Why Competition Matters & Cardano NFT Marketplaces
Why Competition Matters & Cardano NFT Marketplaces
You might have heard many times that competition is healthy, but have you ever wondered why? In this article, we will explore several reasons why competition is essential for the growth and expansion of the entire ecosystem. Companies might become a monopoly for multiple different reasons yet they still might deliver great products people enjoy, so one might ask: “why does it matter, the platform works fine?”
While this perspective is acceptable in the short term, it's necessary to consider the long-term effects. More competition is needed to ensure that businesses maintain their quality level of their products and services.
Without competitors, why would the only company in the market focus on quality, innovation and new developments? If they already have a user base or customers, a stable revenue stream, and no competitors following a similar path, what incentive do they have to invest in innovation? That's right, they might not care at all - they can simply enjoy their market position, revenue stream and potentially even reduce their costs to maximize profit - monopolies usually lack any motivation to build new things and innovations. But is that really the best for the market and users?
Why is competition important?
Competition is said to bring innovation. And that's completely right.
In a market where more players each one of them must try harder to either keep their user base or convince people to use their platform instead of competitor's. If anyone stops developing and pushing forward, they will most likely lose their users as they will simply go to the platform which will have the better features. This shift is only a matter of time.
There is the constant motivation to just be better than the competitors to make a dent in the space which is pushing everyone.
The constant pushing further and further ultimately result in much greater products than if there was just one platform without motivation to innovate.
And that's a shortened and of course simplified explanation of how innovations happen.
Competition between Cardano NFT marketplaces and JamOnBread's solution
In the Cardano NFT market, there has always been one platform with the majority of market share. There were multiple attempts from competitors to take a bite of the market share but it was usually just momentarily before users came back to the dominant platform.
The lack of success is partly because each marketplace has to create its own smart contract to make any revenue. There are NFT aggregators on Cardano, but if any of aggregated listings from the leading platform on their marketplace sell, aggregators don't generate any revenue as it goes to the creator of the smart contract.
Basically the smart contract design is keeping the revenue from those that attracted users to use their platform with innovation, cool design, and new features.
Essentially all marketplace would have to attract users to list NFTs into their smart contract and then sell those listings. But if there are multiple smart contracts, it's just becoming harder for all aggregators to keep up with all of them, and ultimately they won't generate any revenue for them. Another question to ask is will users list their NFTs into the non-dominant marketplace, since there might not be enough liquidity and buyers. It seems like a cursed cycle.
We found this design unfair, so we decided to build a more universal and fair solution for everyone. Our new smart contract will be able to split the service fee revenue accordingly to where the NFT was listed and where it was sold which is going to motivate others to aggregate this contract as it's the first one on Cardano which will reward contributors fairly.
It's the first step to making Cardano more fair and decentralized, actually lowering the entry barriers for any competitors as they will be simply able to integrate JamOnBread's smart contract to both list and sell NFTs without the need to create and audit their own smart contract - and earn a fair share of the revenue.
We hope our solution is going to shift the competitiveness outside of the smart contracts realm, unite the liquidity of Cardano NFTs and allow every marketplace to rather focus on features that the end users are going to use.
Read more about the current meta and JamOnBread's innovation in our previous articles - Aggregating NFT Smart Contracts on Cardano and JamOnBread: A Sweet Snack and a Decentralized NFT Marketplace on Cardano or our GitBook!
Lack of competition on the market usually lacks innovation and progress. A competitive environment results the development of better platforms, as the progress of all market players motivates others to innovate further. The current design of smart contracts on Cardano can make it challenging for new market entrants to access the revenue stream and bring innovation. At JamOnBread.io, we have introduced a more universal and fair design for NFT smart contracts, lowering entry barriers for competition and making the space fairer and more decentralized.