OpenSea: Revolutionary in the NFT market

In the past year, NFT, as an emerging form of goods, has frequently appeared in the public eye, and the company most closely connected with NFT, OpenSea, has been silently developing for several years.

In late July 2021, OpenSea received US$100 million in Series B financing at a valuation of US$1.5 billion. In late August, OpenSea’s daily trading volume reached a short-term peak, breaking through 100 million U.S. dollars.

This article is a record of the development history of OpenSea. Let’s take a look at the NFT head enterprises and how they view the development of NFT. The original text is longer and slightly deleted.

Since its establishment in 2017, OpenSea has become the undisputed leader in the NFT market, with a share of over 97% and a transaction volume of 12 times that of its closest competitor. The intuitive response to these numbers may ask about the size of the market. Of course, OpenSea is won, but in the end won what ?

Regardless of people’s stance on this field, these figures show that NFT is far more than a trivial interest, and that OpenSea is more than just a mysterious peddler. Since the beginning of this year, NFT ‘s sales have exceeded 13 billion U.S. dollars . If sales for the rest of this year are the same as the previous quarter, the annual gross merchandise ( GMV ) of 25 billion U.S. dollars is just around the corner. This scale not only puts OpenSea ahead of the competition, but also surpasses the traditional web2 market. In the most recent quarterly report, the e-commerce platform Etsy reported a GMV of US$3.04 billion; OpenSea exceeded this figure in August alone. 

OpenSea: Revolutionary in the NFT market

GMV data comparison between Dune and Etsy

Coupled with the high-pitched culture of the crypto market, these figures may portray OpenSea as a risky trafficker, the grandest bazaar in an abnormal kingdom. This will damage the creativity and wisdom of NFT and make people misjudge the uniqueness of OpenSea. 

This is not a company ruled by manic YOLOism, but a company guided by patience and conservatism. When opponents try new features and different models, OpenSea has been focusing on improving its core products. The result is a subtle and self-contradictory state of business that empowers radical things, but only in moderation. 

Here are the past, present and future of OpenSea.

Origin: Creative experience before OpenSea 

Before Devin Finzer started the OpenSea business, his first hot business occurred in 2011. On Halloween in his junior year, this computer science student released his work-Coursekick, to other students of Brown University. This is a social course registration system. You can easily choose your own courses and check the registration of friends. Course. Compared with the outdated incumbent curriculum system, it proved to be a popular and effective. Within a few days, CourseKick had 500 users, and after a few days, the number of users reached 1,000. More than a week later, 20% of Brown University students are on the platform. 

Although this product did not yield results in the end, CourseKick provided valuable experience to its founding members.

OpenSea: Revolutionary in the NFT market

His experience at CourseKick inspired Finzer’s obsession with entrepreneurship. After graduation, he went to Pinterest to work as an engineer on the growth team. Less than two years later, he decided to build his own project again. 

In April 2015, just one month after leaving Pinterest, Finzer launched two new projects: Iris Labs and Claim dog . The former is a set of ophthalmological tools, the latter allows people to retrieve “unclaimed property”, users can use Claimdog to search for whether the company owes them money.

According to Finzer’s post on the company’s Product Hunt, this project is very interesting

Unclaimed property refers to money that a company owes to an individual or organization but cannot successfully return it to them. For example, suppose you forgot to cash the check-where did the money go? The state government requires companies to hand over them to them after a period of time in accordance with the law. Uncashed checks, stock dividends, checks sent to old addresses, abandoned bank accounts or PayPal accounts, and inheritance are common sources of these unclaimed assets.

During this period of work, Finzer fell into the encryption rabbit hole and became more and more fascinated by the blockchain and the new economic system it produced. This contrasted sharply with the more stable financial field in his daily work.

In the fall of 2017, Finzer decided to start business in the encryption field, working with another young software developer, Alex Atallah. In September of that year, Finzer and Atallah showed off their project, Wificoin, on Techcrunch’s Hackathon. This is a WiFi sharing platform project. Users can sell WiFi router access rights in exchange for corresponding Tokens. Helium, which is similar to this project, received Series B financing from Google Ventures.

The emergence of CryptoKitties, the eve of the NFT outbreak

November 28, 2017 was a historic day for the crypto community. CryptoKitties was officially launched. Like many other innovations, its face looks like a toy. 

The seemingly stupid crypto kitty aroused people’s great interest. Back then, a crazy bid for the collectible “Genesis” was priced at 247 ETH, which was about $118,000 at that time. (Today, that’s $894,000.)

