On the evening of February 13, OpenSea announced the launch of the OS2 public beta version on X, and will launch the platform token SEA, and hinted that it will conduct an airdrop. Although the specific timetable and details have not yet been announced, this announcement has undoubtedly touched the hearts of many veteran players in the cryptocurrency circle. In just one hour, the number of comments and reposts on the tweet exceeded one thousand, and the community discussion heat soared.
OpenSea CEO Devin Finzer also tweeted to emphasize that "OS2, which is being launched, is not just a new product, and SEA is not just a token, but a brand new OpenSea built from scratch." There have also been some rumors that the new version of OpenSea will refer to Blur's transaction-centric UI.
OpenSea is finally going to issue a coin. If it were three years ago, this would definitely be a highly anticipated cryptocurrency carnival. However, things are different now. Today’s cryptocurrency world is dominated by MemeCoin, and NFT has long been "outdated."
What is even more regrettable is that even if we limit our focus to the NFT field, OpenSea has lost its glory days. According to Dune data, OpenSea's trading volume in January was only US$195 million, a 96% drop from the peak of US$5 billion in early 2022, and its annual revenue has shrunk to approximately US$33.26 million.
According to nftpulse data, as of press time, Opensea's market share in the past 30 days has dropped sharply from 95% in December 2021 to 29%. On the other hand, OpenSea's valuation has also fallen from its peak of US$13.3 billion in early 2023 to around US$1.5 billion. It even fell to the point of being "sold".
So, why did OpenSea, once the dominant player in the NFT trading market, come to this point?
Let’s review the brief history of OpenSea’s development, see how it rose rapidly, and how it fell from the throne in the NFT market competition, and finally talk about OpenSea’s decision to issue coins at this time and what impact it may have on the entire NFT market landscape.
The early days: surviving in the NFT wasteland
There is no doubt that among the startups in the Web3 field, OpenSea is undoubtedly a legendary company that started from scratch. Especially in the two years from 2021 to 2022, the company has leapt from obscurity to a super "unicorn" with a valuation of US$13.3 billion at an astonishing speed, and has firmly sat in the number one spot in the NFT trading market.
However, behind this glorious period is a dramatic history of market ups and downs. Therefore, the author believes that the rise and fall of OpenSea can perhaps be seen as a microcosm of the NFT industry's transition from wild growth to rational competition.
In September 2017, Devin Finzer and Alex Atallah received seed round financing from the well-known venture capital incubator Y Combinator with their innovative project "Wificoin". This project aims to use cryptocurrency to pay for shared WiFi and has nothing to do with the NFT track.
However, in November 2017, Dapper Labs officially launched the Ethereum-based crypto cat game CryptoKitties, which triggered a wave of hype. The frenetic bidding once pushed the price of CryptoKitties' NFT collections to 247 ETH, which was about US$118,000 at the time.
In the same year, CryptoKitties founder and CTO Dieter Shirley proposed the concept of NFT (Non-Fungible Token) and promoted the launch of EIP-721, which defines the NFT standard.
Techub News Note: EIP-721 was later discussed and improved, and was officially passed in 2018, becoming today's ERC-721 protocol standard.
It was the introduction of this standard that changed the entrepreneurial direction of Devin Finzer and his budding team. They decided to abandon the original "Wificoin" project and created the NFT trading platform OpenSea in February 2018.
According to The Generalist, Devin Finzer said: “I see the potential of the NFT market because there is a standard for digital items, and everything that comes after CryptoKitties will abide by this standard.”
At that time, blockchain and cryptocurrency were in the early stages of development, the concept of NFT had not yet become popular, and the entire NFT market was almost a wasteland.
Despite this, OpenSea was not the only NFT trading platform at the time. Released on Product Hunt almost on the same day, there was also Rare Bits, which claimed to be a "zero-fee crypto asset market similar to eBay", a competitor with more advantages than OpenSea. Interestingly, OpenSea also described itself as "Ebay for crypto goods."
Techub News Note: Ebay is an online auction and shopping website that allows people around the world to buy and sell items online.
