OpenSea was once the world's leading NFT trading platform, raising $425.1 million at its peak and with a valuation of $13.3 billion. However, with the rise of competitors Blur and Magic Eden, OpenSea lost its leading position.
1/ Origin
In 2017, Stanford graduates Finzer and Atallah founded a Wi-Fi sharing startup and joined Y Combinator in early 2018. At that time, blockchain technology was emerging and developers began to create NFT, a unique digital asset.
NFTs provide proof of ownership for digital items, ranging from artworks to real-world assets. Finzer and Atallah saw the potential and raised $2 million in funding for their NFT platform in May 2018.
2/ Peak period
In 2021, the NFT market exploded, and Beeple's digital artwork was sold for $69 million, which boosted the development of OpenSea. With a transaction fee of up to 10%, OpenSea quickly attracted investors and subsequently received $23 million in financing, raising the platform's valuation to $123 million.
In the same year, the rise of popular NFT projects such as Bored Ape Yacht Club (BAYC) further boosted the growth of platform revenue. In the third quarter of 2021, OpenSea's revenue soared from US$9 million to US$167 million.
3/ Challenges
As the platform expands, OpenSea also faces a series of problems. In September 2021, product manager Nate Chastain was fired for suspected insider trading, becoming the first NFT-related insider trading case by the U.S. Department of Justice. In addition, the platform frequently encounters problems such as crashes, junk projects, and fraud, so OpenSea is nicknamed "BrokenSea".
4/ Decline
In 2022, OpenSea's market value began to decline, and NFT market trading volume fell from $6 billion in January to only $1 billion in June. At the same time, the price of ETH fell sharply, and the platform suffered serious financial losses. In the third quarter of 2022, OpenSea's revenue fell to $32 million and its losses exceeded $27 million.
5/ The rise of Blur
In October 2022, the NFT professional trading platform Blur went online and quickly captured 52% of the NFT trading volume. The rise of Blur forced OpenSea to reconsider its strategic focus. Although Finzer said he would continue to focus on long-term development, the competitive pressure is still huge.
6/ Legal dilemma
In 2022, the U.S. Securities and Exchange Commission (SEC) launched its first round of legal action against the NFT industry. The NFT market faced increasingly stringent regulatory challenges, and OpenSea was no exception.
7/ OpenSea 2.0
In October 2023, OpenSea announced layoffs and launched the "OpenSea 2.0" strategy, aiming to reshape its position as a Web3 leader. However, investor confidence was insufficient, and Coatue Management cut its valuation to $1.4 billion.
Summarize:
OpenSea, which once held more than 90% of the market share, has now lost its throne to competitors such as Blur and Magic Eden. Although NFTs are still a core part of the blockchain world, the market focus has shifted to other areas such as liquid pledges, real assets, and artificial intelligence. The future of NFTs is still uncertain, but enthusiasts are still looking forward to the possibility of a market recovery.