OpenSea: Revolutionary in the NFT market

Encrypted cat

Although some people despise this project, others see new opportunities. CryptoKitty is not just a cute picture, but a kind of “non-homogenization” (NFT), which is based on the encryption standard called ERC-721, which supports other NFTs.

Let us quickly ask ourselves three questions: 

  1. What is NFT? It is a data unit that cannot be changed. This unit can be anything: a picture, a song, a video, or even a picture of a weird cat. 
  2. Why would anyone want to buy NFT? It is usually related to status, scarcity and sense of belonging. Having an NFT can grant influence, showcase your personality, or give you access to private groups. 
  3. How does ERC-721 work? Think of it as the underlying infrastructure for projects such as CryptoKitties. It is important to know that ERC-721 is also the infrastructure for many projects outside of CryptoKitties. Therefore, if you can build a market on top of ERC-721, you can easily support other NFTs. 

It was the last point that really attracted Finzer.

What makes us think that there may be a bigger market, there is a standard for digital projects… everything that appears after CryptoKitties will follow the same standard.

He and Atallah decided to abandon their work on Wificoin and started with CryptoKitties to create a “meta universe market”. Given that few NFTs were created at the time, this does not seem to be a particularly exciting proposal.

When you start a project, you are looking for things you haven’t done before. This has not been done before.

History is full of moments of simultaneous invention. Think of Leibniz and Newton fabricating calculus, or Darwin and Wallace deciphering evolution. Each revelation is discovered independently. Although the scale is different, the market potential built on ERC-721 looks like another example of multiple discoveries. 

Finzer and Atallah are not alone, almost after their colleagues decided to create OpenSea, another team also decided to build a solution in this field, Rare Bits

Rare Bits consists of four former Zynga employees and seems to be able to take advantage of this new space. After all, NFT will be mainly used by gamers, right? The industry’s view at the time was that NFTs might appeal to this market segment-providing game developers with a way to sell new skins, special weapons, and other digital goods.

In February 2018, on the same day, OpenSea and Rare Bits were released on Product Hunt.

OpenSea describes itself as the “Ebay of encrypted goods.”  

Rare Bits uses a “zero-fee crypto asset market similar to eBay”. 

OpenSea: Revolutionary in the NFT market

product search

At the end of the first day, OpenSea defeated its competitors, 447 than Rare Bits’ 230. Both were overwhelmed by a host of other products including Intel’s new smart glasses, a book on UX job interviews, and a set of “indestructible tights.” “

When it comes to the venture capital market, the role is reversed. After graduating from Y Combinator, OpenSea successfully raised $2 million from a strong lineup including 1confirmation, Founders Fund, Coinbase Ventures and Blockchain Capital. Impressive work, but far behind the $6 million Rare Bits obtained a month ago, the latter involved Spark, First Round and Craft. 

Richard Chen, the general partner of 1confirmation, summarized the consensus at the time and explained his company’s bet: 

Rare Bits is a better team on the surface-they are former Zynga, and they have raised much more funds from traditional venture capital than OpenSea. However, the OpenSea team is more leaner. They discovered new NFT projects, made these projects listed on OpenSea, and successfully attracted most of the transaction volume to OpenSea instead of Rare Bits. When we invested in April 2018, OpenSea’s trading volume was already about 4 times that of Rare Bits.

Although Rare Bits prides itself on not charging a commission for the first sale (OpenSea charges 1% in 2018) and refunding any gas fees incurred by users, the distance between the two companies seems to only widen over time. 

However, this kind of charity seems out of sync with the “crypto winter” of 2018. While Rare Bits is burning money to maintain its popularity, OpenSea seems to have taken another approach, charging fees and striving for excellence. As of August 2020, the company has only 7 employees. 

In order to fight for the number, Rare Bits launched new experiments, including cooperation with Crunchyroll, allowing users to collect “digital stickers” of anime characters. At the same time, OpenSea remains focused and persistently improves its core exchange, even if interest in the industry is needed. When asked why OpenSea can outperform Rare Bits in the long run, Finzer replied: 

Perhaps it is the willingness to enter the field for a long time, regardless of the recent growth trajectory. We want to build a decentralized market for NFT, we can make it small for 3-4 years.

By 2019, Rare Bits seems to have closed down. Today, if you visit the website, it will redirect to CoinGecko. 

For OpenSea, the story has just begun. 

