Anyone interested in NFTs for the first time is likely to stumble across the NFT marketplace, OpenSea, sooner rather than later. When it comes to the secondary market for NFTs, OpenSea is the first name that comes to mind. It is one of the oldest NFT markets, with by far the largest userbase.

But what is OpenSea and how does it function? We’ve got you covered, so continue reading!

The OpenSea NFT marketplace’s history

OpenSea is a platform for minting, buying, trading, and viewing NFTs that was founded by Devin Finzer and Alex Atallah in December 2017. The firm has been compared to a “eBay for crypto assets” or a “Web3 Amazon” in popular parlance.

The new-at-the-time ERC-721 Ethereum standard, which enabled the early NFT applications that laid the groundwork for the sector we know today, was a big influence for OpenSea.

The OG NFT collection CryptoKitties, which had its own specialized trade platform, was another source of inspiration for the OpenSea marketplace. OpenSea was supposed to be a single location where users could manage and trade a range of various NFTs at the time.

It didn’t see much activity for a time and instead concentrated on expanding its platform. That all changed in 2021, when a combination of circumstances such as the growing popularity of NBA Top Shot, Beeple’s historic sale, and the success of CryptoPunks and the Bored Ape Yacht Club propelled NFTs into the mainstream.

What is the NFT marketplace and how does it work?

OpenSea is a peer-to-peer non-custodial NFT marketplace. That implies a few things. For starters, the non-custodial component alludes to the fact that, in principle, the assets on OpenSea are not controlled by a centralized entity (more on centralization issues with OpenSea to come).

The way it works is that smart contracts regulate all of the transactions on OpenSea. As a result, trustless transactions are possible. Anyone with a suitable crypto wallet may also connect to OpenSea and start trading.

The peer-to-peer feature of OpenSea, on the other hand, is due to the fact that OpenSea does not sell NFTs. Rather, it enables individuals or projects to sell NFTs to others. Users may simply manufacture NFTs on OpenSea using a gas-free minting mechanism provided by OpenSea. Regardless, any NFTs from supported blockchains can and do trade on the NFT exchange.

OpenSea, like most online markets, earns money by charging a transaction charge. At current time, the cost is 2.5 percent of the transaction. When compared to some of its rivals who charge lesser fees, this statistic frequently comes up in complaints of OpenSea. Although, to be fair, several other markets charge as much as 15% in fees.

On OpenSea, what types of NFTs are traded?

OpenSea was designed specifically for Ethereum NFTs, the first smart contract chain. The most well-known NFT collections are currently hosted on Ethereum. However, OpenSea has evolved into a cross-chain exchange, with trading on NFTs on the Polygon, Solana, and Klatyn blockchains already available.

So far, OpenSea has dominated the NFT business.

OpenSea tops all NFT marketplaces in all-time trading volume, and is second only to the Axie Infinity marketplace on the Ronin sidechain in terms of user numbers, according to DappRadar’s statistics.

Without a question, OpenSea made good use of its years of foresight. It has been properly positioned for the eruption of NFTs in 2021 since its inception. It created a marketplace that was very simple to use and accessible to anybody who wanted to trade. This contributed to it having a greater adoption rate than other NFT markets.

Its enormous user base provides authors with the largest audience for marketing their NFTs. NFT collectors, on the other hand, have a limitless supply of NFTs to discover and acquire.

Obviously, the increased interest in NFTs resulted in a tremendous increase in OpenSea’s userbase and transaction volumes. In reality, by the beginning of 2022, the firm had raised $300 million in investment, valuing the company at an astonishing $13.3 billion.

Despite this, OpenSea has encountered several public difficulties in recent months. Its hold on the market has eroded slightly, despite the fact that it is still the largest and most used NFT marketplace.

OpenSea’s problems and blunders have been widely acknowledged.

Is the NFT marketplace on OpenSea “too centralized”?

The extent to which OpenSea is a centralized NFT marketplace operating in a decentralized universe is a topic that frequently arises. For a large number of NFT owners, this is a huge stumbling block. To put it another way, many individuals argue that certain of OpenSea’s operations aren’t actually Web3.

To be sure, it’s possible that OpenSea won’t be able to delete any NFTs from the blockchain. It does, however, have complete authority to ban NFTs from its marketplace. This move might be detrimental for NFT designers due of its prominence and large userbase. To that reason, NFT projects that have been delisted from the OpenSea marketplace frequently complain on Twitter and elsewhere.

OpenSea has had its share of scandals.

The ‘insider trading’ controversy at OpenSea was, of course, one of the biggest scandals in the NFT sector in 2021. Nate Chastain, Opensea’s then-Head of Product, resigned from the NFT marketplace in September 2021 after being accused of misusing his position.

This happened after OpenSea admitted that one of its employees had been front-running NFT projects that were supposed to appear on the NFT marketplace’s first page. Following a few days of debate on NFT Twitter, the acknowledgment was made. All of this was prompted by a questionable action from Chastain’s public Ethereum wallet, which was discovered by a cautious user.

In the months that followed, things didn’t get any better for OpenSea. From worries about centralization to a long-term manipulation of OpenSea’s delisting mechanism that resulted in the loss of innumerable high-value NFTs, OpenSea has taken a battering in the Twitter court of public opinion, effectively since Q4 2021.

What does the future hold for the OpenSea NFT market?

Considering everything, OpenSea isn’t going anywhere anytime soon. While new rivals appear on a regular basis, OpenSea’s head start in developing its NFT marketplace is still holding strong. To give you an example, it continues to outperform its nearest competitor, LooksRare, on most measures. Not to mention the problems with the LooksRare platform itself.

NFT marketplaces on other blockchains, such as the top Solana marketplace Magic Eden, also compete with OpenSea. Nonetheless, Magic Eden may face stronger competition in the future if OpenSea moves into the Solana market.

It’s unclear if other NFT markets will be able to catch up to OpenSea very soon, given the addition of new blockchain connections and other user-friendly features like card payment possibilities. It’s difficult to keep up with it, let alone overcome it.

You may also like

Leave a reply

Your email address will not be published.