Analysis of OpenSea's Rise Road: Origin, Development and Prospects
This article is compiled from The Generalist, the following is the compiled part.
Where to invest $10,000 now?
Recently, Bloomberg asked financial experts where they would invest $100,000 today. What is the answer? They overwhelmingly recommend alternative assets such as artwork.
Recently, Bloomberg asked financial experts where they would invest $100,000 today. What is the answer? They overwhelmingly recommend alternative assets such as artwork.
The reasons are as follows:
The reasons are as follows:
From 1995 to 2020, contemporary art appreciated an average of 14% per year.
The global art industry is expected to grow by 51% by 2026.
Correlation with public stocks is 0.01
Actionable Insights
Actionable Insights
If you only have a few minutes to spare, here's what investors, operators, and founders can learn from OpenSea.
NFTs are real. Regardless of whether it is an angry youth or a supporter, the data shows that NFT is by no means boring. NFT sales have totaled more than $13 billion so far this year, most of it in the past two months.
Lean operations are critical in volatile markets. OpenSea maintained a small team in its first few years, with only seven employees at the end of 2020. This allowed the company to weather the cryptocurrency bear market until NFTs took off.
OpenSea is very advantageous. The trading platform has a 97% market share. This is thanks in part to OpenSea's exceptional breadth of assets, simple listing process, and robust filtering system.
Decentralization doesn't have to be dogmatic. Much of the crypto community seems to see decentralization as a source of legitimacy and a panacea. While there is clearly room for decentralized players — Uniswap is an example in the token exchange space — centralized companies can also thrive, OpenSea being the latter.
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OpenSea
What is the most dominant company in the world by market share?
A few names might come to mind: almost certainly Google, maybe Facebook, Amazon, depending on the category.
All of these are good answers. Google has a 92% market share in search, Facebook and its related properties have more than 3x the active users of its next competitor, and Amazon's US e-commerce dominance is thought to be 50% (AWS' cloud computing share is 31% %).
However, OpenSea outperforms all of the aforementioned companies.
Since its inception in 2017, the NFT marketplace has grown to become the undisputed leader in the space, with a share of over 97% and a transaction volume 12 times that of its nearest competitor. The intuitive reaction to these numbers is to ask about market size. Sure, OpenSea won, but what exactly?
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Dune and Etsy Company Files
Coupled with a vibrant culture in the crypto space, these numbers may help paint OpenSea as a risk monger, the grandest bazaar in a dysfunctional nation. This will damage the creativity and intelligence of NFTs and misjudge what makes OpenSea unique.
This is not a company ruled by fanatical YOLOism, but one guided by patience and conservatism. While rivals experiment with new features and different models, OpenSea has focused on improving its core product. The result is a subtly contradictory business that empowers something radical but also restrains it—a rational revolution.
Today, we'll explore the company's past, present, and future. Read on for the following voyages:
Origins: Turning Point for Wificoin and OpenSea.
Market: Re-examining NFT and its development.
Product: A subtle moat around OpenSea.
Valuation: A16z's annual deal.
Competition: Rarible, Foundation and others are catching up.
Risks: OpenSea could be in trouble.
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The origin of OpenSea
Coinciding with the crypto bull market at the end of 2017, Devin Finzer, who graduated from Brown University in the United States with a major in computer science and has been working in the financial field for several years, suddenly became interested in cryptocurrencies and blockchains and the new economic systems they generated.
In the fall of that year, Finzer decided he wanted to do business in the field and teamed up with another young software developer, Alex Atallah. The latter, as a graduate of Stanford University's computer science major, founded the student dormitory social network "Dormlink" during college, and then served as the CTO of two other startups. Like Finzer, Atallah has also developed an obsession with the encryption field and wants to develop it further.
In September of the same year, Finzer and Atallah presented their project Wificoin at Techcrunch's Hackathon. Wificoin is in line with projects gaining prominence in the space. In exchange for sharing access to the wifi router, users earn coins that can in turn be used to buy wifi access from others on the company network. In that regard, it’s not dissimilar to blockchain tethering platform Helium, which raised an impressive Series B round from Google Ventures the year before.