NFT rave parties, growth is just right

It is difficult for us to grasp how much the NFT market has grown in a year. 

Earlier in this article, we noted that OpenSea alone is expected to exceed US$27.5 billion in 2021. If the company maintains its 97% market share, this means that the total annual GMV is $28.4 billion. 

NFT sales in 2020 will be 94.8 million U.S. dollars. This is an increase of 30,000% over last year. Our brain cannot understand this kind of growth, this sudden gigantism. In the blink of an eye, NFTs have matured from an annoying trivia to a wandering behemoth.

This is largely due to the popularity of NFTs for profile pictures, called the “pfp” project. Famous representatives of the movement include CryptoPunks, Bored Ape Yacht Club (BAYC), Pudgy Penguins, Meebits, and many other organizations. 

OpenSea: Revolutionary in the NFT market

The number of these roles has increased sharply, and with the interaction of social media, it has further promoted collection, speculation and investment. (The boundaries between these three are often so blurred that they cannot be distinguished from each other.) 

Even people in the industry find themselves surprised by this appearance, partly because it represents a deviation from initial expectations. As the story of Rare Bits illustrates, NFT is expected to coincide with the game field. Projects such as Gods Unchained and Decentraland, The Sandbox and Animoca Brands are expected to push the field forward.

In general, this is not the case. There is a huge exception: Axie Infinity, which is both a blockchain game and the largest number of NFT projects. However, on the whole, pfps seems to be the dominant form. Five of the top ten projects ranked by historical quantity can be reasonably classified as pfp products. In terms of quantity, they reached 5.4 billion U.S. dollars, accounting for 37.3% of the total. If Axie is excluded and replaced with the 11th project-Sandbox-pfp’s share of transaction volume in these projects will reach 73%.  

OpenSea: Revolutionary in the NFT market


Even Finzer admitted that he did not see the current wave coming. “We did not predict the rise of Bored Ape Yacht Club or other collectibles.” 

This is a bit surprising in some ways. On the one hand, OpenSea has long recognized the potential of encrypted incarnations. At the beginning of 2018, Finzer actually brought in his old friend Dylan Field to help him make Ethmoji. 

OpenSea: Revolutionary in the NFT market

Counterclockwise: Jessica Phan, Alex Atallah, Devin Finzer, Dylan Field and Elena Nadolinski. Offered by Richard Chen

Users can use combinable elements such as eyes, mouth, and accessories to create a profile picture.  

OpenSea: Revolutionary in the NFT market


Driven by Finzer, Ethmoji was ignored. Although it has not received much attention, it still seems to be active until 2019-a year after its establishment-Atallah tweeted that the new avatar is still being created. 

Another surprising reason Finzer did not anticipate the pfp revolution may be that OpenSea currently looks tailor-made. This has a lot to do with the company’s seemingly powerful products. 

Delicate product moat

Logically speaking, OpenSea’s product is simple: it is a market for buying and selling NFTs. But its success is due to more subtle factors. In particular, the company’s dominance seems to benefit from the ease of listing, the breadth of assets on the platform, and a powerful filtering and cataloging system. 

Permission list

Start NFT on OpenSea, whether it is an image or a song, just a few clicks, fill in the work information and upload the relevant data.

OpenSea: Revolutionary in the NFT market


Alex Gedevani from crypto researcher Delphi Digital described it as one of the decisive factors behind OpenSea’s dominance:

[OpenSea] emphasizes becoming a permissionless market for NFT casting, discovery and trading [explain its market share growth]. Due to the lower barriers to entry compared to other platforms, this makes it easy for the long tail of creators to join. This approach expands the supply side of creators, thereby attracting users and liquidity in the primary and secondary markets. If Uniswap is the market for any altcoin, then OpenSea is the market for any NFT.

Although other markets have since followed suit and made it easier to release products, OpenSea is clearly in a leading position in this regard, which has helped bring a lot of assets to the platform. 

Asset breadth

OpenSea divides its choices into eight categories: art, music, domain names, virtual worlds, trading cards, collectibles, sports, and utilities. 

OpenSea: Revolutionary in the NFT market


“Collectibles” has proven to be the most popular category, but the above distribution illustrates the diversity of NFTs and the various products offered by OpenSea. According to the company’s website, there are more than 1 million collections on the platform, and more than 34 million personal NFTs are available for purchase. It’s worth noting that even this number may be out of date, as it coexists with OpenSea’s statement that it processed $4 billion in transaction volume; we know it does more. 

