Blockchain-Based Decentralized Marketplace
Capabilities, Architecture, Costs
In the development of blockchain-based decentralized apps since 2020, ScienceSoft will help you conceptualize and create a cost-effective online marketplace powered by blockchain technology.
ScienceSoft’s Brief on Decentralized Marketplaces
A decentralized marketplace enables blockchain-based crypto payments and secure, intermediary-free exchange of goods between sellers and buyers. Buyers can trace immutable data on the origins and history of goods in the blockchain, which builds trust to sellers and makes the deals more transparent.
- Use cases: Blockchain marketplaces can be used to sell physical goods (food, clothes, electronics, etc.) and digital assets, such as eBooks, gaming stuff, tokenized real-world assets, and NFT collectibles.
- Development cost: The starting cost of a blockchain-based marketplace is around $100,000. You're welcome to use our free calculator to estimate the budget for your case.
- Success tips: Blockchain security audit and rigorous smart contract testing are crucial to ensure the security and high performance of a decentralized marketplace ecosystem.
Blockchain-Based Marketplace vs. Centralized Marketplace
Below, ScienceSoft’s consultants highlight the key benefits blockchain brings to the marketplace model to help you envisage its potential business value.
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Lower transaction costs for sellers. A major driver behind the popularity of decentralized marketplaces. Traditional non-bank payment providers often charge high fees – for example, Braintree takes 2.59% + $0.49 per credit card or digital wallet transaction. In contrast, the Solana blockchain charges just $0.0000000024 per transaction, regardless of whether the item costs $5 or $5,000. |
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Enhanced privacy and security for users. Blockchain instantly encrypts transactional data and stores it in an immutable, tamper-resistant ledger, protecting sensitive buyer information from breaches and theft. Escrow smart contracts further secure buyer-seller transactions and safeguard buyers by holding funds and releasing them to sellers only after they meet their obligations. |
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Streamlined marketplace moderation. Smart contracts can automate control over role-specific marketplace operations based on your tailored terms of use and policies. They also enable consensus-based downvoting for a censored yet unbiased space. You can still manually moderate specific aspects, like overseeing artwork sales to restrict violent or controversial content. |
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Authentic and trustworthy reviews. Smart contracts can verify the legitimacy of users leaving product feedback, authenticate their reviews, and lock reviews in the blockchain for immutability to prevent changes upon submission. This capability fosters a transparent reputation system for sellers, buyers, and products within the marketplace. |
Architecture of a Blockchain-Based Decentralized Marketplace
ScienceSoft builds decentralized marketplaces of the following components.
- Digital wallet is an app to send and receive crypto tokens used for payment transactions on a decentralized marketplace.
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The front-end layer is a web application accessible for users. It is created for two user roles – sellers and buyers.
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The back-end layer processes data that will be stored outside the blockchain (e.g., product listings).
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Web3 API provides the connection between the web front end and smart contracts.
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Smart contracts enable verification of marketplace transactions between sellers and buyers.
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The blockchain encrypts and stores transactional data.
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Key-value data storage system is used to keep the blockchain metadata.
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External data storage (often IPFS) is used in distributed blockchain-based systems for user-generated content (product listings).
Key Functions of a Decentralized Marketplace
When planning the functionality of decentralized marketplaces, ScienceSoft takes the following capabilities as a basis and adapts the plan to individual project requirements.
Role-based user experience
In the absence of a central controlling authority, user journeys for sellers and buyers must be intuitive and frictionless.
Selling process
- Adding and editing product listings.
- Product inventory management.
- Order and return management.
- Private messaging system between sellers and buyers.
Buying process
- Faceted catalog browsing.
- Support for a multi-vendor shopping cart.
- Order placement.
- Order tracking.
- Order history.
Marketplace transactions verification
Marketplace smart contracts
Marketplace smart contracts serve as the back-end business logic of the marketplace – they define how the user behavior unfolds depending on the input data. At the core, they manage the processes of listing, choosing and purchasing products.
Escrow smart contracts
As payment transactions are conducted directly between sellers and buyers, without a payment provider in between, escrow smart contracts provide guarantees for the parties. They hold the tokens transferred by the buyer until the purchased item is delivered and then release the tokens to the seller.
Proprietary cryptocurrency
Marketplaces may have a settlement currency created using privacy-preserving protocols, which means that users’ personal information will not be collected during transactions.
