Understanding NFT Swapping and Bridging
Non-fungible tokens (NFTs) become more and more usable thanks to all types of different transactions users can do with them. These digital assets provide great monetization opportunities to creators, investors, gamers, collectors, and other market participants alike. Although the number of platforms that allow NFT trading grows every month, their interoperability is sometimes too low. That can make purchases, sales, and other moves much more difficult and less profitable.
In today’s article, we’ll look closely at two types of NFT-related activities that correspond with the challenge we’ve mentioned above. Bridging is a crucial concept for raising NFTs’ flexibility when using them with various apps and platforms. Swapping is a type of trading that allows users to grow their returns significantly. Let us explain each of them and showcase how they work in the digital asset realm.
NFT Bridging Explained
NFT bridging refers to the process of linking two different NFT-related blockchain platforms. This enables access to a particular digital asset in multiple places and raises its usability, which corresponds directly with its potential value. A cross-platform network provides numerous benefits to the NFT creator or owner, as well as its potential buyers. It expands the potential reach of the token, raises its liquidity, and stabilizes potential price fluctuations.
Of course, to bridge NFTs, technical compatibility has to be achieved. The cross-chain approach becomes a crucial expectation from the NFT community, so platform owners put every effort to make bridging possible. Even though each blockchain is unique, it’s necessary for them to work together. This way, they can achieve even more and gain appreciation from users that are interested in NFT transactions, including swaps.
How to Bridge NFTs?
The process of bridging NFTs is based on smart contracts. The original asset is not sent to another network, but it’s actually duplicated. Here’s the bridging process described step-by-step:
- The NFT is deposited into the first network and locked within a smart contract.
- The user has to obtain an oracle signature to confirm the whereabouts of the original NFT.
- Then, the user utilizes the signature to call the smart contract on the second network where they want to send the NFT.
- The NFT is duplicated and minted on the second network. Now it can be used for transactions there.
What happens if the user wants to use the NFT back in the first network? The duplicate is burned and another confirmation from oracle is required. Then, the first network releases the original NFT from the smart contract.
NFT Swapping Explained
Now that we discussed how to use non-fungible tokens in various networks, let’s focus on swapping. Simply put, it’s the act of buying new NFTs early on and then quickly selling them at a higher price. Swapping is a practice that applies to many luxury and high-value goods, for example real estate or art.
To swap successfully, the investor has to observe the market of new NFT collections and purchase pieces that are promising in terms of their potential to become a market hit. Even though it can be sometimes hard to predict which tokens will gain momentum, there are many factors that can indicate that – for example recognized creator, a connection to some popular event, or being a part of the latest hit game. Swaps not only help buyers multiply their returns, but they also support NFT-related platforms thanks to purchases and sales of new NFT pieces.
What Makes NFT Swapping Crucial for the Community?
Non-fungible tokens are well-known for being unstable when it comes to value. Not many of them are capable of keeping on the same price level long-term. They receive criticism from worried market participants that don’t want to invest in a collectible that will not be able to make money for them. Swapping is an alternative to holding digital assets. Instead, it proposes to react quickly which results in multiplying the rewards if the investor picks the right collection.
NFT Swapping in Gaming
NFTs are widely discussed as a type of digital asset that can be used in all sorts of video games. They act as virtual ownership certificates, giving gamers rights to items, weapons, and other objects they possessed while playing. It wasn’t possible before to do that – people would just trade in-game goods and whoever purchased would be the next owner.
NFTs make lending and other types of transactions possible without a need to sell the token to make money. Also, users can trade digital assets with the help of dedicated marketplaces and gain rewards much faster and cheaper than they would when it comes to collectible NFTs. Not to mention that such transactions don’t require an intermediary and operate on concrete, fixed prices of peculiar items. It opens many possibilities for gaming worlds to grow as they can provide a safe space for their communities to exchange their treasures.
How to Swap NFTs?
We will discuss specific platforms below, but now let’s talk about the technical side of swapping NFTs. Bridging is essential to make swaps unrestricted and allow users to hunt the best possible deals. There are several options available in cross-chain swapping – one can exchange an NFT for another NFT, for crypto, or for a combination of both. The choice depends on their investment goals, available assets, and offers they want to act upon.
