The world’s largest NFT trading platform: only 70 people in the 4-year-old team are valued at over $13 billion

OpenSea is currently one of the most talked about blockchain startups in Silicon Valley.

On January 4th, OpenSea, the world’s largest NFT trading platform, officially announced that it had obtained the latest round of financing, led by venture capital firms Paradigm and Coatue Management. The company received $300 million in financing this round, bringing its post-investment valuation to 133 One hundred million U.S. dollars. The new financing will be mainly used for product development, improving user experience and investing in NFT and Web3.0 communities.

Founded in 2017, OpenSea is a company that provides users with services for querying, collecting and circulating NFT (non-fungible tokens) assets. At the same time, the NFT trading market created by the company is currently the largest NFT trading market in the world.

In July 2021, OpenSea announced a $100 million Series B financing (post-investment valuation of $1.5 billion) led by a16z (Andreessen Horowitz), and has since begun to seek offers with a valuation of tens of billions of dollars. In the next six months or so, the company’s employees have grown from more than 40 to more than 70, and its valuation has successfully increased by 6 times. The two founders Devin Finzer and Alex Atallah each hold 18.5% of the shares. $2 billion.

This is eye-catching news, and means that the crypto race has once again won among venture capital firms. According to reports, OpenSea is currently one of the most closely watched blockchain startups in Silicon Valley.

NFT market share reaches 95%

The market shares of existing NFT trading platforms vary widely.

According to Dune Analytics data, OpenSea’s market share has soared, from more than 61% in July 2021 to 95% by the end of December 2021, ranking first in the market and second only to OpenSea’s SuperRare in total transaction volume and users The volume is only 1/24 and 1/6 of OpenSea.

While the market share is rising, the platform’s monthly transaction volume will exceed US$3 billion in August 2021, a result that is even comparable to the monthly GMV of some traditional e-commerce companies. The main commodities circulating on the platform are NFTs, which are jokingly called “small pictures”. Representative works include the Bored Ape Yacht Club with a total value of 843,613 ETH (about 3.22 billion US dollars), and the total value of 670,236 ETH (about 2.55 billion US dollars). ) of CryptoPunks.

Not only that, but celebrities such as rapper Jay-Z and NBA star Stephen Curry are also consumers of these “small pictures”.

These NFTs look like “small pictures”, some are digital artworks, digital collectibles, some are game assets (representing props in the game), some represent digital identities… different uses, most based on ERC- 721’s smart contract.

In the history of blockchain, the most popular work using the ERC-721 protocol is Crypto Kitties. This project was born in the bull market in 2017. It is this project that inspired many people to pay attention to NFT, including OpenSea The two founders of Devin Finzer and Alex Atallah.

Because ERC-721 allows “digital items to have a unified standard”, Devin Finzer and Alex Atallah are very optimistic about the NFT track. In November 2017, OpenSea was established, and Rare Bits was established close to its establishment time, both of which aimed at “ebay” in terms of positioning. Additionally, OpenSea only raised $2 million in seed funding from venture funds including 1confirmation, Founders Fund, Coinbase Ventures, and Blockchain Capital after Rare Bits raised $6 million. 

Not long after the establishment of two similar projects, the blockchain secondary market ushered in a bear market. During the bear market, Rare Bits adopted a strategy of not charging first-time sales commissions and refunding users Gas Fees (which can be simply understood as fees generated by using the Ethereum network), while OpenSea insisted on charging a 1% commission in 2018. In addition, Devin has said that OpenSea will maintain a team of seven employees for most of 2020.

In order to survive, Rare Bits later expanded its trading scope to allow virtual commodity trading so that it is not limited to the NFT field, while OpenSea still focuses on the NFT track.

At the end of 2019, OpenSea reached a new milestone of $1.8 million in monthly transaction volume. At the same time, a strategic investment of $2.1 million was injected into OpenSea, with investors in the round including Animoca Brands, gumi Cryptos, Stanford StartX and David Pazdan from MetaMask. In the same year, Rare Bits did not wait for new funding and eventually disappeared.

The death of the opponent was a confidence blow to OpenSea, because the transaction volume of the NFT market was not large at the time, and Rare Bits had sufficient funds before. In addition, 26 months after the launch of the website, OpenSea had only about 4,000 monthly active users and about $1 million in monthly sales. Although the sales commission was raised from 1% to 2.5%, the income was not ideal.

The platform’s revenue is not decent, and the impact of the epidemic in 2020 has caused the two founders of OpenSea to fall into anxiety.

In the eyes of the public, the bull market of NFT is in 2021, but according to the recollection of co-founder and CEO John Crain, in early November 2019, because of the crazy bidding for “Edward Snowden – Variant 02 – Decentral Eyes” created by crypto artist Coldie, its It has been felt that the NFT market is heating up.

According to OpenSea’s official blog, in the second half of 2020, the sales of the NFT market increased 20 times in just six months. At this time, new competitors appeared in the market one after another.

