Accounting for 97% of the transaction share, learn about the NFT trading platform Opensea

NFT is one of the products of blockchain. Blockchain is a technology that highly advocates decentralization. However, recently, users have launched a call because they are dissatisfied with the centralization of the NFT market, which has drawn people's attention to the centralization problem of the NFT market. 97% of the transactions in the NFT market now take place on the Opensea platform.

Who is Opensea?

OpenSea is an online trading market for NFTs. Opensea was founded by Devin Finzer and Alex Atallah in New York on December 20, 2017. Users can generate NFTs for free on OpenSea and offer them for direct purchase or auction. OpenSea is mainly based on the Ethereum ERC-721 standard and Polygon (Ethereum's layer 2 scaling solution).

OpenSea went through a seed round of financing from Y Combinator in 2018. In November 2019, OpenSea raised $2.1 million in venture capital (primarily from Animoca Brands). In March 2021, OpenSea raised another $23 million in venture capital (primarily from A16z Capital). In July 2021, OpenSea announced another round of $100 million in financing.

In February 2021, OpenSea had revenue of $95 million, $147 million in March, and $2.75 billion in September. In September 2021, OpenSea released its own Android and iOS mobile applications. In January 2022, OpenSea raised $300 million in financing (led by Paradigm and Coatue Management), with a valuation of $13.3 billion.

OpenSea co-founder and CEO Devin Finzer said the newly raised funds will be used to improve customer support and security, invest in the broader NFT and web3 communities, and recruit and product development. OpenSea is committed to expanding the entire NFT ecosystem. OpenSea will launch a grant program with opportunities to directly support developers, builders, and creators who shape the future of NFT. OpenSea's goal is to promote the scale and growth of the broader NFT ecosystem, including raising the profile of emerging creators and investing in people who shape the NFT space to make them better.

In addition, the funds raised will help OpenSea fend off new competitors in the NFT market. For example, Coinbase is preparing to launch its own NFT market; FTX already has an NFT trading market up and running.

Opensea has also used the funds raised this time to formulate four areas of future efforts, namely accelerating product development, significantly improving customer experience and customer asset security, investing in the broader NFT and Web3 project community, and strengthening the team.

The first is to accelerate the development of related products. In the future, Opensea will focus on continuing to abstract the complex functions of blockchain and simplify the process to lower the entry barrier of NFT. In addition, Opensea will accelerate the development of functions that support other blockchains in the future. They will also continue to develop better tools to help people analyze, demonstrate, manage and display their NFTs.

The second is to significantly improve customer experience and customer asset security. As the price of NFT assets soars, how to prevent hacker intrusion has become a problem. Opensea revealed that it will actively develop the trustworthiness, security and stability of the platform in the future, and the relevant team will continue to recruit to better protect the security of customers' assets.

Finally, relevant investments will be made. In the future, Opensea will launch plans to directly support developers, builders, and creators who shape the future of the NFT space, and ultimately make the entire NFT ecosystem more complete.

The rise of OpenSea

On November 28, 2017, the CryptoKitties project was officially launched. Because of the digital cats, it attracted the interest of many people. At that time, one of the CryptoKitties named Genesis was sold for 247 Ethereum, which was about 118,000 US dollars (about 752,100 RMB) at the time. According to the current Ethereum price, it is 780,000 US dollars (about 4.97 million RMB).

Genesis NFT

Seeing the sales of NFTs and their rapid rise, Devin Finzer decided to create a trading platform for these assets. Thus, Opensea was born.

OpenSea may seem like a simple platform or product. After all, it is just an NFT trading market. The reason why it has such a large share today is related to the way its platform is built and managed.

The OpenSea platform has easy-to-use listing functions, powerful filters, and a wide range of NFT project assets, which have contributed to its dominance in the NFT market. Creators can launch NFTs on OpenSea with just a few clicks. Simplifying the process of NFT casting has made the entry threshold of NFT much lower, further expanding the audience and participants of the NFT market.

Although some platforms such as Foundation, KnownOrigin, Nifty Gateway, Rarible, SuperRare and Zora are similar NFT trading platforms, OpenSea's approachable operation and low threshold are the main reasons for its popularity. According to DappRadar data, in the first week of September 2021, the OpenSea platform facilitated more than $600 million in transactions; while SuperRare's transaction volume was $6 million.

In addition, Opensea also supports many NFT projects. For example, NFTs found on the Foundation platform may not be found and traded on the SuperRare platform, while Opensea supports the vast majority of NFT projects.

Today, Opensea has almost captured more than 97% of the NFT trading market share. This level of control is rare in other industries outside the digital world. Although NFT is a product of blockchain, a decentralized technology. However, the NFT market is actually no longer decentralized, and Opensea has become the center of the NFT market today.