Swapping is, in other words, purchasing. The user that wants to perform a swap has to access a platform (or platforms) where they store the NFT they own and where is the NFT or other asset they want to receive in return. When they find a listing they are interested in, they initiate a swap and exchange their NFT for another non-fungible token, a particular amount of crypto, or they propose some other arrangement. The second party has to accept their offer. There can also be a situation where the listing will have its price specified and then the user that wants to swap has to provide the assets required to finalize the transaction. When everything is in place, the swap is done and both parties can use their obtained assets.
NFT Swapping Platforms
Now you know how to swap NFTs. It’s time to showcase the most popular and reliable sources where you can find listings and do the swapping transactions. Here are our picks:
NFTrade is probably one of the most popular platforms when it comes to NFT swapping and not only. It’s a cross-platform network that allows its users to sell, buy, and earn NFTs across multiple chains. It also provides rankings of top collections and a knowledgeable guide to help their users find themselves in the world of NFTs. Currently, the platform doesn’t charge any fixed fees, it only requires payment for gas needed to proceed with transactions.
This app also enables multiple NFT-related operations like trading, swapping, and staking. It’s a versatile marketplace with an active community and additional features, like NFTX
Academy that teaches future investors about the secrets of the platform. This platform charges some fees, for example a 5% minting fee. All the payments are distributed between liquidity providers as a reward for supporting the vault. NFTX users can participate in staking and also become such a provider.
Elrond NFT Swap is a straightforward platform that also puts a strong focus on fostering its sense of community. It not only provides trading options but also informs its users about upcoming collections and enables NFT lending. The network is powered by Krogan ecosystem which is a play-to-earn game that issues its own cryptocurrency and NFTs. Elrond NFT Swap shares its marketplace earnings with Krogan NFT owners.
SwapX claims to be a secure, simple-to-use P2P app exclusively for swapping NFTs. It doesn’t charge any fees for NFT-NFT swaps except gas for transactions. It also supports multiple chains, wallets, and NFT collections. Safety is provided by the 0x protocol which is a dedicated solution for the Ethereum blockchain to enable the permissionless exchange of digital assets.
Another peer-to-peer swap platform is NFTTrader. It bets on the security of its transactions and an easy user experience for seamless swapping. Their goal is to also build a community engaged in disrupting industry practices with modern solutions and fighting NFT-based scams. Thus, they prepared a custom smart contract for asset swapping which verifies the authenticity of every NFT collection that participates in transactions within the app’s environment. They also put a lot of focus on providing a platform where everyone will be able to do transactions in one place. The users have to pay a flat fee of 0.005 ETH plus 0.5% for every swap and additionally, the gas costs.
This free-of-charge app (only gas fees are paid) also puts a lot of effort into making NFT swapping secure, user-friendly, and reliable. It is well-known for giving users the possibility to cancel their swaps at any stage of the transaction, which gives them more control over their assets and increased flexibility. They also claim that at no point Swap.kiwi or anyone else besides the swapping-involved parties have access to the assets – the NFTs are transferred to an escrow contract until the transaction is complete. Tokens that are available on Swap.kiwi are Blue Chip and new collections working on ERC-721, ERC-1155 and Ether standards.
Sudoswap provides an online space for NFT-to-token transactions. They work on a liquidity model that allows users to swap their assets instantly with a 0.5% fee. Every member of the community can create their own liquidity pool that can be one-sided (buy or sell) or two-sided (both). This means that users don’t swap between themselves but rather place their NFTs in the pool where every participant can buy or sell. The platform claims to be gas-efficient and offers two types of swaps – normal and robust. The latter costs more in terms of gas but provides a better user experience in rapidly changing NFT ecosystems.
NFT bridging and NFT swapping co-exist to make the digital finance space a better, more user-centric place. The first one allows people to do transactions between different blockchains without additional technical difficulties. The second one boosts the NFT market allowing people to exchange purchased tokens for profit. The non-fungible tokens world is not easy to navigate, but all these solutions are created to help the community grow and thrive.
Thanks to growing interoperability, NFTs become more usable. They present true value for potential new investors. It’s important to support initiatives that can be responsible for bridging distant blockchains and platforms that allow all types of NFT trading. This way, NFTs will present their full potential and will be used for long-term and short-term investments, as well as all sorts of transactions.
In 2022, 4% of US citizens owned an NFT. This number doubled compared to the previous year. Now, that NFTs become even more available and versatile, we believe this stat will grow even more. We hope that thanks to this article, more people will participate in NFT-centered communities.