\n<\/p>\n
Even though NFT sales volume is still down 88%<\/a> from 2022 all time-highs (and down 38% year-to-date), Pallet Exchange is building a new type of NFT marketplace focused on user retention. And it\u2019s doing it on a blockchain less known for NFT trading: Sei.<\/p>\n Co-founders Kelvin Wang and Davy Li have convinced investors that there\u2019s still enough of a future in NFTs beyond silly social media profile pictures (PFPs) to have raised a $2.5 million in a private funding round with participation from Spartan Group, Symbolic Capital, Cypher Capital and angel investors from Coinbase, MoonPay and more, TechCrunch learned exclusively.<\/p>\n Wang and Li are probably best known for creating The Beacon<\/a>, one of the most popular web3 games on Arbitrum, a layer-2 blockchain built on top of Ethereum. \u201cThat was the initial impetus, we saw the landscape of games and thought we could build a better game and had a vision of that,\u201d Li said of why they next built an NFT marketplace.<\/p>\n They see strong promise in the future of NFTs due to human behavior. \u201cThe fundamental draw from a user to trade and flip is very human naturey,\u201d Wang said. \u201cWe\u2019ve seen that with collectibles, cars and toys.\u201d<\/p>\n While building out The Beacon, they saw friction at the marketplace level with speed, transaction time and user experience, so they decided to build a marketplace that was faster and easier to use, Wang said.<\/p>\n In crypto, platforms are often hyper focused on all-things financial.<\/p>\n \u201cIt\u2019s cool if there\u2019s a lot of financial innovations happening, but at the same time we saw there\u2019s pain points from a user experience,\u201d Li said. \u201cIt\u2019s hard for novices to jump in and be hit with numbers and dashboards. Imagine throwing a beginner person who\u2019s never touched stocks into the Bloomberg terminal. It\u2019s like that.\u201d<\/p>\n Still, making money s a key driver for crypto enthusiasts (and many fail, for what it\u2019s worth.)<\/p>\n And the Pallet founders say they recognize that in the bear market, such as the most recent one, when it\u2019s far harder to make money, especially for a novice, new marketplaces like theirs will have a harder time retaining customers. \u201cThat\u2019s the piece we wanted to experiment with and innovate on liquidity and retention mechanisms.\u201d<\/p>\n So, even in instances where the \u201cnumber doesn\u2019t always go up,\u201d the marketplace wants to make users feel like they\u2019re progressing and doing meaningful, fun things with their NFT collections. It\u2019s using social media tactics like in-app messaging that lets people interested in the same NFT collections engage with each other on its marketplace.<\/p>\n \u201cImagine the moment you purchase an NFT you\u2019re added to a group chat with other holders and there\u2019s a community aspect to it,\u201d Li said. \u201cWe want to roll out certain clans where friends can collaborate and we\u2019re trying to take a page out of the live operation games we see and [create] an enhanced system compared to pure points that a lot of marketplaces use\u201d to gamify the NFT marketplace experience.<\/p>\n All in all, Pallet wants to be a \u201cgood trading experience for normies,\u201d Wang said. \u201cWe want to create a platform that brings liquidity, and regular crypto people and regular users through gamification of social features.\u201d<\/p>\n But when it comes to the largest blockchains in the NFT space, Ethereum, Bitcoin and Solana lead the pack with over $1.3 billion in sales volume during the last 30 days, according to CryptoSlam data<\/a>. So why build a marketplace on a blockchain with less traction?<\/p>\n Well, Sei\u2019s layer-1 blockchain is extremely fast at 12,500 transactions per second<\/a> and has low gas fees, aka transaction costs. And the team thinks there\u2019s opportunity in its less-chartered territory.<\/p>\n \u201cWe saw it as a parallel to early Solana days. We took a leveraged bet this is going to be the chain of the future because it allows for something Solana wasn\u2019t able to do, tap into the EVM liquidity market in a natural way,\u201d Wang said.<\/p>\n Plus the creators of the Sei blockchain are working on attracting the hoards of Ethereum Virtual Machine (EVM)-based developers by creating a tech called The Parallel Stack<\/a> \u2013 something that hopes to make Ethereum faster and less costly<\/p>\n Sei\u2019s EVM work has convinced Pallet that Sei\u2019s overlords will \u201cgrow the pie here,\u201d Wang says.<\/p>\n Betting on Sei, its social aspects and its friendly user interface has paid off so far. Pallet is one of the fastest growing NFT marketplaces by volume growth across all blockchains.<\/p>\n