Recently, Devin Finzer, the CEO and co-founder of the former NFT trading market “unicorn” OpenSea, revealed that OpenSea has received acquisition intentions and is open to potential acquisition deals, but did not specify when or by whom the acquisition would take place. Why has OpenSea’s market value shrunk by 90% in just two years? What other variables are there in the future of the NFT trading market?
Summary:
OpenSea Seeks Acquisition? CEO: Open to Consideration if Suitable Deal Arises
Background:
OpenSea’s Valuation Plummeted by 90%! CEO: Developing 2.0 Upgrade, Still Optimistic about Ethereum NFT
Table of Contents:
OpenSea: From a Valuation of Over 10 Billion to a “Collapse”
Evolution of the NFT Market Landscape
LooksRare and x2y2’s “Vampire Attack”
Blur: The True “Game Changer” in the NFT Market
New Trends in the NFT Market
OpenSea: From a Valuation of Over 10 Billion to a “Collapse”
Like Uniswap and Dune, OpenSea is also a startup miracle in the Web3 field that started from scratch and quickly rose to prominence. Especially in the past two years starting from 2021, OpenSea’s valuation soared, surpassing 13 billion USD and becoming a dominant player in the entire NFT market.
The story begins in January 2018 when OpenSea’s co-founders, Devin Finzer and Alex Atallah, established OpenSea for users to buy and sell NFTs. However, due to the NFT market being barren except for the short-lived hype of Cryptokitties, the platform’s user base and transaction volume remained low.
Until March 2020, OpenSea only had 5 employees, and the monthly transaction volume fluctuated around 1 million USD. Based on a 2.5% commission rate, the monthly revenue was only 28,000 USD. Fortunately, in late 2019, Animoca Brands invested 2.1 million USD, allowing OpenSea to maintain financial stability.
OpenSea’s real takeoff began in 2020 when the co-founders achieved a doubling of business volume by the end of 2020. Along with the gradual recovery of the crypto market in the second half of 2020, OpenSea’s business volume quickly skyrocketed, completing the mission ahead of schedule in September 2020.
Starting from 2021, the NFT bull market kicked off, and OpenSea’s active users and transaction volume surged. In July 2021, the transaction volume reached 350 million USD, and OpenSea secured a 100 million USD financing led by a16z, resulting in a valuation of 1.5 billion USD. A month later, in August 2021, the transaction volume of OpenSea surged tenfold to 3.4 billion USD, earning over 85 million USD in commission income.
From then until January 2022, OpenSea seemed invincible, with a monthly transaction volume exceeding 3.5 billion USD and occupying 90% of the NFT market share. Its highest valuation exceeded 13.3 billion USD. From a data perspective, OpenSea was an “unshakable giant” in the entire NFT market, even surpassing Uniswap’s market share and influence in the DEX field.
OpenSea’s Monthly Transaction Volume from 2022 to 2024
However, this also became OpenSea’s swan song in dominating the NFT trading market. The platform’s trading volume plummeted in June 2022, from nearly 2.6 billion USD in May to less than 700 million USD in June. Currently, OpenSea’s monthly transaction volume has decreased to 120 million USD, a drop of over 95% compared to its peak in January 2022.
According to Bloomberg, Tiger Global Management has devalued its stake in OpenSea by 94%, and Coatue has reduced the value of its OpenSea holdings by 90% to 13 million USD. It’s a significant decline for OpenSea.
Evolution of the NFT Market Landscape
The heaviest blow to OpenSea came from the emerging market leader that now holds over 70% of the NFT trading market share – Blur, an NFT platform launched in late 2022. Blur quickly surpassed OpenSea within a year and became the largest NFT market.
According to Dune data, as of the time of writing, Blur’s market share in the past week reached 73.7%, ranking first, while OpenSea’s market share was 21.7%, ranking second.
If we look back at the evolution of the NFT market landscape and Blur’s formidable disruptive capabilities, we will find that all the changes are not surprising.
