In just two years, it went from being unknown to being valued at over $13 billion. Then in another two years, its valuation of $10 billion was cut by 90%, to the point where it was considering selling itself. What kind of experience would it be to experience such a roller coaster of ups and downs?
This is exactly what OpenSea has been like in the past four years - just recently, OpenSea CEO and co-founder Devin Finzer revealed that OpenSea has received acquisition intentions and remains open to potential acquisition deals, but did not specify when and by whom.
As a "unicorn"-level existence that was almost discontinued in the NFT trading market, how did OpenSea rise so quickly and fall from the front row in the competition in the NFT market? What possible disruptors and variables will the future NFT market landscape usher in?
OpenSea: A unicorn with a valuation of over 10 billion, now "toe-cutting"
Like Uniswap and Dune, OpenSea is also a startup miracle that started from scratch and rose rapidly in the Web3 field - especially in the two years since 2021, OpenSea's valuation has been unstoppable, climbing from no one to US$13 billion, becoming the "firmly in the top spot" in the entire NFT market.
The story all began in January 2018, when OpenSea’s two co-founders, Devin Finzer and Alex Atallah, created OpenSea for users to buy and sell NFTs.
However, since the entire NFT market is still barren except for Cryptokitties, which once caused a short-term craze, the platform's NFT trading users and trading volume have been hovering at a low level.
Until March 2020, OpenSea had only 5 employees, and its monthly trading volume fluctuated around US$1 million. Calculated based on the 2.5% commission at the time, this meant monthly revenue of only US$28,000. Fortunately, Animoca Brands invested US$2.1 million at the end of 2019, allowing OpenSea to barely maintain financial balance.
OpenSea really took off in 2020. The two co-founders planned to double their business volume by the end of 2020. Unexpectedly, with the gradual recovery of the crypto market starting in the second half of 2020, OpenSea's business volume soared rapidly, and the task was completed ahead of schedule in September 2020.
Starting from 2021, the NFT bull market has officially begun. The number of active users and transaction volume of OpenSea have been rising all the way. In July 2021, the transaction volume surged to US$350 million, and it received US$100 million in financing led by a16z, with a post-investment valuation of US$1.5 billion.
A month later, in August 2021, OpenSea's trading volume soared tenfold again to US$3.4 billion, earning more than US$85 million in commission income.
From then until January 2022, OpenSea was almost unshakable, with a monthly trading volume of more than US$3.5 billion, accounting for 90% of the NFT industry's market share, and a maximum valuation of more than US$13.3 billion. Therefore, from a data dimension, OpenSea is definitely "too big to fail" in the entire NFT market, even far exceeding Uniswap's market share and influence in the DEX track.
This also became the swan song of OpenSea's dominance in the NFT trading market. As the pioneer that first laid out the NFT trading market and fully reaped the benefits of the explosion, OpenSea's trading volume plummeted in June 2022:
OpenSea's monthly trading volume has now dropped to $120 million, from nearly $2.6 billion in May to less than $700 million in June, down more than 95% from its peak in January 2022.
According to a report by Bloomberg, citing people familiar with the matter, Tiger Global Management has written down the value of its shares in OpenSea by 94%, and Coatue has also reduced the value of its OpenSea shares by 90% to US$13 million, which are almost "toe-cutting".
The evolution of the NFT track
The heaviest blow to OpenSea was dealt by the new overlord, Blur, which now occupies more than 70% of the NFT trading market share. Blur, an NFT platform launched at the end of 2022, quickly surpassed OpenSea in less than a year through Airdrop Tokens and became the largest NFT market.
Dune data shows that as of the time of writing, Blur's market share in the NFT market in the past week was as high as 73.7%, ranking first, and Opensea's market share was 21.7%, ranking second.
If we look back at the evolution of the NFT track and Blur's extremely powerful "disruption" ability, we will find that all the changes are not surprising.
LooksRare, x2y2's "Vampire Attack"
First of all, the miraculous rise of OpenSea is to a certain extent inseparable from the first-mover advantage it gained by persisting in the trough in the early days. After the outbreak of the NFT bull market, the product-dimensional competition and "vampire" attacks among NFT trading markets have almost never stopped in response to OpenSea's dominant position.
