OpenSea on the cusp: Will Web3 be the answer to everything?

On January 10, LooksRare, a community-centric NFT trading platform, announced its official launch and distributed LOOKS airdrops to some OpenSea users. In addition, LooksRare also established a series of economic incentives. For example, 100% of its platform transaction fees are held by LOOKS tokens. Someone earns, this reward model is created for the “fees mainly reward a single subject” in the previous generation of NFT market, it can be said that the sword refers to OpenSea.

On the day before the LooksRare airdrop, at about 21:00 on January 9, the OpenSea service was down. This is not the first time that OpenSea has failed. Although OpenSea has supported Polygon, transactions are still mainly carried out on Ethereum. Problems such as blockage and delay occur frequently, and the gas fee is high. It is even nicknamed “ClosedSea” by netizens.

There are external competitors who are staring at them, and there are internal products whose performance is unsatisfactory. Under the internal and external troubles, OpenSea stands on the cusp. What challenges does OpenSea face today? What is its moat? Will it fully step into the Web3 world?

The big tree attracts the wind, what is the moat of OpenSea?

Despite the controversy, OpenSea’s current success is unquestionable.

2021 is the year when the NFT market explodes, and OpenSea, the absolute leader in the industry, also explodes. According to Dune Analytics data, from December 2020 to December 2021, OpenSea’s total transaction volume increased by 90,968%; its market share has also soared, from 61% in July 2021 to 95% by the end of December 2021, a steady increase Ranked first, while SuperRare’s total transaction volume and user volume are only 1/24 and 1/6 of OpenSea’s, respectively.

Entering 2022, OpenSea continues to ride the wind and waves. On January 9, the single-day transaction volume exceeded 260 million US dollars, which was the peak in the past three months. As of January 10, the cumulative transaction volume of OpenSea in January has reached nearly 2 billion US dollars, which is about 61% of the transaction volume in December last year.

On January 4, OpenSea announced that it has completed a $300 million Series C financing at a post-investment valuation of $13.3 billion, and its valuation has successfully increased by 6 times since the previous round of $100 million in Series B financing.

Such achievements are not unrelated to OpenSea’s advantages in liquidity. Based on the reports of several encryption research institutions, the liquidity advantages of OpenSea are mainly reflected in the following three aspects:

(1) OpenSea allows users to make and sell NFTs for free without paying gas fees. This lowers the barriers to participation and expands the supply of long-tail creators, thereby attracting users and liquidity in primary and secondary markets.

(2) OpenSea aggregates and provides a wide range of asset types. This tolerant strategy is a key competitive advantage, and OpenSea has also become the preferred market/liquidity source for many early-stage assets.

(3) OpenSea has a large number of NFTs available for “immediate purchase”, and the more NFTs that can be purchased immediately, the higher the market liquidity.

The liquidity accumulated for a long time has become the moat of OpenSea at this stage. W3.Hitchhiker believes, “Since the NFTs sold on OpenSea are non-standardized products, unlike platforms that provide standardized products, liquidity is easy to be migrated, and the liquidity of the NFT market itself is poor, and the price of decentralized liquidity is for the market. Too high, which makes it difficult for other adversaries to steal OpenSea’s ‘liquidity’.”

Under the protection of the moat of liquidity, will the recent vigorous rebellion against OpenSea bring substantial harm to OpenSea?

Qunqiergong, OpenSea What are the challenges?

On Christmas Day last year, OpenSea users were dissatisfied with OpenSea’s delay in issuing coins, and many of its behaviors seemed to indicate the possibility of an IPO, so they set up an autonomous organization, OpenDAO, to airdrop SOS tokens to OpenSea users. This is equivalent to issuing a coin for OpenSea, which seems to be a functional supplement to the OpenSea platform. It is expected that OpenDAO can go a step further and cooperate with other NFT markets to establish a decentralized OpenSea alternative and open a new NFT ecological network. However, OpenDAO does not seem to start substantive action, but the hype is intensifying.

Unlike OpenSea, which uses products to gather users and build communities, OpenDAO and SOS lack core uses, but they are better at narrative. By capturing open-source on-chain data and airdropping it, it cleverly captured OpenSea users. After these users made a profit, they spontaneously posted the annual NFT bills initiated by OpenDAO on social media, and the high gas consumption of OpenSea Fei was displayed intuitively, arousing people’s dissatisfaction and resonance with OpenDAO, followed by emojis such as “OpenSea, I will call the police if you don’t send coins”, which made OpenDAO in the short term. increased influence over time.

It can be seen that OpenDAO is taking the opposite route to OpenSea, that is, first using rewards to gather users, and using emotions to accumulate token value, but whether the tokens will have actual use and value support in the later stage is still unknown. The current SOS is more similar to the meme currency. The income obtained through SOS is actually paid by the investors in the secondary market. According to CoinGecko data, the price of the SOS token climbed to a new high of $0.00001108 the day after the airdrop, but then fell 64%.

The rise of community power requires attention in this event. OpenDAO’s “sneak attack” made OpenSea and users more and more antagonistic, and brought the negative emotions of users to the forefront and broke out. It also reflects the development of blockchain technology and Web3 culture, which is constantly empowering the community and users. Users’ behaviors and contributed data on the platform need to be effectively rewarded. The original center needs to be deconstructed, and a new consensus has begun to form. These emotions are what OpenSea needs to capture and reflect on. Moreover, through the increasingly easy-to-use DAO tools and a series of related infrastructures, the emotions of users can be condensed into real power at any time. If the project party cannot remain competitive in serving users and sharing benefits, it will be “DAO”. possible.