According to Mason Nystrom, an analyst at encrypted data platform Messari, this inclusive approach proves a key competitive advantage, especially for rival Rarible .

OpenSea aggregates and provides a wide range of different assets. Therefore, although Rarible received early trading volume due to its liquidity mining at the time of launch, Rarible did not aggregate other non-Rarible assets (i.e. Punks, Axies, Art). As a result, OpenSea became the market/liquidity of choice for many of these early assets. OpenSea also provides a great indexer through royalties from other platforms, and a great UI for filtering assets, verified contracts, and a way for users to create NFTs. 

Maria Shen, a partner at Electric Capital, highlighted a key part of the OpenSea platform’s liquidity, which is the large number of NFTs available to “buy now”.

It is important to capture the “buy now” mechanism because the more “buy now” NFTs you have, the more liquid your market will be…Opensea has the most “buy now”.

By embracing various assets, OpenSea has made itself the default setting of the NFT ecosystem-competitors may find it difficult to escape this perception and position.
However, the scope of the platform comes at a price-in order to obtain a wide range of options, powerful search and filtering are necessary.   

Powerful filtering mechanism

NFT projects vary greatly in their overall form and the details that contribute to their value. Important features that one project needs to be aware of may not be relevant to another project. OpenSea excels at capturing, cataloging, and allowing users to search for this information. 

To explain what we mean, let’s take a look at two popular pfp series: CryptoPunks and Bored Ape Yacht Club. 

This is what CryptoPunks look like-they are pixelated faces with different skin tones, hairstyles and accessories. Although most of them are humans, there are also some zombies, apes and alien punks. 

OpenSea: Revolutionary in the NFT market

On OpenSea encryption punk

These distinctions are important because they can directly indicate rarity. Punks with common characteristics (such as earrings) may be less expensive than rare alien punks equipped with hats, sunglasses, and pipes. In fact, “CryptoPunk #7804” with these attributes was finally sold at the current price of 4,200 ETH or 15.1 million USD. 

OpenSea: Revolutionary in the NFT market

Being able to filter through these qualities is very important for potential CryptoPunk buyers, but they are useless for anyone who wants to protect one of the Bored Apes legions: 

OpenSea: Revolutionary in the NFT market

The Boring Ape on OpenSea

For ape connoisseurs, the salient aspects include the color of the fur, whether the ape is eating pizza, and glowing eyes. One of the most expensive BAYCs purchased on OpenSea was the acquisition of “#3749”, an ape with golden fur, captain’s hat and red laser eyes. It was sold for 740 ETH or $2.7 million at the current price. (The interesting thing is that it was purchased by the official account of the blockchain game The Sandbox we discussed earlier.)

OpenSea: Revolutionary in the NFT market

OpenSea provides users with tools to filter and search items through the most important descriptions. 

OpenSea: Revolutionary in the NFT market


This may seem simple, but it has a huge impact on buyers. Richard Chen clarified this position:

People underestimate the importance of search and discovery for NFTs. Each NFT project (such as Meebits, Lost Poets) needs to customize search filters by attributes, and these filters must be manually added by OpenSea on a project-by-project basis. This creates a huge defensive user experience moat for OpenSea, which is difficult to replicate on other platforms. For example, on Rarible, I can’t even filter Meebits for skulls wearing headphones; therefore, it doesn’t make sense to make NFT shopping on one platform and then check out on another platform. By having an excellent NFT shopping user experience on OpenSea, users can stay on the platform and use OpenSea’s smart contracts for actual NFT transactions.

By treating each item as fundamentally unique, OpenSea builds a platform that truly caters to buyers, simplifies the browsing experience and makes it possible to capture purchases. 

All in all, OpenSea looks like a very cunning product, it perfectly captured last year’s bubble. With a permissionless creation method, a large number of assets on the platform, and a powerful filtering system, it looks like an enterprise surrounded by a subtle but important moat.  

Leadership and culture: outstanding winners

Despite being the CEO of one of the most important unicorns in the world, and despite his brainchildren imposing noble dominance on his dominance, he speaks and behaves gently. 

When asked explicitly about the success of OpenSea, he often changes the subject, turning to all the issues that the exchange has not yet resolved, and all the improvements that need to be made. When asked about the grand vision of the platform and what it might bring in the next few years, he objected and said that the focus is on “striving to improve the core market.” His humility is almost pathological. A very good winner. 