In May 2018, OpenSea raised $2 million from investors including 1confirmation, Founders Fund, Coinbase Ventures and Blockchain Capital, but Rare Bits received $6 million in funding a month earlier, with participation from Spark, First Round and Craft.
From the perspective of VC investment, although OpenSea is at a disadvantage, Richard Chen, partner of 1confirmation, prefers OpenSea. He believes that "Rare Bits does not know as much about NFT as OpenSea, and the OpenSea team is more capable and more combative. Devin and Alex have also done a good job in discovering new NFT projects and promoting them to be listed on OpenSea. Moreover, when we invested in April 2018, OpenSea's trading volume was already 4 times that of Rare Bits."
In addition, the sales strategies of the two companies are also different. OpenSea insists on charging a 1% transaction commission (later gradually increased to 2.5%) to maintain operations through stable income. Rare Bits adopted a "zero transaction fee" strategy in 2018 and promised to refund the Gas fees generated by user transactions, trying to attract traffic by reducing user costs.
This strategy attracted some attention in the early stages and seemed to be more user-friendly, but in fact it was not conducive to the long-term development of the platform. The high operating costs also meant that Rare Bits was doomed to be unsustainable, especially when the "cryptocurrency winter of 2018" was approaching.
During this period, in order to expand its user base and gain platform transaction volume, Rare Bits also tried to expand its business from NFT to a wider range of virtual goods transactions, such as collaborating with the animation platform Crunchyroll to launch "digital stickers" and exploring non-NFT asset transactions such as game props.
Unlike the diversification of Rare Bits, OpenSea remains focused and its focus is always on improving the NFT trading business.
But on the long road before dawn, OpenSea also had a hard time. The platform's early trading volume continued to be sluggish, and early projects were limited to a few NFTs such as CryptoKitties and CryptoPunks.
According to Titanium Media, in March 2020, the team had only 5 people and an average monthly transaction volume of around US$1 million. Calculated based on the 2.5% commission rate at the time, OpenSea's monthly revenue was only US$28,000. If it had not been for the US$2.1 million "life-saving funds" injected by strategic investors such as Animoca Brands at the end of 2019, this startup might have disappeared in the industry's cold winter.
As for Rare Bits, it was already in danger as early as 2019, and in 2020, the platform completely withdrew from the market.
In hindsight, OpenSea’s rise to become the king of the NFT field is inseparable from its operational decisions to focus on core business and streamline operations. Devin Finzer once said in an interview, “We are willing to develop in this field for a long time. Regardless of the current growth trajectory, we want to build a decentralized market for NFTs and hope that it can last for 3-4 years.”
Time quickly came to the second half of 2020, and dawn is approaching. This year can be said to be a watershed in the fate of OpenSea. With the gradual recovery of the Crypto market starting in the second half of the year, OpenSea, with its advantage as a pioneer in the NFT market, was the first to reap the dividends, and its platform transaction volume began to rise rapidly. Dune data shows that in October 2020, OpenSea's monthly transaction volume reached approximately US$4.18 million, an increase of approximately 66% from US$2.46 million in September.
In order to allow the platform to have a wider variety of NFT assets and attract wider liquidity, OpenSea began to fully implement the "open market" product strategy.
In December 2020, OpenSea launched a new feature "Collection Manager", which allows users to mint NFTs without any handling fees (gas fees are borne by the buyer). The official also called this feature "Lazy Minting", which separates on-chain issuance from metadata. Users can upload the metadata of the product to OpenSea for free, and only when the product is sold for the first time will it be minted as an on-chain ERC-1155 NFT.
This feature greatly lowers the threshold for creators, and based on the fact that OpenSea NFTs do not require review for listing, every user can directly mint and issue NFTs on OpenSea. Apart from this advantage, OpenSea also covers the widest range of transactions among similar platforms, including digital avatars, music, domain names, virtual worlds, trading cards, artworks and other NFT collections. Its strategy maximizes the supply of creators' works and attracts more and more users in the primary and secondary markets.