Although Atallah admits that the product is "very easily hackable" in the current instance, they were accepted by Y Combinator (YC), a well-known startup incubator in Silicon Valley, to further their project.
In some ways, this is an unstable combination. Despite being known as a great talent and opportunity spotter, YC did not demonstrate a nuanced understanding of crypto. According to a former OpenSea employee, the YC team at the time was skeptical about the space, and during our discussions, Finzer acknowledged that there were some initial issues.
“YC is certainly not tailor-made for crypto companies,” he said, adding that the accelerator relies on a template for building startups, which is out of place in the world of web3. According to Finzer, these novel ventures are "the exception to the rule."
During the transition period between Wificoin’s acceptance of the program and its launch in January 2018, the cryptocurrency market underwent indelible changes.
November 28, 2017 was a historic day for the crypto community. While the beta version had debuted on ETH Waterloo a month earlier, this day marks the official launch of CryptoKitties.
Although the beta version had debuted on ETH Waterloo a month before, these cute digital cats generated huge interest at the end of the year and the following year, and the frantic bidding made a collectible"Genesis "image description
CryptoKitties
More than just a cute picture, CryptoKitty is a "non-fungible token" (NFT) built on top of a cryptographic standard called ERC-721, which supports other NFTs. Now, this might sound like unintelligible jargon to non-crypto natives, but I promise it's not as unintelligible as you might think.
Let's quickly ask three questions:
What are NFTs? It is a unit of data that cannot be changed. The unit could be anything: a picture, a song, a video, or even a drawing of a wacky cat.
Why would anyone want to buy one of these? This is often about status, scarcity and belonging. Owning an NFT can grant influence, showcase personality, or get you into private groups.
How does ERC-721 work? Think of it as the underlying infrastructure of projects like CryptoKitties. The thing to know here is that ERC-721 is also the infrastructure for many projects other than CryptoKitties. So if you can build a marketplace on top of ERC-721, it can easily support other NFTs.
It was this last point that really attracted Finzer:
What makes us think (the market) is that this could be bigger because there is a standard for digital projects. Everything that comes out after CryptoKitties will adhere to this standard.
So, he and Atallah decided to give up their work on Wificoin and start with CryptoKitties to build a "metaverse market". Given how few NFTs were being created at the time, this didn't seem like a particularly exciting proposition. But they value the novelty of what they do:
When you start a project, you look for something that hasn't been done before. This is unprecedented.
Finzer and Atallah are not alone. Almost simultaneously with their decision, another team also decided to build a solution in this space, Rare Bits. In many ways, they seem to be the better choice.
Rare Bits, made up of four ex-Zynga employees, appears to be well positioned to take advantage of this new field. After all, NFTs will primarily be used by gamers. The industry view at the time was that NFTs had the potential to appeal to this segment of people, offering game developers a way to sell new skins, special weapons, and other digital goods.
On the same day in February 2018, OpenSea and Rare Bits were launched on Product Hunt.
OpenSea describes itself as"The Ebay of Crypto Goods"。
Rare Bits calls it “an eBay-like marketplace for zero-fee cryptoassets.”
By the end of the day, OpenSea had beaten its rivals with 447 downloads to Rare Bits' 230.
However, when it comes to the venture capital market, the roles of both parties are reversed. OpenSea managed to raise $2 million from a strong lineup including 1confirmation, Founders Fund, Coinbase Ventures and Blockchain Capital. But it is far behind the $6 million Rare Bits received a month ago, with participation from Spark, First Round and Craft.
Richard Chen, general partner at 1confirmation, summed up the consensus at the time while explaining his firm’s predictions:
"Rare Bits is a team on paper, they are ex-Zynga employees, raised a lot more money from traditional venture capital firms than OpenSea. However, OpenSea's team is leaner and more combative. Devin and Alex found new NFT Projects have done a good job and surpassed Rare Bits in getting these projects listed on OpenSea, attracting most of the trading volume on OpenSea. When we invested in April 2018, OpenSea's trading volume was already Rare Bits' 4 times."
