Plenty of NFTs at OpenSea
Happy Sunday! Building off last week’s Bored Apes post, let’s dive into how we can actually acquire one at OpenSea.
The Profile Basics
Startup Name:
OpenSea
Industry:
Web3 - Consumer NFT Marketplace
Current Valuation:
$10B+
Competitors:
Rarible, SuperRare, Nifty Gateway
Break It Down for Me
The Problem:
Early in the development of NFTs, there was a lack of a user-friendly, secondary marketplace to buy and sell. Before OpenSea, NFTs were primarily transferred between wallets in a peer to peer fashion.
The Solution:
The premier, decentralized NFT marketplace for buying, selling, and trading of NFTs and other digital goods collections. OpenSea is primarily known for its NFT use case, but the marketplace has developed to include digital assets like game items, domain names, and even digital representations of physical assets.
Core Users:
The everyday consumer looking for an easy way to acquire NFTs
Walk Me Through It:
Once you have a few NFTs for purchase in mind (maybe
BAYC
?) or just want to browse a catalog of available NFTs, the best place to do so is OpenSea.
Backing up, let’s walkthrough the exact steps to get started on OpenSea:
Create an account with a centralized exchange (
Coinbase
or equivalent) to purchase some Ethereum.
Download and create a
MetaMask wallet
. This is the account you will send your freshly purchased Ethereum to. It’ll also be the log-in for OpeanSea.
Now, head over to
OpenSea
and connect your MetaMask wallet to get started buying and selling on the marketplace. Note: you can still browse the collections even without a connected wallet.
Now that you’re set up on OpenSea, the best place to start is their browse page. Here, you can explore their vast 34 million+ digital assets by filtering and searching keywords.
As a seller, there are a few different options for listing your NFT.
Fixed Price Listing - This is a typical “buy now” listing where the seller sets the price, and stays active until it’s purchased or canceled.
English Auction Listing - Here, the seller sets the minimum price and duration. Then it’s a waiting game in hope for bidders to push up the price.
Dutch Auction Listing (Declining Price Listing) - Essentially the seller sets a starting price, an ending price, and duration. The strategy is to set a price higher than market value and gradually reduce it until it’s accepted or reaches that ending price.
But wait, how does a decentralized marketplace like OpenSea even work?
This just means that OpenSea does not take possession of your assets (they remain in the wallet you are connected with), and relies on smart contracts to facilitate the peer to peer buying, selling, and trading.
And finally, that’s not all. Now anybody can create their own NFTs. It’s as simple as uploading an image or video to make an NFT, write a description, and add some optional features like “unlockable content” that only the owner can access.
Show Me the Money
Currently:
OpenSea’s primary revenue generation is via 2.5% commission fees for each transaction (much like any other marketplace, yet much lower and without a buyer fee). They’re the current market leader and for some context, OpenSea recorded over $3.5B in NFT trading volume during August 2021 alone (Crazy!).
A more recent, additional revenue stream is through content creation. A user can now create and mint (adding it to the blockchain) their own NFT on OpenSea for the small 2.5% service fee.
Be Wary
Where to be wary for OpenSea:
Once a company reaches the scale that OpenSea is at, the primary concerns are 1) innovation and the speed they will be able to adapt in order to keep their edge against the other promising NFT marketplaces, and 2) maintaining their share of the market as new competitors enter the space.
Now Get Excited
OpenSea is the OG of NFT marketplaces. When I first heard of digital art and NFTs, the unanimous answer of where to get started was OpenSea. At its core, there’s such a loyal fanbase that is eager to refer others to the platform because of its product design and onboarding simplicity. The importance of this: the dominance OpenSea was able to establish early created a moat, owning roughly 97% of the market share.
As part of a decentralized ecosystem, OpenSea was also able to leverage interoperability to make it even more desirable. In this case, this meant that NFTs could be bought or acquired anywhere, but as long as they were in your wallet, OpenSea offered a seamless experience for auction exposure to the masses.
Second, the scale and reach of OpenSea has made it the de facto launchpad for projects. My favorite section is the rankings page because it gamifies the ownership of Top NFTs and boosts the credibility of projects and/or communities associated. Across categories and blockchain platforms, a user can see the top NFTs by volume, floor price, and other fun statistics. By aggregating this information in a friendly UI, NFT projects are also incentivized to launch through them because of the signaling it sends to users, which is especially important for projects looking to expand their community.
OpenSea has done a tremendous job scaling to date, but let’s explore a few additional possibilities:
The product - Currently supports custom NFT marketplaces for in-game items, crowdfunding projects, airdrops, etc. To scale even further, OpenSea can provide a plug-and-play SDK to help MetaVerse projects create their own in-game marketplaces and simultaneously reduce the development costs.
The target user market - Given the size of the Solana NFT ecosystem, a natural next step would be extending support here, as well as other low gas fee platforms (e.g. Harmony). To the extent gas fees for every transaction has become a recent issue, unlocking the “next billion” users will have to take into account other developing NFT ecosystems where users require less starting capital.
Revenue generation - By focusing on product development in areas like NFT aggregation across exchanges (similar to the functionality of
Genie
), OpenSea can keep users on their platform while leveraging competitor’s marketplace platforms with an extra service fee charge for ease of use in bulking orders.
And that’s a wrap!
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Thanks for reading and see you on Sunday,
Nico
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