According to different accounts, he is also very focused. A former employee called him “one of the most dedicated founders in the entire crypto space.” Chen described his first impression of Finzer: 

[He seems] very stoic, focusing on the company’s most important long-term priorities… [he] will not be distracted by short-term prices/speculation in the crypto market. 

In the face of fierce competition and market turmoil, OpenSea has maintained an admirable focus. 

This was largely helped by co-founder Alex Atallah. Chen described the CTO of OpenSea as a “10 times engineer” who has a special talent for React.js. Atallah is also described as paying close attention to the crypto ecosystem and “living in Discords”, an activity that helps to understand the needs of users keenly. Like Finzer, he is obviously relatively conservative, and both of them are described as “more risk-averse than ordinary founders.” If their leadership has obvious weaknesses, this is it. Chen also admitted and said: 

[Finzer and Atallah] are more willing to be in a favorable position in the macro NFT market trend than to take new measures to push the space forward.

The company they built seems to reflect this low-key demeanor overall. In our conversation, Finzer pointed out that he prefers a “flat” management structure, which gives employees ample opportunities to take the initiative, regardless of their claimed role. In our conversation, he mentioned a “pod” structure in which small groups unite to handle different projects, and the leadership of these subgroups is determined by the participants. 

Currently, the company is still very small, with a team of only 45 people. As mentioned earlier, this is a significant increase from a year ago, and Finzer stated that OpenSea had 7 employees in August 2020. If it goes well, it will soon expand, posting 21 job vacancies on Lever. 

Maybe when it grows so fast, things may slip through the cracks, which is natural. One obvious damage to OpenSea’s reputation came in September of this year. The user analyzed the transaction history of Nate Chastain, the company’s product leader at the time, and found that he was involved in the preemptive transaction. In some cases, Chastain seems to have bought NFTs that he knows will appear on the OpenSea homepage, using the increased visibility to sell them at a higher price. 

This strategy runs counter to OpenSea’s policy around “manipulative” trading behavior. Finzer expressed disappointment, Chastain resigned, and OpenSea formulated a policy prohibiting employees from “using confidential information to buy or sell any NFT, regardless of whether it is available on the OpenSea platform.” They are also not allowed to buy distinctive NFTs on the platform. 

For the behavior of individual employees, it is hard to blame OpenSea for working too hard. But for at least one category of competitors, the Chastain incident illustrates the need for alternatives. Many people come to the position of OpenSea. 

A16Z’s acceleration of OpenSea valuation

Before we understand OpenSea’s competitors, we must first flesh out our understanding of OpenSea’s valuation. In some ways, this is futile—it is a (fast) moving target that can make today’s analysis stupid tomorrow. 

We have seen this happening in the venture capital market, thanks to Andreessen Horowitz. In late July of this year, the company led a $100 million Series B financing in OpenSea at a valuation of $1.5 billion. At that time, OpenSea handled less than US$1 billion in transactions throughout the year, with an average monthly fee of US$8.5 million. 

This now looks like a ridiculous steal. In the two months after a16z announced its investment, OpenSea’s GMV increased more than six times to reach 6.4 billion U.S. dollars, and expenses changed simultaneously. Between August and September, Finzer and the company charged an average of $220 million in monthly fees. 

So, should OpenSea be taken seriously today? 

Considering that OpenSea itself is an alliance, direct comparison is very tricky. But we can get an idea by looking at a small number of markets, cryptocurrency exchanges and betting platforms. Although no one is independent and perfect-the cost of physical goods traded in traditional markets is completely different, but exchanges may rely on different revenue streams, such as “order flow payment”, and NFTs and fantasy NFLs are not exactly the same-they are Compare. 

The chart below shows the valuations of companies—whether publicly available or in the previous round—divided by their “revenue run rate.” This is calculated by extending public data for the past three months. 

OpenSea: Revolutionary in the NFT market

One of these things is different from the other.

The valuation of OpenSea has obviously exceeded its last valuation. If given the same 13 times as Etsy, its value will exceed 24 billion U.S. dollars. Of course, its growth rate is much faster, and considering that Etsy has 1,400 employees, while OpenSea has only 45 employees, the cost structure should be much lower. 

(On the contrary, OpenSea’s revenue is not very reliable. If we see a full encryption winter, it may drop by 90% or more.) 

The revenue run rate per employee is as high as 41 million U.S. dollars; Ebay’s price is hovering around 800,000 U.S. dollars. 

If OpenSea is raising another round of financing—every growth investor is definitely knocking on the door—only three months after the announcement of Series B financing, the company’s value seems more than 10 times more likely.