OpenDAO with “no works” is not to be feared for the time being, but LooksRare, which was launched and airdropped on January 10, seems to be more like a “vampire attack” against OpenSea. LooksRare, a community-focused NFT trading platform, announced on its launch day that it will airdrop LOOKS tokens to users who have traded at least 3 ETH on OpenSea from June 16 to December 16, 2021, directly targeting the OpenSea user base . LooksRare has also set up transaction mining, single-currency pledge, and liquidity mining. These economic incentives may put real pressure on the OpenSea model. There are also TreasureDAO, Mintable, etc., which are the real projects of OpenSea. Compete.

Speaking of “Vampire Attack”, it goes back to SushiSwap in 2020. Similar to the situation of OpenSea, at that time, the DEX leader Uniswap did not issue coins. SushiSwap forked Uniswap and issued tokens to separate a large number of Uniswap users. At that time, Uniswap’s counterattack was to issue UNI tokens.

So, will OpenSea issue coins? Will it go to Web3?

Where to go, can Web3 solve everything?

On January 4, OpenSea announced the completion of a $300 million Series C financing at a post-investment valuation of $13.3 billion. In the 4-year history of OpenSea, more than 5 rounds of financing have been conducted, and most of the participants are “New Money” related to the crypto industry; however, in this C round of financing, the traditional institution “Old Money” dominated, and the list appeared again. Once Coatue, a private equity fund (PE) and a hedge fund, stepped in, it was hard not to be reminiscent of OpenSea’s IPO plans.

Although OpenSea responded to the IPO statement in early December, saying, “We have no plans for an IPO. If there is a plan, we will seek to involve the community.” However, how the community participates in the IPO will not be discussed below. The community does not trust The spread of emotions also directly led to the birth of OpenDAO.

The root cause of OpenSea’s sway and users’ suspicion is that the current OpenSea is a Web2 application built in the Web3 world. Where such a “four dissimilarity” will go next is still in the air.

Since its creation, OpenSea has built a wallet system naturally, which is one of the manifestations of its Web3 features; but OpenSea is not enough Web3, it is not built on the chain.

Such a twisted structure makes the governance of OpenSea twisted. On the one hand, it hopes to be as open as a decentralized platform, so there is no review step when users create NFTs; on the other hand, it can directly delist or freeze users’ NFTs in a centralized manner. As a result, many frictions have fueled the rebellion in the community. For example, political painters accused the platform of “political censorship” of his NFT works, and in the previous $2 million BAYC theft incident, OpenSea froze the theft Asset disputes, etc.

It seems that OpenSea cannot be blamed, but the entire NFT market is facing a dilemma. dForce founder Yang Mindao tweeted that the platform needs to protect the IP of creators/producers, otherwise it cannot attract them, but if the platform does this, it becomes a Web2. Tokens alone cannot solve the problem.

As far as the current development of Web3 is concerned, there is more than one dead end. A recent article also sparked discussions on the “centralization trend” of the Web3 world.

This article stems from an experiment by author Moxie at OpenSea. Moxie minted an NFT and sold it on OpenSea. He found that there was no verification process during the process, so he deliberately set the image to show different appearances for different IPs, that is to say, the one seen on OpenSea It is a picture, and after buying it, I see another picture.

OpenSea, as a centralized platform, quickly delisted this NFT, but strangely, Moxie found that the NFT in his MetaMask wallet also disappeared.

That is to say, in order to improve efficiency, MetaMask also adopts a centralized processing method – directly scanning OpenSea’s API without scanning the blockchain.

Moxie pointed out that the key here is that the blockchain does have many benefits, but it is too inefficient to work entirely on the chain at this stage. In a competitive environment, everyone will naturally rely on various ready-made tools in the ecosystem, so There is a trend of sliding from decentralization to centralization. The same goes for users, how many regular users are running their own nodes?

Therefore, Web3 needs to compromise and still guarantee the verifiability of information while the infrastructure may still be centralized. In other words, the user can use the centralized OpenSea, but the user must have a way to easily know whether OpenSea is lying to him.

But Buterin responded to Moxie and said that the real Web3 world should have a continuous transition spectrum. Between the best centralized platform and the most difficult to use server, there are a lot of transition states to adapt to different application scenarios. But today the middle part is missing.

These middle grounds, then, may be where the “LooksRare” grow. They may not crowd OpenSea’s soil, but they will have their place. OpenSea is not the only way to go with Web2 and Web3. How to maximize its first-mover advantage and liquidity advantage, how to win back users and maintain its leading position requires OpenSea to continue to explore.

Epilogue

As an early entrant, OpenSea survived the cold winter, paved the way for the construction of the NFT market and related facilities, and shared the huge dividends of the industry outbreak. Today, it faces many challenges, standing at the intersection of Web2 and Web3, in the context of technology empowering users, we will wait and see where it will go.

There are many words or new ways of playing, which can easily incite the disappointment of OpenSea, and it can easily make people think that they have held the invitation letter to the Web3 world, but every hill in the process requires another one. Turn over the seat.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/opensea-on-the-cusp-will-web3-be-the-answer-to-everything/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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