Architecture and Design for NFT

Marketplace

Introduction
This document details the architecture and design of the NFT Marketplace system. It covers
the system’s component structure, design patterns used, and how the system parts interact.
Additionally, it includes illustrative diagrams (UML and architecture) and microservice
explanations to communicate system logic and workflows.

System Architecture
Architecture Overview
The system employs a modular, microservices-based architecture, distributed across three
main layers:

a. Frontend

i. Built with React.js and Tailwind CSS, integrated with Ethers.js.

ii. Communicates with the backend via REST APIs and WebSocket.

iii. Supports real-time updates for events like new bids or completed
transactions.

iv. UX Enhancements:

● Intuitive onboarding for novice and experienced users.

● Support for search filters, trending collections, and personalized

dashboards.

b. Backend

i. Built with Node.js and Express.js.

ii. Handles core services:

● Auth Service: Manages authentication (OAuth, MFA).

● Auction Service: Manages creation and handling of auctions.

● Payment Service: Integrates with Stripe, MoonPay, and crypto

payments.
 ● User Service: Manages user profiles.

iii. Stores metadata in MongoDB and PostgreSQL.

iv. Employs RabbitMQ for asynchronous communication.

c. Blockchain

i. Uses smart contracts on Ethereum and Polygon.

ii. Supports ERC721 for NFT creation and ERC2981 for royalty
management.

iii. Utilizes Hardhat for deployment, testing, and contract verification.

iv. Interacts with Ethers.js for blockchain communication.

d. Storage

i. MongoDB: Stores user profile data and NFT metadata.

ii. PostgreSQL: Stores financial transactions and logs.

iii. IPFS: Decentralized storage for NFT media.

iv. CDN and Cache:

● Cloudflare for fast delivery of static assets.

● Redis for caching frequently accessed data.

e. Scalability Features

i. Designed to support high transaction volumes with Layer 2 solutions

(e.g., Polygon).

ii. Future interoperability with Binance Smart Chain and other

blockchain networks.

Implementation Status

Functionality Status Description

NFT Creation Completed (100%) Supports minting via

ERC721 and metadata
registration on IPFS.
Auctions (Auction.sol) Partial (70%) Basic bidding logistics and
rules completed; on-chain
validation adjustments
pending.

Royalties Distribution Incomplete (30%) Configurable royalties are

defined in the NFT contract,
but integration is
incomplete.

Wallet Integration Completed (100%) Supports MetaMask and

WalletConnect.

Timed Auctions Incomplete (0%) Logic for automatic ending

and time extensions not
implemented.

Open Auctions Incomplete (0%) Not initiated.

Security Management Partial (50%) Basic access control

implemented; reentrancy
protection is pending.

Community Features Incomplete (0%) Requires development of

forums, reviews, and social
sharing functionalities.

Analytics Dashboard Incomplete (0%) Needs implementation for

tracking sales, royalties, and
marketplace trends.

Design Patterns Used

1. Microservices Architecture
a. Each primary functionality (auctions, authentication, payments) is an
independent service.
 b. Communication between services is done via REST APIs and asynchronous
events using RabbitMQ.

2. Smart Contract Design Patterns

a. Factory Pattern: Used for AuctionFactory contracts.

b. Proxy Pattern: Implemented for ease of contract upgrades.

3. Blockchain Integration
a. On-chain events trigger backend notifications.

b. Listeners implemented with Ethers.js to capture events.

Communication Between Microservices

● REST APIs: Expose endpoints for CRUD functionality.

● WebSocket: Provides real-time updates (e.g., new bids, auction results).

● RabbitMQ: Facilitates asynchronous communication between services (e.g.,

payment and auction events).

Smart Contract Design

1. NFT.sol
○ Status: Completed (100%)

○ Functions:

i. mint(address to, string memory tokenURI): Creates a new NFT with

metadata stored on IPFS.

ii. setRoyalties(address recipient, uint256 percentage): Defines royalties

for secondary sales.

iii. getRoyalties(uint256 tokenId): Returns the configured royalties for a

specific token.

○ Events:

i. Transfer(address from, address to, uint256 tokenId): Notifies NFT

transfers.

ii. RoyaltiesSet(uint256 tokenId, address recipient, uint256 percentage):

Notifies royalties configuration.

2. AuctionFactory.sol
○ Status: Partial (70%)
 ○ Functions:

i. createAuction(address nftAddress, uint256 startPrice, uint256

endTime): Creates and registers a new auction contract.

ii. getActiveAuctions(): Returns the list of active auctions.

○ Events:

i. AuctionCreated(address auctionContract, address creator): Notifies

the creation of new auctions.

3. Auction.sol
○ Status: Partial (60%)

○ Functions:

i. placeBid(): Allows users to place bids. - Implemented, but minimum

increment validation pending.

ii. endAuction(): Ends the auction, transferring the NFT to the winner.

iii. withdraw(): Allows participants to reclaim funds from unsuccessful

bids.

○ Events:

i. BidPlaced(address bidder, uint256 amount): Notifies new bids.

ii. AuctionEnded(address winner, uint256 finalAmount): Notifies the

auction’s conclusion.

Diagrams
Architecture Diagrams
● Frontend, backend, and blockchain interaction.

● Storage and data flow using IPFS, PostgreSQL, and MongoDB.

Use Case Diagrams
1. Creator
Illustrates NFT creation, listing, and managing royalties.