Integration of cryptocurrency payments
You may implement other cryptocurrencies your marketplace will support. Bitcoin is a go-to choice as the most widely accepted cryptocurrency.
Hashing
Each blockchain record contains a unique cryptographic hash and a timestamp to protect the information from tampering and hacking.
Reputation system
Proof-of-individuality framework
It enables user verification to prevent fake and duplicate user accounts and manipulation of sellers’ reputation.
Product reviews
Review submission is controlled by smart contracts to authorize reviews from buyers of a particular product only.
Flagging, upvoting and downvoting
As a way to moderate a decentralized marketplace, you can introduce a system where users flag products that violate their values or marketplace policy and thus trigger the process of upvoting/downvoting by other users. The product is banned from the marketplace if it exceeds the threshold of downvotes.
Logistics Organization for a Decentralized Marketplace
To ensure a smooth process of physical delivery of goods, ScienceSoft recommends integrating logistics providers with a marketplace. As smart contracts can’t interact with outside systems, there will an intermediary – a third-party service named blockchain oracle.
How ScienceSoft Achieves Apt Functioning of Decentralized Marketplaces
Rigorous testing of smart contracts
The best practice is testing both internal and external behavior of smart contracts. This approach requires three types of tests:
- Functional testing to check if a smart contract returns the right values.
- Performance testing to analyze the throughput and latency of smart contracts.
- Integration testing to verify the interaction between smart contracts, including Web3.js tests to run through the interaction between the marketplace front end and smart contracts.
Security is a critical aspect to think of when creating smart contracts as the code of smart contracts can’t be modified after deployment to patch security vulnerabilities. As a rule, blockchain development companies programming smart contracts can execute an independent audit, like we do at ScienceSoft.
Explore Our Featured Decentralized Marketplace Projects
5 results for:
Investment and ROI to Expect
ROI factors
- Lower fees on crypto payment transactions compared to fees required by standard payment systems.
- Transparent and trustworthy reputation system for sellers.
- Better engagement of buyers cautious about their personal data as it’s not collected and stored and thus can’t be stolen from the back end.
- Less third-party involvement is needed to mediate the trading process.
What makes ScienceSoft different
We achieve project success no matter what
ScienceSoft does not pass mere project administration off as project management, a practice that's unfortunately common in the market. We drive projects to their goals, mitigating risks and overcoming constraints.
ScienceSoft Shortlists the Best-Suited Blockchain Platforms
Solana
Description
A permissionless blockchain framework. Uses a proof-of-stake protocol, the most energy-efficient blockchain protocol. Offers faster transaction processing and lower transaction fees compared to more hyped peers like Ethereum.
Source code
Open-source protocol
Ethereum
Description
Powers thousands of decentralized apps. Supports a variety of programming languages, including .Net, Java, Go, Python, Ruby, and others. Has a solid base of development materials created by the backing community: development frameworks, APIs, testing tools.
Source code
Open-source protocol
Hyperledger Fabric
Description
A private blockchain framework. Has a modular architecture that facilitates the transaction processing workflow and improves the network scalability. Supports a plug-and-play approach allowing to reuse existing functions and modules instead of building them from scratch.
Source code
Open-source protocol
Decentralized Marketplace Implementation | Services by ScienceSoft
If you are ready to transform a marketplace model and the way people trade things, ScienceSoft will bring the expertise in building blockchain-based decentralized apps to embody your business idea. Our approach rests on the closest attention to quality and business value, ensuring technically and economically feasible solution design and driving quick delivery.
Our consulting services
- Elaborating on the high-level concept of the marketplace: its unique value proposition, target audience, marketability.
- Creating a business case weighing up investment against the estimated ROI.
- Documenting a full functional and architectural map of the marketplace.
- Selecting an optimal technology stack.
Our development services
- Creating the front end of a user-facing web app integrated with Web3.js.
- Integrating a digital wallet.
- Creating smart contracts.
- Integrating the web app with the blockchain network and data storage.
- Optionally: setting up required integrations with third-party systems.
About ScienceSoft
A provider of blockchain development services since 2020, ScienceSoft works with all the leading blockchain platforms to build decentralized apps. The high quality and customer-centered approach are a cornerstone of our service delivery model, which is recognized by reliable authorities like the International Organization for Standardization (ScienceSoft is ISO 9001 and ISO 27001 certified) and International Association of Outsourcing Professionals (ScienceSoft is included in the 2023 Global Outsourcing 100 list).