Objectively speaking, the potential of the NFT market has contributed to OpenSea's subsequent success, but the field's rapid explosion is also inseparable from OpenSea's contribution.
In 2021, the Crypto market ushered in an all-out "bull market", and OpenSea, which had been dormant for two years, began to truly show its brilliance.
NFT is booming, and OpenSea is the king with billions of dollars in monthly trading volume
According to Dune data, in February 2021, OpenSea's data experienced explosive growth for the first time. On February 2, OpenSea's single-day trading volume exceeded US$5 million, while OpenSea's trading volume for the whole month of January was just over US$7.5 million. In the end, OpenSea's trading volume for the whole month of February was close to US$95 million, an increase of more than 10 times month-on-month.
Also starting from the beginning of 2021, a large number of commemorative NFTs began to be issued on OpenSea. Bands, entertainment stars, sports stars, and well-known artists began to launch their own NFTs. A large number of well-known brands also began to launch commemorative NFTs or use NFTs to launch user loyalty activities.
It can be said that NFT, which started with CryptoKitties, brought Web3 and traditional industries together for the first time, and also allowed many people who originally did not understand Crypto to come into contact with a new "species" for the first time.
As the largest NFT trading platform, OpenSea has finally waited for the arrival of the trend. Data shows that in March 2021, the transaction volume on OpenSea exceeded the 100 million US dollar mark for the first time, and exceeded 300 million US dollars in July. In August, the figure increased by more than 10 times month-on-month to 3.44 billion US dollars. It was also in March that OpenSea completed a round of financing of 23 million US dollars led by a16z. Many angel investors including Mark Cuban also participated in this round of investment.
Although NFT has actually started to develop rapidly since the beginning of 2021, and the floor price of the CryptoPunks series of NFTs has also increased from single-digit ETH at the beginning of the year to more than ten to twenty ETH in the middle of the year, the main narrative of the market in the first half of 2021 is still centered around DeFi. At that time, everyone's attention had not yet completely shifted to NFT. The reason for this is that in addition to the rising popularity of DeFi, there are no targets and concepts in the NFT field that can be hyped.
After entering the second half of the year, the emergence of a series of PFPs represented by BAYC completely ignited the market's enthusiasm. NFT is also considered to be another phenomenal concept after DeFi. As the popularity of NFT transactions increases, the monthly trading volume on OpenSea has always remained at a high level of billions of US dollars. In January 2022, the figure even exceeded 5 billion US dollars.
Nate Chastain, product director of OpenSea, tweeted at the end of August 2021 that the company had only 37 people, but that month OpenSea's fee income alone exceeded US$80 million. The per capita contribution of more than US$2 million is extremely terrifying in any industry.
Before the end of 2021, OpenSea spent most of its time accelerating and sprinting non-stop. During this period, apart from the resignation of Nate Chastain due to an insider trading scandal, there was almost no other negative news about OpenSea. Even if other NFT trading platforms obtained large amounts of financing, they had no way to shake OpenSea's position. In fact, almost all NFT trading platforms' products have more or less referred to OpenSea.
Challengers are eyeing it, but OpenSea "betrays" Web3 and plans to go public?
Amidst the prosperity, a turning point has quietly arrived, and it all started with the rumor of OpenSea’s listing…
In early December 2021, Bloomberg reported that Brian Roberts, CFO of the US ride-hailing company Lyft, would join OpenSea as CFO. At the same time, Roberts said that he was planning an IPO for OpenSea. This was originally a very ordinary news, but it sparked some discussion in the Web3 industry. Many people believed that OpenSea should issue tokens to give back to OpenSea's users, and this is what the Web3 project should do.
Perhaps feeling some pressure, two days later, Brian Roberts personally came out to clarify that there is no IPO plan at present, and said, "There is a big gap between thinking about what the IPO will eventually look like and actively planning an IPO. We have no plans for an IPO. If we do, we will seek community participation."
This somewhat ambiguous statement not only failed to dispel the community's concerns, but instead further strengthened everyone's decision that OpenSea would eventually go public, because it did not mention the issuance of coins at all.