The gap between the two companies only seems to widen over time, though Rare Bits prides itself on taking no commission on first sales (OpenSea charged 1% in 2018) and refunding users for any resulting Gas fee.
However, such acts of kindness do not seem commensurate with the "crypto winter" that loomed over 2018. While Rare Bits burns cash to stay hot, OpenSea appears to be taking a different approach, charging fees and running lean. As of August 2020, the company had only seven employees.
In a bid to gain volume, Rare Bits has launched new experiments, including a partnership with Crunchyroll that will allow users to collect "digital stickers" of anime characters. At the same time, OpenSea remains focused on continuously improving its core exchange, which is where the interest of the industry lies. When asked why OpenSea could outperform Rare Bits in the long run, Finzer replied:
“We are open to being in this space for the long term, regardless of the immediate growth trajectory. We want to build a decentralized marketplace for NFTs and hope it will last 3-4 years.”
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Marketplace: Welcome to the PFP Party
It's hard to grasp how much the NFT market has grown over the course of a year.
As mentioned above, we note that OpenSea alone is expected to exceed $27.5 billion in transaction volume in 2021. If the company maintains its 97% market share, this would suggest total annual GMV of $28.4 billion.
NFT sales in 2020 were $94.8 million. This is a 300-fold increase from last year. We cannot comprehend this sudden upheaval. In the blink of an eye, NFT has grown from an insignificant little thing to a walking behemoth.
This is due in large part to the popularity of profile picture NFTs, dubbed the "PFP" project. Notable representatives of the movement include CryptoPunks, Bored Ape Yacht Club (BAYC), Pudgy Penguins, Meebits, and many others.
These characters proliferate and spread among your friends and followers on social media, driving further collection, speculation and investment. (The lines between the three are often so blurred that they are indistinguishable from one another.)
Even industry insiders found themselves surprised by the phenomenon, in part because it represented a deviation from initial expectations. As the story of Rare Bits demonstrates, NFTs are expected to interface with the gaming space. Projects like Gods Unchained and Decentraland, The Sandbox and Animoca Brands are expected to push the field forward.
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DappRadar
Even Finzer admits he doesn't see the current wave coming. "We're not predicting the rise of Bored Ape Yacht Club or other collectibles."
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Jessica Phan, Alex Atallah, Devin Finzer, Dylan Field and Elena Nadolinski. Supplied by Richard Chen
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Emoticons
Driven by Finzer's focus, Ethmoji has been overlooked. While it didn't get much attention, it seemed to remain active until 2019, a year after its founding, when Atallah tweeted that new avatars were still being created.
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Product: Subtle Moat
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permission list
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OpenSea
Alex Gedevani from crypto research outfit Delphi Digital described this as one of the deciding factors behind OpenSea's dominance:
“(OpenSea) emphasizes being a permissionless marketplace for NFT minting, discovery, and trading (explaining its market share growth). This makes it easy for long-tail creators to join because of the low barriers to entry compared to other platforms. This The approach is to expand the supply side for creators, attract users and liquidity, including in primary and secondary markets. If Uniswap is the market for any altcoin, OpenSea is the market for any NFT."
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breadth of assets
OpenSea divides its selection into eight categories: Art, Music, Domains, Virtual Worlds, Trading Cards, Collectibles, Sports and Utilities.
As we discussed, "collectibles" has proven to be the most popular category, but the distribution above illustrates the diversity of NFTs and the variety of products OpenSea has to offer. According to the company’s website, there are more than 1 million collectibles on the platform and more than 34 million individual NFTs available for purchase. It’s worth noting that even this figure may be outdated, as it appears in OpenSea’s statement that it processed $4 billion in transaction volume, which has presumably increased by now.