“Vampire attacks” by LooksRare and x2y2
Firstly, OpenSea’s rise miracle was partly due to its early advantage and persistence in the early stage. After the NFT bull market took off, there was fierce competition and “vampire attacks” among NFT trading markets to challenge OpenSea’s dominant position in terms of product dimensions.
It is well known that there is a clear trend in the Web3 and crypto world. Whether it’s DeFi, NFTs, blockchain games, or infrastructure, there are more and more similar projects, but the competition is highly homogenized, and the differences are limited to names, UI, token incentives, and transaction fees.
“In market competition, who copies whom is not important, what matters is who is the first.” This is especially true in Web3. It has been repeatedly proven since Sushi’s vampire attack on Uniswap.
Since 2022, “OpenSea killers” like LooksRare and x2y2 started to focus on OpenSea’s delayed token issuance. They gained relative advantages through token distribution incentives, but the hype around airdrops quickly died down, and they failed to truly challenge OpenSea’s position in the market.
Blur: The True “Game Changer” in the NFT Market
In late 2022, Blur emerged and introduced Bid Airdrop, which went beyond traditional transaction reward mechanisms. This innovation completely solved the problem of liquidity shortage in the NFT market. It encouraged making offers with higher rewards for bids closer to the floor price. Essentially, it subsidized bidders with secondary market tokens, similar to Aave’s rise – a protocol that helps large holders sell their tokens.
Looking at the development trajectory of the past year, Blur and its founder, Tieshun, are the top “game changers” in various mature fields:
NFT Trading Sector:
Blur disrupted OpenSea, slashing its valuation from 13.3 billion USD to 1.4 billion USD.
NFT Lending Sector:
Blend’s total lending transactions exceeded 4.6 billion USD, becoming the leader.
L2 Sector:
Blast’s TVL exceeded 1.78 billion USD, ranking third among L2 solutions, following Arbitrum (12.34 billion USD) and Optimism (6.6 billion USD).
New Trends in the NFT Market
Since 2023, in addition to Blur’s “replacement” of OpenSea, there have been emerging variables.
Firstly, the rise of Bitcoin-like NFTs, represented by Ordinals, has sparked a new wave of “BitcoinFi.” The trading activity within the Bitcoin ecosystem has reached new heights.
According to Cryptoslam, in the past 30 days, NFT sales on the Bitcoin blockchain reached 238 million USD, making it the second-largest blockchain in terms of NFT sales, following Ethereum (456 million USD), surpassing Solana (232 million USD) and Polygon (50.03 million USD).
According to the latest data from Dune, as of February 16th, Ordinals’ cumulative minting fees exceeded 6,150 BTC, equivalent to over 320 million USD.
This has also led to the rise of Bitcoin-based NFT trading markets such as OKX Web3 Wallet’s Ordinals market and UniSat NFT trading market. As of last week, the total trading volume of OKX Web3 Wallet’s Ordinals market has exceeded 1.3 billion USD.
Furthermore, starting from the second half of 2023, the NFT market seems to have gradually stabilized. The floor prices of many blue-chip NFTs have started to rebound or surge. The Solana ecosystem has also entered a new speculative cycle in the NFT sector.
At the same time, similar NFTs to Ordinals, such as ERC404, have re-emerged. As a “new asset” with dual nature, these NFTs can be traded on OpenSea and Uniswap, which may have a significant impact on the future NFT market landscape.
It is worth paying attention to whether ERC404, as a new asset type, will give traditional token trading protocols like Uniswap a new entry ticket to the NFT market, thereby disrupting the NFT market landscape in 2024.
Related Reports:
Crypto Investors’ Nightmare: Tiger Global Suffers Losses, Devaluing OpenSea by 94%, BAYC by 69%, and FTX’s Investment to Zero.
OpenSea’s Mass Layoffs vs. Blur’s Surge: What Changes Are Happening in the NFT Exchange Competition?
OpenSea’s Trading Volume Hits Two-Year Low! Major Blue-Chip NFTs Continue to Struggle, Only “Fat Penguins” Rise Against the Trend.