If OpenSea had decided to issue coins at that time, there might not have been any exciting subsequent stories in the NFT trading platform track. It was the "selfish" decision of choosing an IPO that tore a hole in the originally unbreakable wall.
At that time, OpenSea occupied more than 90% of the NFT trading market on Ethereum. After its attitude of not issuing coins spread, some entrepreneurs found opportunities and quickly launched NFT trading platforms that issued tokens. LooksRare was one of them. Although it was not the first project to launch a "vampire attack" on OpenSea, it obviously had a significant influence after OpenSea was ready to go public.
On January 10, 2022, LooksRare was officially launched. The team stated that as long as the trading volume on OpenSea is greater than or equal to 3 ETH, users can place an order for an NFT on LooksRare to receive the airdrop. In addition, users can pledge the LOOKS airdrops they received to share all transaction fees of the platform. Two days after LooksRare went online, its daily transaction volume exceeded OpenSea, and based on the 7-day transaction volume data as of January 19, 2022, LooksRare was more than three times that of OpenSea.
When the rift was torn open and the market discovered that OpenSea was not completely invincible, everyone began to show their skills. X2Y2, which was launched in February 2022, Element, which focuses on BNB Chain, Zora, which focuses on art NFTs and takes a high-end route, and Magic Eden, which focuses on the Solana NFT market, are all constantly eroding OpenSea's existing market and the market that may be expanded.
Perhaps it is a bit of an exaggeration to say that they were arrogant, but at least it was a major strategic mistake for OpenSea not to take precautions when it was at its peak.
Despite this, OpenSea's market influence remains unshakable. As we enter the second quarter of 2022, on the one hand, Yuga Labs is about to issue APE tokens, and on the other hand, transactions of "blue-chip NFTs" such as Moonbirds and Doodles are still active. As the NFT trading market with the best liquidity, OpenSea still holds the lifeline of the NFT market.
The person mainly responsible for changing the entire NFT track or the collapse of NFT was quietly born at this time. Its appearance fundamentally changed everyone's stereotype of what the NFT market should look like.
Blur emerges, NFT market No. 1 changes hands
At the end of March 2022, Blur announced that it had completed US$11 million in financing. At that time, I believe many people would still wonder why a new NFT trading platform would emerge at this point, but after Blur was officially launched at the end of October, it gave everyone a blow.
A completely different UI, which clearly states that there will be airdrops for placing orders, bidding, and buying and selling, and the airdrops are just "treasure boxes" with an unknown number of tokens. A UI designed purely for trading and clear yet ambiguous airdrops, Blur has achieved the ultimate in product and gameplay design. Although many people criticized Blur's UI for being very difficult to use at the beginning, after getting used to it, everyone found that such a design is indeed much easier to use than OpenSea in terms of pure buying and selling. To make an analogy, if OpenSea is an NFT e-commerce platform, then Blur is an NFT exchange.
Prices are listed from low to high, and real-time transactions and the distribution of transaction prices are displayed on the right. With this convenient UI design for transactions and the expectation of airdrops, a large amount of funds began to flow into Blur. Previously, many NFT trading platforms relied on tokens to attract traffic in the short term, but OpenSea's market share in transaction volume has not been challenged in monthly or quarterly data. However, the emergence of Blur has caused OpenSea's share of transaction volume to return to more than 50% until a week ago.
But it is also because of this that big funds have gained the ability to manipulate the market, buying and selling frantically. In addition, the Crypto market had entered a deep bear market at that time. Seeing that big funds were making airdrops at all costs, a large number of NFT prices were almost smashed. Retail investors lost interest in NFTs. After Bitcoin had fallen to around US$20,000, the "last goalkeeper" of crypto assets also left the market sadly. The collapse of the NFT market and the ascension of the new king Blur made OpenSea a cannon fodder.