According to Mason Nystrom, an analyst at cryptocurrency data platform Messari, this inclusive approach is proving to be a key competitive advantage, especially for rival Rarible (we’ll discuss this in more detail later in this article):
OpenSea aggregates and provides a wide range of different assets. So while Rarible was launching with early volume due to its liquidity mining, Rarible did not aggregate other non-Rarible assets (i.e. Punks, Axies, artwork). As a result, OpenSea became the market/liquidity of choice for many of these early-stage assets. OpenSea also offers a robust indexer via royalties from other platforms, and an excellent interface (UI) for filtering assets, validating contracts, and user-created NFTs.
Maria Shen, a partner at Electric Capital, highlighted a key part of OpenSea’s platform’s liquidity, which has a plethora of NFTs available for “instant purchase.”
Capturing the Buy It Now mechanism is important because the more Buy It Now NFTs you have, the more liquid the market, and Opensea has the most Buy It Now.
By embracing all forms of assets, OpenSea has made itself the default choice for the NFT ecosystem, a perception and position that may be difficult for competitors to shake off.
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Powerful filtering function
NFT projects vary widely in their overall form and the details that contribute to their value. A feature that is critical to one project may not be relevant to another. OpenSea does an excellent job of capturing, cataloging and allowing users to search this information.
For a better understanding, let's look at two popular PFP series: CryptoPunks and Bored Ape Yacht Club.
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CryptoPunks on OpenSea
These distinctions are important because they directly indicate rarity. Punks with common traits, such as earrings, may cost less than rare alien punks equipped with hats, sunglasses, and pipes. In fact, "CryptoPunk #7804" with these characteristics was last sold for the current price of 4200 ETH ($15.1 million).
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Bored Ape on OpenSea
For ape connoisseurs, standout aspects include fur color, whether the ape is eating pizza, and glowing eyes. One of the most expensive items BAYC sold on OpenSea was "#3749," an ape with golden fur, a captain's hat, and red laser eyes. It sold for 740 ETH, or $2.7 million at current prices. (Interestingly, it was purchased by the official account of The Sandbox, the blockchain game we discussed earlier.)
OpenSea provides users with the facility to filter and search items by their most important descriptions.
This may seem simple, but it makes a big difference to buyers. Richard Chen articulates this position:
People underestimate the importance of search and discovery for NFTs. Each NFT item (e.g. Meebits, Lost Poets) requires custom search filters by attribute, which must be added manually by OpenSea on an item-by-item basis. This creates a huge user experience moat for OpenSea that is difficult for other platforms to replicate. For example, on Rarible, I couldn't even filter out the skeleton with headphones on Meebits. So it doesn't make sense to shop for NFTs on one platform and then check out on another. By having a great NFT shopping experience on OpenSea, users can stay on the platform and use OpenSea's smart contracts for actual NFT transactions.
By treating each item as fundamentally unique, OpenSea has built a platform that truly caters to the buyer, simplifying the browsing experience so it can capture buying needs.
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Valuation of OpenSea
Before we discuss OpenSea's competitors, we must first flesh out our understanding of OpenSea's valuation. In some ways, this is futile as this is a (quickly) moving value that can make today's analysis look stupid tomorrow.
We've seen this happen in risk markets, thanks to Andreessen Horowitz (a16z). In late July, the company led OpenSea's $100 million Series B round at a $1.5 billion valuation. At the time, OpenSea was processing less than $1 billion in transaction volume for the year, with an average monthly fee of $8.5 million.
In the two months since a16z announced its investment, OpenSea’s GMV has grown more than sixfold to $6.4 billion, with fees rising in tandem. During August and September, Finzer and company collected an average of $220 million in monthly fees.
This now seems like a ridiculous steal. In the two months since a16z announced its investment, OpenSea’s GMV has grown more than sixfold to $6.4 billion, with fees rising in tandem. In August and September, Finzer and company collected an average of $220 million in monthly fees.
So, what should be the valuation of OpenSea today?
Considering that OpenSea is itself a consortium, direct comparisons are tricky. But we can get a sense of the situation by looking at a handful of markets, cryptocurrency exchanges, and gaming platforms. While none are perfect on their own — physical goods traded in traditional markets cost vastly different things — exchanges may rely on different revenue streams, such as “pay for order flow.”
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Dune and company documents
One of those things is different from the other.