NFT transaction share of each platform

Source: Dune Analytics

An increasingly competitive market

Recently, with the rapid growth of the NFT market, many Crypto exchanges have also launched their own NFT markets. For example, three of the top five centralized Crypto exchanges have launched their own NFT markets, Coinbase launched its NFT platform in mid-October 2021, and FTX also launched its own NFT market in mid-October. Many established and emerging players are entering the field, and competition is intensifying, which may cause OpenSea to lose some market share.

In addition, OpenSea's competitor Rarible (NFT trading platform) has launched a new feature that allows artists to mint NFTs for free. NFT minting requires a fee (cost), and with the rise of NFTs, its costs are rising, which has become a barrier for people to enter the NFT market. Rarible's free NFT minting service will attract more and more NFT minters, and it is likely to become the first choice for artists in the future.

When trading NFTs on OpenSea, in addition to the price of the NFT itself, buyers need to bear the Ethereum network's gas fee and the platform's fixed commission of 2.5%. Nowadays, many platforms do not charge any fees, except for the price of the NFT itself and the Ethereum network's gas fee. These factors may become obstacles to OpenSea's future development.

Finally, OpenSea does not support other popular blockchains, such as Solana, Cardano, and Tezos, in addition to Ethereum. For example, Solana has become increasingly popular in the past year, making it the preferred blockchain network for many crypto traders. Many other blockchain networks feature low or even zero gas transaction fees, which will attract more users. Opensea's failure to support other popular blockchains may weaken Opensea's dominance and give other platforms an opportunity to take advantage.

However, other platforms have the opportunity to take advantage of it, but it will only turn one center into multiple centers. In fact, many NFT projects are controlled by these platforms, and the future decentralization of NFT will probably become increasingly slim.

The outrage caused

OpenSea is a completely centralized platform and has not issued tokens to distribute governance in its community. This move actually violates the idea of ​​decentralization in blockchain. Nowadays, many exchanges or platforms have issued their own tokens to allow users to distribute governance, which may gradually weaken OpenSea's dominance in the NFT market.

Recently, OpenSea made a slip of the tongue on a show, which made the cryptocurrency community issue tokens on behalf of Opensea. The full name of the project is Save Opensea. The price of this coin increased 50 times in 24 hours after it was launched, and the number of holders exceeded 200,000. Its code name is SOS . The purpose of its establishment is to claim to give back to the community on behalf of Opensea. In simple terms, it is an organization that will issue tokens for you if Opensea does not issue tokens.

Previously, Brian Roberts, CFO of Opensea, said in an interview with Bloomberg: He has seen many companies' income statements, but he has never seen an income statement like Opensea's. When a company grows so fast, you would be very stupid if you did not consider going public. The secondary market will be very optimistic about companies with such growth rates. If this statement is put in any other industry, it is not a big problem. However, in the blockchain world that advocates decentralization, this statement is not recognized. Going public and taking the old path of the web 2 era is considered to be against the "blockchain spirit" of web 3 users. After Opensea went public, many retail investors could only be regarded as the receivers of large institutions in the secondary market.

After this statement was made, Opensea's CFO quickly came out to clarify that Opensea has no plans to go public for the time being. If it wants to go public in the future, it will also find a way to bring community members along. Although it came out to clarify, it did not stop the anger of American blockchain users, so Save Opensea was born. In less than two days, the SOS airdrop was claimed by 200,000 people. According to Uniswap data, the 24-hour trading volume of SOS online reached 157 million US dollars (about 1 billion yuan).

SOS Price Trends

Source: Coingecko

The official website of Save Opensea states that the purpose of establishing this project is to give back to all NFT creators, collectors, and community members who have contributed to the development of the entire NFT ecosystem. The Save Opensea project will issue tokens to all users who have traded on the Opensea platform based on the open source data provided by Opensea. The number of tokens that can be received is determined by the total number of transactions and consumption amounts that have occurred in Opensea. The total number of SOS is 100 trillion, of which 50% will be used for airdrop rewards, 20% for staking rewards, 20% for the governance and maintenance of the DAO organization, and 10% for liquidity mining rewards.

Opensea was founded in 2017 and has experienced a four-year bear market in the cryptocurrency circle. Many projects closed down or went bankrupt during this period. Opensea has been working silently for several years and now has a dominant position in the NFT market. However, the result of all the hard work was that a DAO that was established only a few days ago snatched away all the fruits of victory. This incident will inevitably make Opensea re-examine its decision not to issue tokens and to go public through an IPO.

Author | Chenglin Pua (Malaysia) Editor | Yu Baicheng Layout | Wang Jilongyan