The environmental problem

Digital ownership carried a real energy cost. Minting, bidding, cancelling bids, sales and ownership transfers each consumed energy. Tracking sales and bids for a single-edition NFT worked out to roughly 340 kWh and 211 kgCO₂.

For scale, those emissions are comparable to an EU resident's electricity use for a month, two hours of flying, driving a thousand kilometres on petrol, boiling a kettle four and a half thousand times, or running a laptop for three years.

The biggest challenges

• No practical way to trade an NFT directly for another NFT.
• Excessive and unnecessary on-chain transactions.
• The environmental footprint of networks like Ethereum.
• High Ethereum transaction fees squeezing out lower-value trades.

Evaluating the alternatives

We assessed MATIC/Polygon, ADA/Cardano and SOL/Solana NFTs against those constraints, weighing the trade-offs of each. Alongside the chain question we designed new functionality, notably wallet-to-wallet trading through smart contracts, to make NFT-for-NFT swaps a first-class action instead of a workaround.

Analysing the competition

We studied the incumbents to understand user expectations and market dynamics: OpenSea.io (ETH/MATIC), Rarible (ETH), NBA Top Shot (Flow), Nifty Gateway (ETH) and Magiceden.io (SOL).

Our conclusion: Solana with Metaplex

We settled on SOL/Solana NFTs built on the Metaplex framework. It gave us the combination we were after: low transaction cost, a dramatically smaller energy footprint per transaction, and enough flexibility to support the trading model we wanted to build.

That decision went on to shape the interface work in our social NFT marketplace case study.