Now, OpenSea’s lead seems almost impeccable. Although its products and choices make it defensive, it operates in an early, highly active market. This leaves room for various competitors, including centralized NFT markets, decentralized markets, vertical markets, and cryptocurrency exchanges. 

OpenSea: Revolutionary in the NFT market

Centralized market

It can be said that the competition among other centralized NFT exchanges is the weakest, at least for now. Competitors include Nifty Gateway (now owned by Gemini), Foundation, MakersPlace and Zora. In some cases, these platforms differ from OpenSea in terms of choice and aesthetics—for example, Foundation is a minimalist and beautiful platform that attracts more design-sensitive creators—but there is still overlap. Both Foundation and Zora were established in 2020, and many people are also on the newer side. 

In the long run, can this group keep in touch with OpenSea? Given the network effects implied by this business, it is hard to imagine that OpenSea will be replaced, but the growth of the NFT market should mean that there is enough room for alternative destinations to flourish. This is especially true if they can build supply in certain categories and focus on feature sets. 

The success of OpenSea is also likely to encourage capital to flow into this area, because investors recognize the size of the bonus. This may give upstarts the firepower to compete for share, especially the many new buyers who may flood the ecosystem in the next few years. 

A more fundamental threat may come from decentralized participants. 

Decentralized market

Currently, OpenSea is a fully centralized entity that can fully control its platform. It charges 2.5% of the fees received by the company. (In addition to this fee, users must also pay “gas” fees, which are essentially network transaction fees.) In other words, power and wealth are not liquid. 

Will this matter in the NFT field? Someone must think so. 

In the course of last year, there have been many decentralized participants, among which Rarible is the most mature. This is also an interesting case, because the project was originally a centralized entity and raised $16 million in venture capital before announcing its intention to become a DAO. As part of the transition, Rarible issued a token in the summer of 2020. RARI can be earned by using the project’s platform, and governance rights can also be granted. 

After that release, Rarible briefly became the number one NFT platform in terms of trading volume, because scrubbing—the practice of buying and selling assets to increase trading volume and pricing—pushed up the exchange rate of $RARI. But this did not last long, and OpenSea’s excellent platform finally won back users, as Chen described:

Rarible launched the token to launch the token, and did not think deeply about the economics of tokens. As a result, they greatly motivated people who planted tokens to shuffle the transaction, and in the months of last summer, Rarible’s transaction volume surpassed OpenSea. But once the inorganic demand dries up, it becomes very obvious that OpenSea is a better product.

Although Rarible’s method is not an absolute success, it is not a failure either. Its RARI token has a fully diluted market value of $430 million, and in terms of volume, it is OpenSea’s closest competitor-not bad for a project that was established less than two years ago. 

However, more importantly, Rarible outlines the potential attack vectors for future decentralized players. As mentioned in the Sushi article, the community’s “Shoyu” project is an example of this, although it is still not online. Owners hope that the vigorous development of the broader Sushi ecosystem will drive sales. A twist? According to a source, there is only one engineer responsible for building Shoyu-defeating OpenSea is a task undertaken by one person. 

Artion is another notable attempt. Artion was founded by Andre Cronje, the creator of Year Finance, to resolve common complaints against OpenSea. It alleges that there are no platform usage fees, and it is based on Fantom’s network, not revenge, on the decision to make transactions faster and reduce gas fees.

Artion is the logical conclusion of the encryption motto of A16z partner Chris Dixon, “Your acceptance rate is my opportunity.” By charging a fee of 0%, Artion provides a powerful incentive to use its platform. In turn, it has open sourced its code so that others can easily fork and build on it. 

When asked why he would build a project with no profit potential, Cronje replied: “I like to make fires.” (*In this way, Cronje threw the phone into the river and walked away. A building in the background exploded into flames. , Denzel style.*) 

Is the fee reduction enough to compete with OpenSea? Opinions are divided. Chen believes that OpenSea products are difficult to replicate:  

OpenSea is hard to be attacked by forks and vampires. This is because 99% of engineering work is off-chain (e.g. search and discovery, infrastructure) and therefore cannot be forked.

Messari researcher Nystrom has a slightly different view, but he emphasizes the advantages of decentralized platforms: 

[P] No license agreement…will be more composable, community-driven, resist harmful regulation, attract better talent, and be profitable. In the long run, these qualities are the reason why most decentralized protocols will outperform centralized competitors. 