In early 2022, it completed a $300 million Series C financing round with a valuation of $13.3 billion. Two years later, at the beginning of 2024, OpenSea’s CEO has admitted that he was considering being acquired. In this round of Bitcoin’s "one-man bull market," in addition to Pudgy Penguins, which has airdrop expectations, the floor prices of a large number of former blue-chip NFTs have fallen to a horrible level. For OpenSea, if it does not make changes, it may end up giving away years of hard work, which is definitely not what they want to see.
Therefore, OpenSea decided to launch the platform token SEA. On the one hand, it is a self-rescue measure to cope with the continued decline of the platform business. On the other hand, this former king may also be a little unwilling and have ambitions to return to the top. So the question is, is it possible for OpenSea to change the competitive landscape of the NFT market after issuing the token?
With the recent surge in trading volume, is OpenSea expected to reshape the competitive landscape of the NFT market?
There is no doubt that the most likely to be impacted by OpenSea's coin issuance and the launch of the OS2 public beta version is Blur. As a powerful rival that subverts OpenSea's position, although Blur has subsequently shown a downward trend with the downward trend of the Crypto market, as of the time of writing, its trading market share in the past 30 days is still over 44%, firmly sitting in the first place in the NFT market.
In addition to the unique product UI and gameplay design mentioned above, Blur also attracted a large number of users with its Bid Airdrop (bid reward tokens) and zero-fee model. It conducted airdrops several times in 2023 to seize market share, which can be seen from the data:
On February 15, 2023, Blur airdropped 360 million BLUR in the first quarter. The airdropped tokens accounted for 12% of the initial total supply and were released immediately. According to Glassnode, after the BLUR token airdrop, Blur's market share surged, and its NFT transaction volume market share jumped from 48% to 78%, while OpenSea fell by 21%;
On February 23, 2023, Blur launched the second quarter airdrop of 300 million BLUR. This airdrop directly pushed Blur's trading volume to far surpass OpenSea. DappRadar data showed that on February 22, 23, BLUR's trading volume reached approximately US$108 million, while OpenSea's trading volume was only US$19.27 million during the same period.
To a certain extent, Blur's two large token airdrops played an indispensable role in breaking through OpenSea's "moat". As the saying goes, give someone a taste of their own medicine. At a time when the current NFT market has not yet recovered, if OpenSea's SEA token attracts users through airdrops or staking rewards, it is very likely to copy this strategy, and even imitate the "OpenSea killers" such as LooksRare and x2y2 to launch a "vampire attack" on Blur to compete for its core users.
In fact, since OpenSea confirmed that it would conduct an airdrop, it has aroused the expectations and heated discussions of many Twitter users. Many people believe that this will be one of the largest airdrops this year.
In addition, in terms of transaction fees, the OS2 beta version recently launched by OpenSea reduces market fees to 0.5% and transaction fees to 0%, which directly targets Blur's zero transaction fee model. When SEA goes online, OS2 will most likely build a very flexible competitive strategy with its combination of "low transaction fees + token incentives".
Objectively speaking, most users are profit-seeking in nature. If the reward mechanism of SEA tokens is more attractive, and some of Blur's existing users already come from OpenSea, it may not necessarily cause these users to return to OpenSea. However, Blur's "moat" lies in its faster transaction speed and higher gas efficiency than OpenSea, and it still has a technical advantage in the short term.
Influenced by the news of coin issuance, the market has already reacted. According to nftpulse data, as of press time, OpenSea's daily trading volume has reached approximately US$29.8 million, and the transaction share has soared to 70.6% of the total daily trading volume.
For the entire NFT market, OpenSea's launch of the SEA token is undoubtedly a good thing. In addition to stimulating a sharp increase in NFT trading volume in the short term, OpenSea also tweeted that OS2 already supports cross-chain transactions of 14 chains, including Flow, ApeChain, and Soneium. So, is it possible for the SEA token to become a universal token for the multi-chain NFT ecosystem, thereby promoting the development of the NFT market on Ethereum external chains (such as Solana)? This is worth looking forward to.
However, from another perspective, the upcoming fierce competition between OpenSea and Blur will once again squeeze the living space of second-tier platforms such as LooksRare and X2Y2, and Blur will surely not sit idly by and watch its former rival make a comeback. Blur may launch more token application scenarios, or token rewards to further motivate user loyalty.
