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 on the rise 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, and Finzer and Atallah saw the potential in this 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 US$69 million, which boosted the development of OpenSea. With a transaction fee of up to 10%, OpenSea quickly attracted investors and subsequently obtained US$23 million in financing, increasing the platform's valuation to US$123 million.
In the same year, the rise of popular NFT projects such as Bored Ape Yacht Club (BAYC) further boosted the platform's revenue. In the third quarter of 2021, OpenSea's revenue soared from US$9 million to US$167 million.
3. Challenges
As the platform expanded, OpenSea also faced 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 US Department of Justice. In addition, the platform frequently encountered crashes, junk projects, fraud and other problems, so OpenSea was nicknamed "BrokenSea".
4. Decline
In 2022, OpenSea's market value began to decline, and NFT market transaction volume fell from US$6 billion in January to only US$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 US$32 million and its losses exceeded US$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 remains enormous.
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 aimed at reshaping 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 occupied more than 90% of the market share, has now lost its throne under the impact of competitors such as Blur and Magic Eden. Although NFT is still a core part of the blockchain world, the market focus has shifted to other areas such as liquid staking, real assets and artificial intelligence.
The future of NFTs is uncertain, but enthusiasts are still looking forward to the possibility of a market recovery.
NFT-based social interaction: Instead of liking, it is better to mint
Let’s go back to the end of 2021, which was the peak of the NFT craze.
If you only bought and didn’t sell, you might look back on that year like that chihuahua, with memories floating around in your mind, valuations for NFT collectibles reaching ridiculous levels, communities clamoring for rare traits, and new hot projects launching every day.
Almost all of these projects rely heavily on the concept of scarcity, with limited supplies – 5,000, 10,000 or more, good times.
As the industry moves past the NFT craze (although that craze is still here), we’re seeing various NFT-related token standards and minting methods emerge:
1155: Version number of the same NFT. The Doodles: Certified Viral collection is an example, where there are tens of thousands of versions of each NFT.
Soulbound tokens: tokens that are bound to a wallet address and are non-transferable;
Unlimited casting based on time limits: This approach was popularized by digital artists, introducing unique burning, casting, and other gamification mechanics;
ERC-6551: Token-binding accounts, allowing NFTs to hold other NFTs;
ERC-404: Allows standard non-fungible tokens to be converted into a certain number of fungible tokens.
While prices for many rare collectibles have dropped dramatically, or even to zero, I’ve observed two trends:
NFTs have an ever-increasing level of functionality;
NFTs are becoming everywhere.
These two trends are obvious, but I want to focus on the second one. To illustrate this, here’s what it looks like:
Note that this does not mean there won’t be valuable projects with a limited supply in the future, or that current projects have no value.
Base、Rodeo、Zora
Over the past month or so, I’ve used and observed three app platforms that really make the theme of “unlimited casting based on time limits” stand out.
Base
Base recently shared their Onchain Summer event, which saw over 2 million unique wallets mint over 24 million on-chain assets, generating over $5 million in on-chain revenue for builders, creators, and projects.
The Onchain Summer Highlights video in the post is also an NFT, and over 54,000 NFTs have been minted so far.
Rodeo
This app, which was released about 3 months ago and was developed by the Foundation team, reminds me of Instagram from simpler times.
Working principle introduction:
Users can post their artwork, photos, or any content;
Followers can mint these for a fixed price of 0.0001 ETH (about 25 cents) within 24 hours;
The feed is populated based on the accounts you follow or the content they cast, in this case the accounts you follow become the “influencers”, in the screenshot above, coopahtroopa is that influencer;
Minting proceeds are split 50% between Rodeo and the creator;
If the minting is attributed to an influencer, the minting proceeds are split 25%, 25%, and 50% between the influencer, Rodeo, and creator;
Rodeo is showing signs of slow but steady growth while continuing to add features, and it’s worth noting that their public Dune dashboard is keeping an eye on retention and casting engagement.
Zora
The Foundry platform has recently transformed into a discovery and social platform beyond crypto users, introducing new features and mechanics:
Partnering with Uniswap to integrate a simplified secondary market experience into the app;
Sparks (✧), a new unit of Ethereum in the Zora ecosystem, 1 ✧ = 1 millionth of an ETH;
The uniform minting price for all content is 0.000111 ETH or 111 ✧, which is about 25 cents. Previously, the minting price was set by the creator, but there were some exceptions, and the details were not clear;
Minting will remain open until there are 200 mints on the post, once the 200 mint threshold is reached, a 24 hour timer begins, when the timer ends a Uniswap driven secondary market will open based on supply and demand;
Zora’s mobile app went live last week, offering a simpler minting experience as users purchase Sparks through in-app purchases, which makes the mobile experience free of switching, pop-ups, bridges or fees.