In the end, the second part of Nystrom’s answer explains how OpenSea may flourish despite the presence of strong decentralized competitors. 

I think both centralized and decentralized markets have a place, just like Coinbase and Uniswap have both succeeded. OpenSea will continue to exist and will provide excellent entry, UI and useful features.

Vertical market

Although it is not a direct competitor, OpenSea may see vertical platforms suck away its numbers. To some extent, this has already happened, and several of the largest NFT projects have facilitated buying and selling on their own exchanges.

For example, if you want to buy Axie, you won’t start by visiting OpenSea. Instead, you can go to Axie’s “internal market.” There, you will find an interface tailored to the product, with perfect filtering and search functions. Project-specific wallets and transaction trackers enhance this. 

OpenSea: Revolutionary in the NFT market

Axie Infinity

LarvalLabs (creator of CryptoPunks, NBA Topshot and Sorare) has a similar dynamic-all of which handle meaningful transaction volumes on its own platform. 

In the end, although OpenSea has done a great job in adapting to different NFTs, projects that have invested a lot of resources to build a professional platform will not be able to keep up. Finzer’s company hopes that it will grow stronger, win through choice, and continue to host publishers who are unable or unwilling to create customized solutions. 

OpenSea gives the impression that a company never worry too much about its competitors. Although more competitors are expected to join the competition in the next few years, there should be room for growth if the implementation continues. Greater concerns may come from elsewhere. 

Despite its size, OpenSea is still a start-up company with only a few dozen employees and has a track record of several years. Although it performs well and takes advantage of the exciting market expansion of cryptocurrencies, it also has vulnerabilities. Some may be within its control, and many are not. 

In particular, OpenSea needs to ensure that it responds to customer feedback to improve the platform, gradually takes action to reduce regulatory risks, and prepares for adverse market conditions. 

Respond to customer feedback

Despite being the default place in the crypto world, OpenSea sometimes gives the impression of an unpopular platform. Users complained about the company’s fees, the high oil prices generated by using the Ethereum blockchain, and the lack of decentralized features like tokens. 

It is commendable that OpenSea operates a customer portal where users can make suggestions for improvements and vote on previously submitted content. The list is long: 

OpenSea: Revolutionary in the NFT market


One of the most common requests is for OpenSea to add support for other blockchains, including Cardano, Tezos, Solana, etc. For now, the company supports Ethereum and Polygon-although less used, the gas cost of the latter is indeed lower. 

Support for Solana should be at the forefront. The project has exploded in the past year (it is well explained in Not Boring’s “Solana Summer”) and seems to have room for operation. Its low fees and fast transaction processing may make it very suitable for NFTs, as a series of chain-specific apes, cats, and chihuahuas have emerged, as well as a market, Solanart, as an aggregator. 

A project called The Degenerate Ape Academy has processed more than 950,000 Solanas on Solanart, which is equivalent to US$149 million at current prices. On OpenSea, it seems that Degenerate Apes worth about 1.9 ETH has been traded. 

OpenSea: Revolutionary in the NFT market

Degen Apes on Solanart

When asked what his strengths were in our discussion, Finzer replied: “I try my best to avoid being arrogant about things and look at things as they are.”

This seems to be true. As mentioned earlier, the CEO of OpenSea often mentions the shortcomings of the platform and sets out to correct them. He wants to make sure that OpenSea will not miss future breakthrough projects like Degen Apes. The challenge will be to add more features and more networks while maintaining the performance of the core product. 

Is NFT a security? 

If the US regulator makes a positive decision, OpenSea’s business will undoubtedly be affected. Securities and the market for selling securities must comply with SEC rules, which is a burden that requires OpenSea to do a lot of work and fundamentally change the NFT purchase process. 

So far, regulators have hardly stated how they view NFTs and whether they meet the four aspects of the “Howey Test”, which determines whether an asset is a security. To meet the standard, the following conditions must be met:  

  1. Invested money (or equivalent)
  2. It was invested as a “joint enterprise” 
  3. This investment comes with “reasonable profit expectations”
  4. This kind of profit comes from the efforts of others

Legal scholars are best able to determine whether the NFT meets the standards, but even outsiders will agree to invest in equivalents, usually expecting an increase in value. These potential profits do seem to depend on the work of others. Whether the NFT project represents an “ordinary enterprise” is a more difficult question. 