In addition, Magic Eden, which is also a latecomer, should not be underestimated. Relying on its dominant position in Bitcoin and Solana chains, its total platform market transaction volume once reached US$3.2 billion in the past year, accounting for more than 30%, second only to Blur's US$3.8 billion (accounting for about 36%), while OpenSea's transaction volume in the past year was only US$1.2 billion, accounting for less than 12%.
In short, the author believes that OpenSea’s SEA token is not only the key to the platform’s self-rescue, but may also become the driving force to push the NFT market out of the downturn. In the long run, the competition between OpenSea and Blur will also prompt the NFT field to develop in a more complex financial and multi-chain direction.
As for whether OpenSea can regain its dominant position, whether the future pattern will be a two-strong confrontation, or whether Blur will continue to be the king, it depends on the performance of the SEA token after it goes online. Let’s wait and see!
Sneak peek! What’s new in OpenSea 2.0?
Last week, the author published an article titled (OpenSea 2.0 Hypothesis: Points? Airdrops? NFT Launchpad?), and just last weekend, NFT trader john.weth, as an early tester of OpenSea 2.0, revealed many details of this version to us. So, what are the highlights of OpenSea 2.0?
What’s new in OpenSea 2.0?
1. Brand new user interface: It includes a list of NFT series ranked by the previous day’s trading volume, floor price increase, and popular trending series, allowing users to see at a glance.
2. Optimized Profile page: This page more intuitively displays the user's holdings, asset value, and transaction activities, providing a more convenient asset management experience.
3. As can be seen from the Leaderboard page, OpenSea will distribute XP retroactive rewards to users and will also hold the first season XP event. Ways to earn XP include listing NFTs and bidding (offer) for top NFT series. The total XP reward is also related to loyalty and BOOST. Among them, only listing NFTs on OpenSea can maximize user loyalty, and the BOOST multiplier is related to ranking.
In addition, the Top Bidder's points will also be significantly increased. The specific rules are as follows:
Top 100-51: Points increased by 1.2 times
Top 50-26: 1.5x
Top 25-11: 2x
Top 10: 2.5x
4. The OpenSea page clearly states that XP is far more than a number. As users collect more and more, its true value will become more and more prominent. At the same time, OpenSea has the right to deduct and reset the XP rewards of users who harm the interests of other users or provide false liquidity to ensure the fairness and healthy development of the platform.
OpenSea faces challenges in multiple dimensions
Regarding the heated debate about whether OpenSea is copying Blur, OpenSea co-founder and CEO Devin Finzer clearly expressed a negative attitude. He emphasized that the goal of OpenSea 2.0 is to become the NFT home for everyone, whether collectors, professional traders, or users in between. In addition, OpenSea 2.0 will continue to launch more innovative features to meet the growing needs of users.
In the past year and a half, the NFT market has been shrouded in a downturn, which has brought heavy pressure to every participant in the industry. OpenSea has suffered a strong impact from the latecomer Blur, and its market share has shrunk significantly. Last week, NFT transaction volume accounted for 26.4%, while Blur accounted for 53.6%. In sharp contrast, OpenSea once monopolized 98% of the market share in its heyday.
Today, whether OpenSea can successfully reverse the situation, regain market leadership, and once again set off a craze in the NFT field with the newly launched OpenSea 2.0 platform and points reward strategy is undoubtedly a difficult and challenging task.
The challenges faced by OpenSea are multi-dimensional. On the one hand, it needs to compete with Blur for market share and user resources. On the other hand, OpenSea needs to find an effective way to reignite consumers' interest in NFTs. At a time when the NFT market is sluggish, users' enthusiasm for NFTs has clearly cooled.
How to spark the NFT craze again is not only a question that OpenSea needs to ponder, but also a severe test faced by the entire NFT industry.
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Written by: Babywhale, Glendon (Techub News), Karen (Foresight News)
Layout: Jonathan
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