2. Collector (Buyer)
Covers browsing, bidding, and purchasing NFTs.
 3. Administrator
Focuses on user management, monitoring transactions, and approving/removing listings.

4. General User
Actions such as registering, connecting wallets, and sharing NFTs.

5. Payment Gateways
Models interactions for crypto and FIAT payments.
Sequence Diagrams
1. NFT Creation:
Uploading assets, storing metadata, and minting NFTs.
 2. NFT Purchase:
Finalizing transactions via blockchain or FIAT payment gateway.

3. Auction Flow
Bidding, winning, and finalizing ownership transfer.
Next Steps
Below is a more detailed breakdown of the next steps, ensuring clarity on tasks, priorities,
and deliverables for the NFT Marketplace project:

Required Adjustments
1. Timed and Open Auctions
a. Objective: Implement enhanced auction functionalities, including timed
auctions and open bidding.

b. Tasks:
 i. Develop logic for automatic auction termination based on a predefined
end time.

ii. Add support for time extensions triggered by last-minute bids.

iii. Ensure open auctions allow sellers to accept or reject bids manually.

iv. Update smart contracts to handle the above scenarios securely.

v. Integrate frontend components for user notifications about auction

status changes.

c. Deliverables:

i. Fully functional auction contracts.

ii. Real-time frontend updates for auction states.

iii. Backend API for retrieving live auction data.

2. Royalties Integration
a. Objective: Automate royalty distribution for creators on secondary sales.

b. Tasks:

i. Extend NFT.sol to enforce royalties defined at minting.

ii. Integrate royalty logic within the Auction.sol contract to ensure

payouts on secondary transactions.

iii. Implement a royalties tracker in the backend for real-time insights.

iv. Add UI elements to display royalties clearly on NFT detail pages.

c. Deliverables:

i. Automated royalty distribution for both direct sales and auction

transactions.

ii. Comprehensive testing to ensure accurate payouts.

iii. Frontend dashboard showing royalty earnings.

3. Community Features
a. Objective: Foster user engagement through social tools and
community-building features.

b. Tasks:

i. Implement user ratings and reviews for NFTs and sellers.

ii. Build social sharing tools for platforms like Twitter, Instagram, and
Discord.
 iii. Develop discussion forums where users can connect and collaborate.

iv. Add a system for following creators to get updates on new NFTs or
auctions.

c. Deliverables:

i. Ratings and reviews system visible on NFT pages.

ii. Fully integrated sharing buttons with pre-populated messages.

iii. User forums accessible from the dashboard.

iv. Creator following system with notification integration.

4. Analytics Dashboard
a. Objective: Provide insights for creators and collectors, enhancing their
marketplace experience.

b. Tasks:

i. Develop APIs to retrieve data on sales volume, bidding trends, and

user activity.

ii. Build frontend components to display key metrics, such as:

iii. Total earnings.

iv. NFTs sold or purchased.

v. Popular categories or trending NFTs.

vi. Add filters to analyze data by time period, categories, or creator

performance.

c. Deliverables:

i. User-friendly analytics dashboards for creators and collectors.

ii. Interactive charts and graphs powered by APIs.

iii. Backend storage for historical analytics data.

5. Security Enhancements
a. Objective: Strengthen platform security to safeguard user data, transactions,
and assets.

b. Tasks:

i. Finalize reentrancy protection in smart contracts using best practices.

ii. Integrate AI-driven fraud detection to monitor transactions for

anomalies.
 iii. Conduct regular audits with tools like MythX and Slither.

iv. Add multi-factor authentication (MFA) to user accounts.

v. Perform penetration testing to identify and mitigate vulnerabilities.

c. Deliverables:

i. Fully audited and secure smart contracts.

ii. Fraud detection and reporting mechanisms.

iii. Penetration test reports with resolved vulnerabilities.

iv. MFA implemented for all users.

6. Scalability and Multichain Support

a. Objective: Prepare the platform for growth and interoperability with additional
blockchains.

b. Tasks:

i. Research and integrate Layer 2 solutions (e.g., Polygon or Optimism)

to reduce gas fees.

ii. Develop support for Binance Smart Chain and potential future
blockchains.

iii. Design modular backend services to handle multichain requests.

iv. Test scalability under high transaction loads.

c. Deliverables:

i. Multichain-enabled contracts and backend.

ii. Layer 2 integration with seamless UX for users.

iii. Load testing reports demonstrating platform stability.

7. Payment Gateway Enhancements

a. Objective: Ensure seamless and secure payments using both crypto and
FIAT options.

b. Tasks:

i. Enhance the crypto payment flow with support for additional tokens
(e.g., USDT, MATIC).

ii. Expand FIAT payment integrations with MoonPay and Stripe.

iii. Implement escrow services to hold payments securely until

transaction completion.
 iv. Provide clear payment status tracking on the frontend.

c. Deliverables:

i. Functional escrow system integrated into the backend.

ii. Extended token support for crypto payments.

iii. Simplified FIAT payment process for onboarding traditional users.

8. Risk Management
a. Objective: Mitigate risks associated with market volatility, security, and
scalability.

b. Tasks:

i. Introduce support for stablecoins to minimize cryptocurrency volatility.

ii. Maintain compliance with global regulations on digital assets and

NFTs.

iii. Regularly update the platform to handle increased traffic and

transaction volumes.

c. Deliverables:

i. Stablecoin payment options integrated into smart contracts.

ii. Compliance documentation for key jurisdictions.

iii. Scalable architecture validated through stress testing.