Crypto Exchanges Look To Cash in on NFT Boom
Crypto exchanges are eager to move away from trading fees as the market sell-off continues
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key takeaways
- Coinbase and Kraken move ahead with NFT marketplace plans
- Coinbase hopes to create a social community while Kraken offers zero gas fees
As the sell-off in cryptocurrency markets rages on, digital asset exchanges looking to diversify revenue outside of trading fees are taking an interest in a different part of the industry: NFTs.
US-based crypto exchanges Coinbase and Kraken each have their own NFT (non-fungible token) marketplaces in the works.
Coinbase’s venture, which it calls a “Web3 social marketplace,” moved to open beta testing Wednesday, allowing users to create a profile and trade on the platform.
As part of the testing, Coinbase will offer zero transaction fees for a limited time, the exchange said in a blog post. Fees that are “in-line with Web3 industry standards” are slated to follow.
Coinbase and Kraken both face steep competition from incumbent NFT giant OpenSea — leading to such money-losing promotions in a bid to gain market share as upstarts.
Kraken has opened a waitlist for its NFT marketplace, which it hopes to launch later this year.
The exchange said once an NFT is custodied with Kraken, users will not have to pay any gas fees, which power transactions on the Ethereum blockchain. Gas fees change based on supply and demand and have risen recently as investor interest in digital collectibles has spiked following a year-end 2021 sell-off.
The zero-fee structure “helps you build your dream collection with near-instant transfer speeds and the peace of mind that spikes in network activity will not impact the cost of your purchases and trades,” Kraken wrote in a blog post.
The launches come as interest in the NFT space, which had been dwindling, starts to pick up again. Toward the end of April, weekly NFT trading volumes were up about 30% from March lows, according to data from crypto analytics firm Nansen.
Major NFT trading platform OpenSea logged a new daily trading record this week with more than $476 million worth of ethereum NFT trades on Sunday, according to data from Dune.
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