In five years of existence, OpenSea has become the first NFT platform in the world. The co-founder, Devin Finzer, analyzes the current crisis in the industry and gives his view on a market that is still in its infancy.
JDN. OpenSea is often presented as an “eBay for NFTs”. Does this comparison seem fair to you?
Devin Finzer. Indeed, it is a simple way to describe the activity of OpenSea, the benchmark marketplace for discovering, buying and selling NFTs. Inspired by the rise of CryptoKitties, we launched OpenSea in 2017, starting with the Ethereum blockchain. Since then, our marketplace has opened up to other blockchain ecosystems, including Polygon, Klaytn, Solana, and more recently Avalanche. OpenSea initially targeted the secondary market by allowing anyone to list and resell NFTs.
Today, our activity also integrates the primary market, allowing creators, brands or even video game designers to launch and fully manage their NFT projects. From this point of view, OpenSea could now rather be regarded as the Amazon of NFTs.
The NFT market has crashed by more than 90% since last January’s peak. What is the impact on Opensea’s business, which had over a million active wallets at the time?
Trading volumes have indeed plummeted. The current numbers are somehow healthier because they are now less affected by market swings. It is also an indicator that prices have fallen. But despite everything, we find that a significant number of people remain enthusiastic about this economy of NFTs. The other important thing to point out is that the crypto universe is a new macro environment that seems to work in cycles. We are confident that we are just at the beginning of NFT adoption.
Have you noticed an evolution in OpenSea user profiles since this sudden drop?
NFT buyers have very diverse profiles. Those interested in art will turn to “collectibles” type NFTs. There are also video game enthusiasts. Today we see many new projects in this sector. Web3 gaming startups have raised billions of dollars and are currently designing video games that will integrate NFTs into their virtual economies. Some of these games will take years to develop. All this investment in the NFT sector makes me think that a lot of interesting projects should appear on the market in a few years.
Do you believe that the high speculation surrounding NFTs is behind us? Will this market downturn mark a turning point in the type of NFTs traded on OpenSea?
OpenSea first launched with NFT collectibles. This is the simplest use, which is to hold and collect a digital object. I remain convinced that digital art remains an interesting market. It’s not that different from the traditional art market, where some just collect for fun. However, we plan to offer other types of NFT that integrate different applications. I can give you the example of the Veefriends collection by American influencer Gary Vaynerchuck. These NFTs are actually access cards to access the Veecon conference and exchange with the community. Another example with The Sandbox offering to buy virtual land in NFT. You can then build what you want there or earn money with these spaces by renting them or charging an entrance fee. These are just a few examples, even though many applications have yet to be invented.
Some players, such as The Sandbox, advocate for interoperability between web platforms to allow better use of NFTs. How far are we?
One of the first known NFT projects referenced on OpenSea was the Cryptokitties in 2017. Some people then started building experiments around this collection to give them additional uses. For example, a video game was created that allows you to race your Cryptokitties. This translates the promise of these digital assets to be able to be used in different video game platforms and thus have different experiences. Many players are working on the infrastructure that will allow their NFTs to move from one platform to another in the future. I am very excited about this idea.
Twitter, Reddit and Instagram have integrated NFTs into their platforms. A boon to promote the adoption of NFTs among the general public?
“Twitter, Reddit and Instagram integrations logically contribute to accelerating the adoption of NFTs”
Indeed. The fact that a platform like Reddit deploys collections of NFTs has made it possible to familiarize millions of people with the operation and usefulness of a wallet in record time. Will NFTs necessarily reach all audiences? It’s less safe. The internet does not yet reach all target groups. However, it seems clear to me that NFTs will increasingly be adopted on a massive scale by populations already familiar with the Internet, as is the case with the community of Reddit users. These integrations by Twitter, Reddit or Instagram logically contribute to accelerating the adoption of NFTs. We also have direct and regular contact with all of these platforms that use the OpenSea API to facilitate these integrations.
Apple said the commission rate applied to NFT sales transactions through the app store would be 30%, well above the 2.5% OpenSea charges. Could this be a drag on the adoption of NFTs on mobile?
In a sense, Apple’s announcement is a positive step forward in terms of industry recognition as the company provides access to applications for exploring and trading NFTs. So it’s going in the right direction. On the other hand, the in-app purchase method now shows some limitations, especially in the case of high commission costs. But we’re excited to talk to Apple to see how we can drive the development of this NFT economy and make sure we don’t put too much strain on users’ shoulders. All this is recent and work is therefore still being done to improve the applicable rules.
What is your advice for creators looking to launch an NFT collection on OpenSea?
The first thing I recommend is discussing upstream with the community and looking at what has been created in the past. The NFT community is very active on Twitter and the platform is therefore the tool of choice for understanding a community’s motivations and analyzing what is popular. In the case of NFT-type collectibles, the methods are quite similar to those of the art world. It is important to work on the envelope of a project, namely storytelling and marketing, but also to offer something new. Trying to replicate existing collections will not work and will not appeal to potential buyers. It is therefore important to think from the start about what you want to create, how you will reach potential customers, which artists you can collaborate with, etc.
After raising $300 million in Series C last January for a $13.3 billion valuation, is there an IPO scheduled for 2023? What are OpenSea’s projects?
An IPO is not planned before 2023. We want to continue building a user-friendly marketplace where everyone can experiment with NFTs. Our second goal is to build a relationship of trust with our users. This is why we want to make sure we give visibility to the best NFT projects and don’t appreciate those who behave badly. Finally, we will continue to expand our inventory by opening up to different blockchains. We want to cover the ecosystem as a whole.
What would you say to those who are skeptical of NFTs and more generally of the Web3 ecosystem?
A few years ago you had to convince the most skeptical with words, by letting them fantasize about what the future might look like. Today it is already possible to test concrete projects in the Web3 sector. Be it with The Sandbox in the metaverse sector, with OpenSea in digital art or even trying to make a wallet to understand how it works. So my advice would be to just give these new tools and platforms a try. We should also remember the beginning of the Internet. There were a lot of useless web pages back then that didn’t have much to do. We are at the same point here and it is important to realize that the Web3 ecosystem and its use will grow over time.
Devin Finzer is the co-founder and CEO of OpenSea, the leading marketplace for discovering and trading NFTs. Passed by the YCombinator, the start-up, which now employs 250 people, counts among its investors a16z, Paradigm or Coatue. Before that, Devin created a fintech app called Claimdog (acquired by Credit Karma) and worked as an engineer at Pinterest. He graduated from Brown University.