As we all know, there is an obvious trend in Web3 and the crypto world now. Whether it is DeFi, NFT, blockchain games or infrastructure, there are more and more similar projects, but homogeneous competition is serious, and the differences between them are almost limited to differences in name, UI, Token incentives, transaction fees, etc.
"In market competition, it doesn't matter who copies whom, what matters is who is first." This is especially true for Web3. Since Sushi's vampire attack on Uniswap, this view has been repeatedly proven.
Therefore, since 2022, a number of "OpenSea killers" such as LooksRare and x2y2 have begun to take advantage of OpenSea's delay in issuing tokens. They have temporarily gained relative advantages by using the incentive form of token distribution, but the Airdrop has not really shaken Opensea's position.
Almost all of these transaction reward mechanisms triggered a large number of false orders, which quickly fell silent after a brief boom, and no strong competitor emerged to truly share the NFT market share.
Blur: The real “wall breaker” in the NFT track
At the end of 2022, Blur appeared and launched Bid Airdrop, which went a step further than the transaction reward mechanism (Bid Airdrop is a marketing strategy in a crypto asset project that aims to distribute tokens to participants by participating in auctions or bidding), completely solving the problem of insufficient NFT market depth:
Encourage bids (make offers). The closer the bid is to the floor price, the greater the reward. "In essence, the secondary market takes over the platform tokens and subsidizes the bidders." This is similar to the path of Aave's rise - a protocol that helps large investors "ship" is a good protocol.
Looking at the development trajectory of the past year, Blur and its founder Tieshun can be said to be top "wall breakers" in various "mature tracks":
NFT trading track: Blur overturned the well-established OpenSea, reducing its valuation from $13.3 billion to $1.4 billion;
NFT lending track: Blend’s total loan transaction volume exceeded US$4.6 billion, making it the leader;
L2 track: Blast's TVL exceeded US$1.78 billion. According to L2Beat statistics, it is second only to Arbitrum (US$12.34 billion) and Optimism (US$6.6 billion), and higher than Base, zkSync and other L2s, ranking among the top three L2s.
New trends in the NFT market
Since 2023, in addition to Blur's replacement of OpenSea, some potential variables have also emerged.
The first is naturally the rise of pan-Bitcoin NFTs represented by Ordinals, which has set off a new wave of "BitcoinFi", and the activity of transactions within the Bitcoin ecosystem has reached a new peak.
According to the Cryptoslam data in the figure below, NFT sales on the Bitcoin chain reached US$238 million in the past 30 days, making it the second largest blockchain in NFT sales, second only to Ethereum ($456 million) and higher than Solana ($232 million) and Polygon ($50.03 million).
The latest data from Dune shows that as of February 16, the cumulative cost of Ordinals inscription minting exceeded 6,150 BTC, exceeding US$320 million.
This has also given rise to the rise of Bitcoin-based NFT trading markets such as the Web3 wallet Ordinals market and the UniSat NFT trading market. As of last week, the total transaction volume of the Web3 wallet Ordinals market has exceeded US$1.3 billion.
In addition, starting from the second half of 2023, the NFT market seems to have gradually stabilized, and the floor prices of many blue-chip NFTs have begun to rebound or soar, and the NFT track in the Solana ecosystem has also ushered in a new hype cycle.
At the same time, pan-NFTs with similar inscriptions such as ERC404 have re-emerged. As a "new asset" with dual nature, this type of pan-NFT can be traded on both OpenSea and Uniswap, which may also bring greater impact on the NFT market structure in the future.
In particular, Uniswap had previously acquired the NFT trading market Genie, sending a clear signal of entering the NFT trading market - Genie aggregates transactions from other NFT markets, and Uniswap provides trading depth.
In general, competition in the NFT market has been centered around product and asset dimensions:
Blur innovated the product dimension of the liquidity reward mechanism and hit a number of old-generation NFT trading platforms such as OpenSea and x2y2 in the first half of 2023;
Web3 wallets, UniSat, etc., with the help of the new asset class of inscriptions, have risen rapidly in the second half of 2023 and opened up new territories;
Now that 2024 has begun, will the ERC404, a new asset type that is gaining popularity, give traditional Token trading protocols such as Uniswap a new NFT entry ticket, thereby stirring up the NFT market landscape in 2024? It is worth paying attention to.
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