Even though NFT sales volume is still down 88% from its all-time high in 2022 (down 38% since the beginning of the year), Palette Exchange is building a new type of NFT marketplace focused on user retention. I am. And we're doing it on a blockchain that's not well known for NFT trading: sei.
Co-founders Kelvin Wang and Davey Lee have convinced investors that there is still plenty of future for NFTs beyond silly social media profile pictures (PFPs), and Spartan Group, Symbolic Raised $2.5 million in a private funding round with participation from Capital and Cipher. Here's what capital and angel investors at Coinbase, MoonPay and more learned exclusively on TechCrunch.
Wang and Li are perhaps best known for creating The Beacon, one of the most popular Web3 games on Arbitrum, a layer 2 blockchain built on Ethereum. “That was the initial impetus. We looked at the gaming landscape and thought we could build better games, and we had that vision,” Lee said of why he then built the NFT marketplace. Told.
They believe there is strong promise for the future of human-driven NFTs. “The fundamental appeal for users to trade and flip is very human,” Wang said. “We've seen it with collectibles, cars, toys.”
While building The Beacon, Wang said they noticed frictions at the marketplace level regarding speed, transaction times, and user experience, so they decided to build a faster, easier-to-use marketplace.
In cryptocurrencies, platforms are often very focused on general finance.
“It's great to see so much financial innovation happening, but we also found that there were some pain points in the user experience,” Lee said. “It's hard for beginners to be suddenly faced with numbers and dashboards. Imagine taking someone who has never touched stocks and throwing them into a Bloomberg terminal. Something like that.”
Still, making money remains a key driver for crypto enthusiasts (and for all its worth, many fail).
And Palette's founders recognize that in bear markets like the recent one, making money is much harder, especially for beginners, and new marketplaces like theirs have a hard time retaining customers. He said there was. “That's where we wanted to experiment and innovate the liquidity and retention mechanisms.”
Therefore, the market wants users to feel like they are making progress and doing something meaningful and fun with their NFT collections, even if “the numbers don't necessarily increase.” We use social media tactics such as in-app messaging to allow people interested in the same NFT collection to interact with each other on our marketplace.
“Imagine the moment you buy an NFT, it gets added to a group chat with other holders. There's a community aspect to it,” Lee said. “We want to develop specific clans that friends can collaborate with, and we're trying to take some of the live-op games we see. [create] It gamifies the NFT marketplace experience with an “enhanced system compared to the pure points that many marketplaces use.”
Overall, Pallet wants to provide a “good trading experience for standard people,” Wang said. “We want to create a platform that brings liquidity and regular crypto users and regular users through the gamification of social features.”
However, when it comes to the largest blockchains in the NFT space, Ethereum, Bitcoin, and Solana lead the way with over $1.3 billion in sales over the past 30 days, according to CryptoSlam data. So why build a marketplace on a blockchain with little traction?
Sei's layer 1 blockchain is extremely fast at 12,500 transactions per second and has low gas fees, aka transaction costs. And the team believes there are opportunities in less explored areas.
“We saw it as analogous to the early Solana era. We made a leveraged bet that this was going to be the chain of the future, because this would give us something that Solana couldn't do. This allows us to tap into the EVM liquidity market in a natural way,” said Wang.
Additionally, the creators of the SEI blockchain hope to attract large numbers of Ethereum Virtual Machine (EVM)-based developers by creating a technology called Parallel Stack that they hope will make Ethereum faster and cheaper. We are working on this.
Mr. Say's EVM efforts convinced Mr. Paret that Mr. Say's rulers were “going to grow the pie here,” Mr. Wang said.
Betting on Sei, its social aspect and friendly user interface have paid off so far. Pallet is one of the fastest growing NFT marketplaces with increasing volumes across all blockchains.
The palette was launched in September and “boomed” in December, Wang said. That's when Sayans, Saybase's NFT collection fueled by meme culture, brought new blockchains and marketplaces to the crypto world's conversation. Seiyans NFTs can be bought and sold in his Pallet.
Currently, the company has approximately 99% of the NFT market share on SEI, with year-to-date trading volume of over $20 million, and over 2 million users visiting the platform in the past year, every day. Wang said it has 40,000 to 50,000 users. Wang said the company's revenue model includes taking a 2% commission on trades, which results in an annual run rate of more than $2 million. “It's a great start for us.”
Over the past few weeks, Wang said that while PFP still has its fans, there has been an uptick in interest in art NFTs, collectibles that are not a throwback to the whole genius of Bored Apes PFP. In the future, Palette will consider partnering with major partners in the art market and creating a separate marketplace for these creators. “We don't want to combine a one-on-one artist with a bunch of his PFPs. We want to create a unique experience for both,” Wang said.