Foundry enhances social interaction
Watch the evolution of Rodeo and Zora, emerging social media platforms that aim to solve the pain points of current mainstream social media.
The value of likes is gradually decreasing
Likes have become an emoji response in iOS text message threads, simply used to confirm that someone has seen your post or message. There is nothing wrong with this, but in the overall interaction, it is the lowest value interaction signal besides browsing. At least you know who has seen and approved of your post.
Existing social media platforms are aware of this, with Twitter placing 27 times more importance on replies than likes.
Commenting can be a privilege, not a right
Most social media posts allow anyone to comment or reply, but in some cases, the comment feature is turned off. For example, Solana co-founder Anatoly only allows accounts he follows or users he is mentioned in to reply to his posts.
Response to this matter
Rodeo and Zora address these pain points as core features of their respective apps.
Casting is more important than liking
The like button was replaced with a mint button, and if you really liked the content, you could mint it for a low price of about 25 cents, creating a win-win situation:
Creators receive financial compensation for their work;
Collectors receive an NFT in return;
The platform gets a portion of the minting revenue and does not have to rely on the traditional advertising model.
Comments are open to creators only
Anyone can comment on a piece of content if you cast it.
In the context of these apps, this all makes sense, and the goal of platforms like Rodeo isn’t to prevent creators from connecting with users, but to create more meaningful ways to connect through casting and limiting commenting features.
These behaviors exist on traditional social platforms
While I’ve criticized this broken model of engagement quite a bit, the emotions, psychology, and intentions behind this behavior that Rodeo and Zora built from scratch exist in different forms, proving their approach works.
Tinder Super Like
In the world of dating (an area I’m totally unfamiliar with right now), Tinder introduced Super Likes a few years ago, which increase your chances of matching and automatically put you at the top of the list of matches.
These super favorites aren’t cheap either, with 3 costing $9.99.
Save content
Social platforms also allow you to save content and organize it, which indicates that the content you save is more valuable and worth revisiting at some point.
Future application scenarios
Moments in life
The examples I provided were focused on art so they are easier to understand in terms of creator vs. collector incentives, collecting art for a low price of 25 cents a piece is a win-win, but what about those who aren’t great photographers or artists posting amazing work on Rodeo?
While they are a minority, users like Max Segall of Privy are using Rodeo more like Instagram, where the posts don’t have dozens of mints, nor do they need to, or necessarily aim for that purpose.
It’s not like they don’t have mints either, for example this post by Max has two mints, one of which was minted by Alex in the photo, and that’s the point.
Alex’s mint may be more valuable than 20 likes on other social platforms, and of course, if Max wants to get those likes, he can choose to post the photo cross-platform.
Important moments in life
Engagement, wedding, new job, these types of posts are flooded with likes and congratulatory messages, but they are forgotten after a few minutes due to the endless updates in the feed.
While happy couples or creators appreciate these little dopamine rushes and notification lights, what if there was another way to congratulate creators? Minting a post provides a way to do this and allows minters to show that they put more thought into their efforts than the standard “Congratulations!!!”
And if casting 1 makes you feel a little stingy, why not cast 10 or 100... or cast 1 and give it directly as a wedding gift, haha.
Non-profit organizations
This is a case that makes sense to me, what if every post published by the Red Cross was mintable, and all minting proceeds (if the platform turns off the charging switch or transfers their share later) went directly to them?
People could still visit the site to make larger donations, but minting became a way to make micro-donations that weren’t possible before, which accumulated over time and became DTC (direct donations to charity).
What if you're an animal shelter? Post cute photos of cats and dogs and watch those micro donations roll in. Who wouldn't want to donate 25 cents and mint a cute photo of a kitten or puppy?
MVF - Minimum Viable Financialization
As I write this, the idea of financialization is on my mind, blockchain is driving financialization in a way that has never been done before, memes are already valued at billions of dollars, we have prediction markets based on what presidential candidates say in their speeches, and people are still speculating on JPEGs worth thousands of dollars.
However, financialization, and more specifically minimum viable financialization, can lend meaning to certain digital interactions that are becoming increasingly meaningless.
Maybe the way forward isn’t friend.tech, but SocialFi with a lowercase f, via platforms like Rodeo and Zora.
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