Ground Zero of Web 3.0🚀
OpenSea: The Leading Decentralized Marketplace
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Just 3 months after raising a $23 million Series A, OpenSea raised a $100 million Series B valuing the company at $1.5 billion. That kind of growth sparked my curiosity so I did some digging. Here’s what I found on the metaverse’s NFT marketplace:
Shopify, meet Ebay in Web 3.0.
That is my best one-liner for describing the largest NFT marketplace,
Non-Fungible Tokens (NFTs) are blockchain-based records representing pieces of digital media. When you buy the rights to a digital asset, just like a physical asset, it is yours to control; give it away, sell it, collateralize it, fractionalize it, lend it, whatever your heart desires. Early use cases for NFTs include digital art, virtual land, sports cards, and collectibles, but the prospects for the future are plenty.
OpenSea founder, Devin Finzer, sold an NFT such that whoever purchased the token received 45 minutes of advice from him on how to build a crypto startup.
Jack Dorsey sold his first tweet as an NFT for nearly $3,000,000.
This technology represents one of the most intriguing evolutions of the internet, introducing consumers to new constructs surrounding ownership of digital assets and galvanizing the transition from buying things online to buying online things. NFTs are a key building block of the metaverse.
Prior to OpenSea, NFTs had been quasi-confusing for ordinary consumers and were left to the pleasure of tech enthusiasts; much like the internet in the days before the web browser. There was no catalogue that allowed creators and consumers to easily search for unique pieces across platforms, no intuitive medium to buy or sell digital assets, and certainly no place to aggregate blockchain data related to the transaction history of the asset. OpenSea, as a peer-to-peer marketplace, acts as the link between the consumer and the underlying infrastructure, providing a one stop shop to create, discover, buy and sell NFTs as well as track the provenance and transaction history in a convenient, trusted way.
OpenSea also provides functionality to creators to build their own
where you can easily create a smart contract, mint NFTs, and list them for sale all in one place.
Crypto and NFT’s have catalyzed new business models for creators and OpenSea has minted (pun intended) itself as the platform of choice for creators and consumers. Given the ease of use made possible by OpenSea, it is no surprise that they are in hyper-growth mode.
OpenSea’s success is contingent on its ability to simplify very complex data such that it can be used by non-technical consumers to transact.
The chart above shows the number of OpenSea traders growing more than 1,000% YoY.
OpenSea (a horizontal marketplace) as well as vertical marketplaces like NBA Top Shot have demystified NFTs and are now seeing user growth expand from technologists, gamers, and crypto enthusiasts, to a more mainstream audience.
As more popular creators like
announce NFT projects, a tsunami sized wave of fans and collectors are poised to enter the space. OpenSea stands to benefit from immense network effects as the technology becomes more mainstream and new use cases emerge. The number of artist-sellers grew 500%, from 1,395 in June of 2020 to 8,770 by the end of the year and has continued to grow exponentially in 2021. Each new creator increases the value of the platform to every customer. Conversely, every new customer provides added platform value to the creators. This results in a self-reinforcing upward spiral leading to widespread adoption.
This has already begun to take shape as monthly transaction volumes have grown 1,000x YoY to more than $1 Billion in August:
OpenSea is the most robust NFT marketplace and will be the primary beneficiary of mass adoption as consumers flood the space to purchase the digital assets of their favorite creators; a rising tide lifts all boats.
Where most marketplaces charge gas fees to mint NFTs and more gas to transfer ownership, OpenSea has offloaded the gas fees to the first purchase. This removes the barrier inhibiting creators from minting new pieces and thus increases liquidity in the marketplace.
They have also added very interesting features such as unlockable content. Unlockable content grants specific material that only the NFT buyer has access to. This is a critical development in consumer use cases as you now have the ability to restrict non-owners from accessing certain content.
Currently you must have a third party crypto wallet to transact on OpenSea. USD is not an accepted form of payment.
OpenSea has created brand recognition and they are uniquely positioned to improve customer experience with NFTs and capture a large share of the market. The biggest deterrent to transacting is the variable and expensive cost of transferring ownership. OpenSea is native to the Ethereum blockchain but is expanding to other blockchains to increase accessibility and adding Layer 2 solutions to decrease cost and increase throughput while maintaining interoperability with the existing infrastructure.
The lion’s share of NFT adoption will come in the form of consumer experience. If curated marketplaces like Superrare court the most coveted creators then horizontal marketplaces like OpenSea will lose any differentiation and bleed to death.
In respect to the timeline of NFTs, we are not in the early innings, the first hitter has not approached the plate, but people are making their way to their seats. Use cases are continuing to emerge and the value of decentralized platforms like OpenSea are continuing to grow. Today, it is selling digital art, tomorrow it is tokenizing and borrowing against your house. NFTs are totally reconstructing the way we think about digital ownership and OpenSea is the mainframe underlying this revolution.
Until next time ✌️
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