OpenSea should use this period of uncertainty to proactively work with regulators to help define appropriate boundaries and ensure that their platform is in a leading position in terms of compliance. If they can manage this well, then regulation may prove that it has fewer defenses against smaller, less stringent participants than sources of defense. Nystrom of Messari mentioned this, adding that it might reduce OpenSea’s options: 

As NFT grows, OpenSea may eventually rely on building a regulatory moat (similar to Coinbase) instead of providing riskier assets. 

Although we believe in the creativity and social power of NFTs, this space is indeed a kind of fanaticism. Fraud, false transactions and speculation are rampant, and prices do not always seem to be rational. 

In the short term, this cocktail may cause buyer dissatisfaction, thereby reducing OpenSea’s transaction volume. It is likely that this will be driven by a wider distance from cryptocurrencies-the current bull market is certainly not going to last forever-and investors will move from the more fantastical fringes of the world to mature projects. This may actually have a positive impact on blue chip NFT projects-crypto investors may regard CryptoPunk or Fidenza as a fairly secure storage of value. But at least, smaller projects and many projects that support them may see paper “returns” erased. 

How will OpenSea respond to this downturn?

Like several other fast-growing startups, OpenSea actually feels that it can withstand the test of such events. As we mentioned, the company has worked with a lean, low-cost team for most of its life cycle and thrived by staying focused. Assuming that it will not suddenly develop a lavish hobby, it should have enough treasury to survive the winter. It can use this time effectively by picking interesting vertical participants and prepare for the next crypto roller coaster. 

Frontier: Where is the next step for OpenSea and NFT?

What will NFT become? 

This is a problem that can make visionaries crazy. This form already includes painting art, music, fashion, games, fields, and countless other overlaps and overlaps between these forms. Equally important, as new projects continue to emerge on established boundaries, the terrain changes every day. 

Loot, released by Vine founder Dom Hofmann in late August this year, is an example of how new trends capture imagination. As we pointed out, most of the NFT mania is dominated by avatars-Loot tilts in the other direction, avoiding the black and white list image of the subject. The idea is that creators can build on Loot and provide different places for holders of this digital itinerary to express and reflect their ownership. 

OpenSea: Revolutionary in the NFT market


Chen said that music NFT may be worth paying attention to: 

Surprisingly, audio NFT has not yet taken off. A big reason is that NFT metadata now mainly only provides images or videos. OpenSea is working to support important metadata for rendering audio files, which will benefit projects like Catalog, which are building platforms for curated 1-of-1 NFT music.

Looking ahead, “smart” NFTs may represent another frontier field. Nystom outlined this opportunity: 

We can expect NFT to evolve from purely static to dynamic, that is, “smart” NFT, with AI integration and other cool features that evolve based on the use of NFT.

This is exciting. The only real boundary is law and technology. At some point in the future, we may buy an avatar with a “real” personality, whose thoughts will change and adapt. 

If NFT is now expected to reach tens of billions of transactions, what might mature markets manage?  

The challenge for OpenSea is to successfully catalog such complex and dizzying objects. The opportunity is to capture as many growing numbers as possible. 

Doing so may require new products and features. In the past few weeks, OpenSea has launched a mobile application. Although it does not allow buying and selling, this is the first step towards a true multi-platform product that can further popularize NFT. 

If we want to understand where the company might go, revisiting Coinbase’s roadmap may be a good choice. In many ways, this seems to be the closest simulation of OpenSea-a centralized encrypted exchange that serves as a natural entry point to the ecosystem and is keen to follow the rules. 

In other words, we should expect OpenSea to provide an institution-friendly product, which is different from Coinbase Pro. This can handle hosting, expensive purchases and providing white glove services. 

If regulation is feasible, partial ownership of NFTs will represent a huge unlock for the industry. As far as the current situation is concerned, many people are excluded just because of pricing. For example, the current “base price” of Boring Ape is 38.7 ETH, which is approximately US$140,000. This is beyond the reach of everyone except the rich. 

At the same time, holders of these NFTs have little choice in locking in revenue. If you are lucky enough to buy CryptoPunk for $10,000 and see its value increase to $1 million, should you sell it? What if a similar work sells for $10 million next week? 

Now, whether it’s buying or selling, it’s all or nothing. Segmentation will allow newcomers to purchase their favorite assets for less money—for example, buying “stocks” in CryptoPunk—and holders can take some bonuses off the table while preserving the upside. 

Whether this will soon become possible is not important to OpenSea. This is a market that seems to have just begun.

Text | the generalist

Compilation | Gyro Finance Ono

Posted by:CoinYuppie,Reprinted with attribution to:
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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