So why is OpenSea different? In addition to the data and resource advantages accumulated in the NFT market before, OpenSea also launched a “king bomb” function in 2020-Collection Manager, which allows users to make and sell NFTs for free without paying gas fees.

This feature seems so mundane right now, it’s not even worth marketing as a feature. But at the time, it was unique. This function is similar to the one that Ethereum can launch in the public chain market and Uniswap in the DeFi market, and provides tool support for the subsequent outbreak of the NFT market.

Delphi Digital, a crypto market researcher, attributes this reason as one of the decisive factors in OpenSea’s eventual dominance of the market: “OpenSea’s emphasis on being a permissionless marketplace for NFT minting, discovery and trading explains its natural increase in market share. The platform has low barriers to entry and long-tail creators can easily join. This approach expands the supply of creators, thereby attracting users and liquidity in the primary and secondary markets. If Uniswap is a market for any token, then OpenSea is the marketplace for any NFT.”

In 2021, the NFT market will break out completely. OpenSea has successively won $23 million in Series A financing and $100 million in Series B financing led by A16Z. With sufficient funds, it has expanded its team to more than 70 people and has become the market leader. The transaction volume has crossed the threshold of 3 billion US dollars, and the monthly active users have exceeded 100,000.

IPO rumors spark user protests

From a traditional business point of view, OpenSea is successful, and from the perspective of its absolute monopoly in the market, such success is unquestionable.

However, OpenSea was recently protested by users. The fuse was that OpenSea was rumored to be IPO a month ago.

Brian Roberts, the former chief financial officer of Lyft in the United States, appeared in a Bloomberg report shortly after joining OpenSea, saying that “when your company is growing so fast, you don’t think about going public. Since Brian Roberts had no previous work experience in the encryption field, but he led Lyft to a successful IPO, the market interpreted the remarks as OpenSea’s intention to IPO.

This angered OpenSea users. Compared with some NFT trading platforms that have used Tokens to motivate users’ trading behavior, OpenSea officials have never disclosed any plans to issue official Tokens, and a considerable number of users have worked tirelessly to contribute to OpenSea’s active transactions because they are looking forward to the launch of the plan.

Previously, the market speculated that Tokens issued by the platform would be airdropped based on the number of transactions and amounts of active users. Therefore, some users who swiped orders in order to obtain more airdrops threatened that “OpenSea’s products are not special” and “lose the support of the community”. , the status of OpenSea will not be guaranteed”, and began to look for alternatives to OpenSea.

According to the thinking of former Twitter CEO Jack Dorsey on Web 3.0 a while ago, the real Web 3.0 project should not involve venture capital. This view is being recognized by more and more people in the industry. The development process of Opensea tells the public that it obviously needs the support of venture capital, which means that OpenSea may not be a Web3.0 project. Then, how much attention will be paid to the opinions of the community and users?

User protests did act as a deterrent, Brian Roberts clarified on December 8, 2021 that there is a lot of gap between thinking about what an IPO will ultimately look like and actively planning an IPO, also, OpenSea is not planning an IPO, but if it does , will seek community participation.

This clarification statement has played a role in calming the market to a certain extent, but there are still users who are looking for alternatives to OpenSea. On the one hand, users are actively looking for alternatives, increasing their attention to decentralized NFT trading platforms and NFT trading platforms in vertical fields. On the other hand, the NFT enthusiast community attempts to “grab” Opensea’s Commercial achievements, such as investing Tokens to OpenSea users to attract OpenSea users to migrate.

The above actions have not yet achieved real breakthrough progress, but the market has set off thinking about the OpenSea moat: some believe that OpenSea can be replaced, and the other part thinks that OpenSea does have a moat.

A blogger with a social user name of W3.Hitchhiker said that OpenSea is the most comprehensive NFT platform in the market, and quoted Li Rongbin, founder of SevenX Ventures, that OpenSea has become one of the most important infrastructures in the NFT industry. Work and hard work are beyond the perception of most users, but this accumulation and practice has become an industry standard.

In addition, W3.Hitchhiker wrote his own thoughts on the moat of OpenSea, claiming that liquidity is the moat of OpenSea at this stage: “OpenSea is in a typical strong two-sided market, similar to Taobao, but the boundaries between buyers and sellers on OpenSea are not like Taobao. The platform is clear, so there will be stronger network effects. Since the products sold on OpenSea are non-standardized products, unlike platforms that provide standardized products, liquidity is easy to be migrated. In addition, the liquidity of the NFT market itself is poor, and the decentralized liquidity The price is too high for the market, which makes it difficult for other adversaries to steal OpenSea’s ‘liquidity’.”

Interestingly, three years ago, Tesla founder Musk blasted Buffett’s “moat” theory, claiming that as long as the innovation is fast enough, it can resist the invasion of foreign enemies, and Buffett responded that technology will not destroy every industry. of the moat.

Of course, the NFT trading platform is still in its early stage. Although OpenSea is the largest NFT trading market, it still needs to continue to work hard to maintain its leading position. Venture capital is still looking for new opportunities in this field, and new entrepreneurs will emerge.

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