The non-fungible token (NFT) is a new digital asset that resembles the value of real world items according to consensus. The term "non-fungible" means that this type of digital asset is unique, meaning that no two items are exactly the same. These digital tokens represent true ownership that cannot be tampered, and they are empowered by certain rights or privileges that come along with the NFTs themselves.

Therefore, within the GameFi world, the ownership of game assets has always been at the center of the discussion. For example, tokens defined by ERC standards, such as ERC721 and ERC1155, are the blockchain representation of game properties and are used in the Ethereum network to ensure interoperability across different blockchain platforms. In a way, the concept is quite similar to the format of files on a computer (.mp3, .jpeg, etc.).

Thanks to this, NFTs can be easily offered and transacted. In this way, users can exchange gaming properties securely and freely, provided that the properties are liquid. Only in this case can they be treated as assets with an exact value.

During NFT transactions, precisely before the deal is done, buyers and sellers receive many offers. These interactions include, but are not limited to, putting up for sale, offering, changing the price, canceling the request, auctioning, etc. Usually, choosing a trading mode to regulate these interactions above is the first stage of establishing an NFT market.

Nowadays, there are different NFTs markets, each of which has its trading model. Here are the three main NFTs trading modes: centralized, decentralized, and semi-decentralized. Generally, these differ in aspects such as trading costs and asset ownership.

CENTRALIZED MODE

Centralized trading markets are online platforms that are used to transact NFTs. The idea of centralization refers to using an intermediary or third party to assist in conducting transactions. Both buyers and sellers rely on this intermediary to manage their assets.

Some marketplaces that have this mode of trading are Binance and Nifty Gateway. In such centralized NFT marketplaces, users have to meet specific requirements such as registering on the platform as web2 users, taking verifications, and transferring assets to the platform to then be able to trade.

This market has several advantages that can be highlighted: the interface is simple to use; they offer advanced options that allow a variety of actions; they have excellent liquidity. The best thing is that users do not have to pay additional costs. This is because transactions are executed on the platform's servers rather than blockchains, so the platform pays for the required computational resources. These features represent an excellent benefit for web2 users because it is an option for them to get started.

Some disadvantages of this type of market are that the control is centralized, and there is no privacy for the users, so the possibilities of hacking are pretty high. But, on the other hand, the commissions for the transactions may be increased.

In addition, in the centralized market, illiquid assets (NFTs) and liquid assets (fiats and tokens) must be stored in the service provider's platform as long as users do not withdraw the assets. For that reason, users must have complete confidence in the chosen centralized platform, as it is the one that stores all assets.

DECENTRALIZED MODE

The decentralized mode is a peer-to-peer marketplace connecting buyers and sellers of cryptocurrencies. Unlike centralized platforms, they are non-custodial, meaning that users maintain control of their private keys when transacting on a decentralized platform.

Foundation, KnownOrigin, and Zora are some platforms using this trading model. The website is just a front-end gateway in these decentralized marketplaces that records data and facilitates trading. Even after exiting this type of website, users can use the corresponding smart contract to perform the trade under set conditions automatically and record each transaction on the blockchain.

To trade on a decentralized platform, users need to have a blockchain wallet to store their assets, after which they can access the website to collect information, make lists and bids, change prices, auction, etc.

In this mode of trading, users own the funds at all times and commissions for transactions are practically or entirely zero. In addition, there is no third party involved and exchanges are made directly between peers (P2P), so commissions are usually zero or practically zero. In general, they provide excellent privacy because exchanges are peer-to-peer, and no personal information must be disclosed to access the platform.

In this market, many advantages can be found: first of all, users are owners at all times of the funds, and they have great privacy because they do not need to disclose personal information to access the platform.

SEMI-DECENTRALIZED MODE

Semi-Decentralized mode is an intermediate of the mentioned trading modes; some of the well-known platforms using it are OpenSea, LooksRare, and Rarible. As in the decentralized mode, it requires users to have their wallets, but it differs in that the processing of deals is centralized and not recorded on the blockchain.

Although there are many ways of trading, it can be simplified in the interaction between two parties where you want to exchange the bundle of assets, so you put the essential information on the blockchain and leave the rest on the centralized server of the platform. Therefore, the negotiation process is not as important as the deal's outcome; for that reason, only the outcome has a record on the blockchain.

The main advantage of the semi-decentralized mode is that it saves costs of the intermediate calculation by taking it out of the chain and preserves decentralization by recording the result on the chain. To ensure the security of users' assets during the intermediate process, this type of platform usually uses asymmetric encryption that helps avoid data tamper and data forgery.

THE P12 CHOICE

P12 believes that virtual goods and assets will occupy more than 10% of the world's net worth in the future. For that reason, we think it is crucial that you value your in-game properties (NFTs), store them in your wallet, and under your complete control. Thus, we strongly disagree with the traditional centralized mode and recommend that you reject any platform that manages your NFTs on your behalf.

Furthermore, P12 believes that all designs should be adapted to provide the best service to users. For that reason, we chose a semi-decentralized trading mode so that users can reduce their costs by eliminating unnecessary registrations on the blockchain and avoid possible frictions during the transaction to the largest extent.

Protect your game assets in the best possible way with P12!