In the five years of its existence, OpenSea has grown into the world’s first NFT platform. Its co-founder, Devin Finzer, analyzes the current crisis in the industry and provides his vision of a market that is still in its infancy.
JDN. OpenSea is often presented as “eBay for NFTs”. Does this comparison seem fair to you?
Devin Finzer. It is indeed a simple way of describing the activity ofOpen sea This is the benchmark marketplace for discovering, buying and selling NFTs. We started inspired by the creation of CryptoKitties Open sea 2017 starting with the Ethereum blockchain. Since then, our marketplace has opened up to other ecosystems Blockchain including Polygon, Klaytn, Solana or, more recently, Avalanche. OpenSea initially focused on the secondary market by allowing anyone to list and resell NFTs.
Today our activity also integrates the primary market by selling creators, brands or even Video game designers to launch and fully manage their NFT projects. From this point of view, OpenSea could now be seen more as the Amazon of NFTs.
The NFT market is down more than 90% since peaking last January. How does this affect the activity of Opensea, which had more than a million active wallets at the time?
Trading volume has actually decreased. The current numbers are somehow healthier as they are now less affected by market fluctuations. It is also an indicator that prices have fallen. But despite everything, we are observing that a significant number of people remain enthusiastic about this economy NFT. 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 convinced that we are only at the very beginning of the introduction of NFTs.
Have you seen any evolution in OpenSea user profiles since this sudden drop?
NFT buyers have very different profiles. Art lovers turn to NFTs of the “Collectibles” type. There are also video game enthusiasts. Today we see many new projects in this sector. startups Web3 in the gaming industry have raised billions of dollars and are currently working on developing video games that integrate NFTs into their virtual economies. Some of these games will take years to develop. All these investments in the NFT space make me think that in a few years many interesting projects should come to the market.
Do you think the high speculation surrounding NFTs is behind us? Will this market decline mark a turning point in the nature of NFTs traded on OpenSea?
OpenSea first started with NFT collectibles. This is the simplest use, which is holding and collecting 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 collect works just for fun. However, we intend to offer other types of NFT that integrate different usages. I can give you the example of the Veefriends collection created by the American influencer Gary Vaynerchuck. These NFTs are actually tickets that allow access to his Veecon conference and exchange with the community. Another example with The sandbox offering to buy virtual land in NFT. You can then build whatever you want there, or monetize these spaces by renting them or charging admission. These are just a few examples, although many applications have yet to be invented.
Some players like The Sandbox advocate interoperability between web platforms to enable better use of NFTs. How far are we?
One of the first known NFT projects to be referenced on OpenSea was the Cryptokitties in 2017. Some people then started building experiments around this collection to further exploit it. For example, a video game was created that allows you to race your Cryptokitties. This translates into the promise of these digital assets to be able to be used on different video game platforms and thus have different experiences. Many players are working on the infrastructure that will enable their NFTs to be used from one platform to another in the future. I’m very excited about this idea.
Twitter, Reddit, and Instagram have integrated NFTs into their platforms. A boon to promote the acceptance of NFTs among the general public?
“Twitter, Reddit, and Instagram integrations are logically helping to accelerate adoption of NFTs”
As a matter of fact. The fact that a platform like Reddit hosts collections of NFTs has made it possible to introduce millions of people to the workings and usefulness of a wallet in record time. Will NFTs inevitably reach all audiences? It’s less secure. The Internet is already not reaching all target groups. However, it seems obvious to me that NFTs are becoming increasingly massively adopted by demographics already familiar with the web, as is the case with the community of Reddit users. Logically, these integrations of Twitter, Reddit or Instagram help accelerate the adoption of NFTs. We are also in direct and regular contact with all these platforms that they useAPIs from OpenSea to facilitate these integrations.
Apple said the commission rate for NFT sales transactions made through the App Store would be 30%, well above the 2.5% OpenSea charges. Could this be a brake on the adoption of NFTs on mobile?
In a way, Apple’s announcement is a positive step forward in terms of recognition for the industry 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 purchasing method now shows some limitations, especially with high commission costs. But we look forward to speaking with Apple to see how we can encourage the development of this NFT economy and make sure we’re not putting too much strain on users’ shoulders. All of this is new and therefore there is still work to be done to improve the current regulations.
What is your advice for creatives who want to publish an NFT collection on OpenSea?
The first thing I recommend is to discuss upstream with the community and look at what has been created in the past. The NFT community is very active on Twitter, making the platform the tool of choice for understanding a community’s motivations and analyzing what’s popular. In the case of NFT type collectibles, the methods are quite similar to those used in the art world. It’s important to work on the shell of a project, which is storytelling and marketing, but also to offer something new. Attempting to replicate existing collections will not work and will not appeal to potential buyers. Therefore, it is important to think about what you want to create, how to reach potential customers, which artists you can work with, etc. right from the start.
After raising $300 million in Series C last January for a valuation of $13.3 billion, is an IPO planned for 2023? What are OpenSea’s projects?
An IPO is not planned for 2023. We want to continue building a user-friendly marketplace where anyone can experiment with NFTs. Our second goal is to build a relationship of trust with our users. Because of this, we want to make sure that the best NFT projects are visible and the misbehaving ones are not appreciated. Finally, we will continue to grow 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 about NFTs and the Web3 ecosystem more generally?
A few years ago you had to convince the most skeptical with words by imagining what the future could be like. It is already possible to test concrete projects in the Web3 area. Whether using The Sandbox in the Metaverse sector, using OpenSea in digital art, or even trying to create a wallet to understand how it works. So my advice would be to just try these new tools and platforms. We must also remember the beginnings of the Internet. Back then there were many useless websites with not much to do. We’re at the same point here, and it’s important to realize that the Web3 ecosystem and its uses will grow over time.
Devin Finzer is co-founder and CEO of OpenSea, the leading marketplace for discovering and trading NFTs. The start-up, which was overtaken by the YCombinator and now has 250 employees, counts among its investors a16z, Paradigm or Coatue. Before that, Devin developed a fintech app called Claimdog (acquired by Credit Karma) and worked as an engineer at Pinterest. He graduated from Brown University.