You might be wondering what non-fungible tokens (NFTs) and OpenSea are if you’ve heard a lot about them. Perhaps you’ve heard of CryptoKitties, the first NFT game to crash the Ethereum network, or Bored Ape Yacht Club, a popular NFT collection with a floor price of roughly 100 ETH, or thousands of dollars.
NFTs are non-transferable tokens that are recorded on the blockchain in a transparent manner. They can be used to prove ownership of both digital and physical assets in a tamper-proof manner. From digital music and art to in-game assets and tangible assets like real estate, anything may be tokenized. These digital assets have gained a lot of traction as a way for artists to secure their intellectual property.
What is OpenSea?
OpenSea is a marketplace comparable to eBay, Etsy, and Amazon, with the exception, that all of the things displayed are one-of-a-kind digital treasures in the form of NFTs that users may buy, sell, and mint. The platform is a decentralized, peer-to-peer exchange that allows users to conduct direct, trustless transactions with one another.
OpenSea was formed in 2017 by software programmers Alex Atallah and Devin Finzer, who was inspired by the release of the popular NFT series CryptoKitties and saw the potential for NFTs to provide actual ownership of digital objects for the first time. The platform allows digital artists and content creators to mint NFTs, establish unique marketplaces and NFT collections, set fees for their tokens, and sell them through auctions.
How OpenSea work?
The marketplace on OpenSea is non-custodial, which means that no central entity has control over the platform’s transactions. Instead, self-executing smart contracts facilitate transactions and ensure fair commerce. On OpenSea, transactions are either completed (the buyer receives the NFT and the seller is compensated) or they are not completed at all. Atomic transactions are what they’re called.
Because OpenSea is a peer-to-peer marketplace, there is no middleman between the buyer and seller. Despite this, the platform keeps 2.5 percent of each transaction. The costs of competitors range from 0% to 15%. The Wyvern Protocol, which is a collection of smart contracts here on the Ethereum blockchain meant to facilitate the buying and trading of unique digital goods, lies at the heart of OpenSea’s architecture. The platform supports Ethereum, Polygon, and Klatyn, as well as other blockchains.
The ability to mint NFTs for free utilizing Opensea’s Polygon-based gas-free marketplace is one of the key benefits for creators. By choosing the gas-free marketplace, authors will avoid having to pay the Ethereum network’s transaction costs, often known as gas fees. Another benefit is that the NFT’s original author can set up a royalty payout for each secondary-market purchase of the token in perpetuity.
Buyers may quickly search through NFT collections, filtering by price, status, native blockchain, and token rarity. Buyers can cast a bid, make an offer, or buy right away and pay the NFT’s asking price, depending on the type of auction. Buyers can also view each NFT’s purchase history, which includes how many times it was sold, who bought it, and how much it cost. More than a dozen crypto wallets are supported by OpenSea, with MetaMask and Coinbase Wallet being the most popular.
OpenSea raised US$300 million in a Series C fundraising round headed by Paradigm and Coatue in January 2022, valuing the platform at US$13.3 billion. While the firm has stated that it is not actively planning an IPO, the employment of a seasoned CFO in 2021 indicates that this is a possibility. Brian Roberts was previously the CFO of Lyft, a ride-sharing platform, where he oversaw the company’s IPO, which raised $7 billion in financing.
OpenSea will always face opposition as the premier NFT marketplace. The vampire attack by LooksRare was a surprising and successful example. While comparable approaches may reduce OpenSea’s trading volume in the short term, the company’s substantial market share may enable it to maintain its position as the industry leader in the long run. Trading volume on OpenSea increased 646-fold in 2021, topping US$14 billion. OpenSea accounted for 56 percent of the total transaction volume in the NFT market, which was valued at $25 billion in 2021. The NFT market is expected to exceed US$35 billion in 2022 and US$80 billion in 2025, according to investment bank Jefferies. With its size advantage, OpenSea may be able to maintain its position as the leading NFT marketplace for the near future.