OpenSea has clearly exceeded its last valuation. Given the same 13x multiple as Etsy, it would be valued at more than $24 billion. Of course, it's growing much faster and has a much lower cost structure because Etsy has 1,400 employees compared to OpenSea's 45.
(Conversely, OpenSea's revenue is less reliable and could drop by 90% or more if we see a full-blown crypto winter.)
Revenue per employee topped $41 million; Ebay's was around $800,000.
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Competition: bullish on the throne
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centralized market
It can be said that the competition among other centralized NFT exchanges is the weakest, at least for now. Competitors include Nifty Gateway (now owned by Gemini), Foundation, MakersPlace and Zora. In some cases, these platforms differ from OpenSea in terms of choice and aesthetics. Foundation, for example, is a beautifully minimalist platform that appeals to more design-conscious creators -- but there's still overlap. Both Foundation and Zora were founded in 2020, with many also siding with the newer side.
Can these platforms coexist with OpenSea for a long time? Given the network effects implicit in this business, it's hard to envision OpenSea being displaced, but the growth of the NFT market should mean there's plenty of room for other destinations to thrive. This is especially true if they can build offerings across certain categories and specialized feature sets.
It's also possible that OpenSea's success has encouraged capital to flow into the space, as investors recognize the size of the bonus. That could give upstarts some firepower to fight for share, especially with the many new buyers that are likely to flood the ecosystem in the coming years.
decentralized market
decentralized market
In our previous article, "Sushi and the Founding Murder," we outlined two fundamental "laws" of cryptocurrencies:
1. The laws of fluid dynamics. Cryptocurrencies operate against existing power structures that deem traditional hierarchies to be illegitimate and illegitimate. This may be related to long-lived institutions, such as the traditional financial system or new companies such as Coinbase. In both cases, power is believed to have been seized by an entity seeking to codify and strengthen its control. Cryptocurrencies want power to be fully fluid, accumulating according to the value of contributors to the community.
2. The law of liquid wealth. Likewise, the crypto world is skeptical of rent-seeking entities. Organizations that do not provide ongoing value and effort, making money under the same rules as other players, are often considered compromised. Cryptocurrencies want wealth to be liquid, rewarding continual value creation. Fundamentally, crypto sees users as an essential part of value creation, not its consumers.
Currently, OpenSea is a fully centralized entity with complete control over its platform. It charges a fee of 2.5 percent of what the company receives. (In addition to this fee, users must pay "gas" fees, essentially the network's transaction fees.) In other words, neither power nor wealth is mobile.
Over the past year, a number of decentralized players have emerged, with Rarible being the most established. It’s also an interesting case because the project started out as a centralized entity and raised $16 million in venture funding before declaring itself a DAO. As part of the transition, Rarible issued a token in summer 2020. RARI can be earned by using the project's platform and also grants governance rights.
After that launch, Rarible briefly became the number one NFT platform by volume as wash trading (the practice of buying and selling assets to inflate volume and pricing) pushed up RARI’s exchange rate. But it didn't last long, and OpenSea eventually won back users, as Chen describes:
"Rarible launched tokens for the sake of launching tokens without thinking deeply about the economics of the tokens. As a result, they greatly incentivized those who farmed tokens to do wash trades, and during the months of last summer, Rarible's trading volume than OpenSea. Once the inorganic demand dries up, it becomes very clear that OpenSea is a better product."
While Rarible's approach wasn't an absolute success, it wasn't a failure either. Its RARI token has a fully diluted market cap of $430 million, and by volume it is OpenSea’s closest competitor, not bad for a project less than two years old.
But more importantly, Rarible outlines a potential attack vector for future decentralized players. As mentioned in Sushi's article, the community's "Shoyu" project is one such example, although it's still not live. Holders will hope that the vibrancy of the broader Sushi ecosystem will drive transaction volume. However, only one engineer was tasked with building Shoyu, according to a source. Beating OpenSea is quite a task for one person.
Artion is another notable attempt. Artion was founded by Yearn Finance founder Andre Cronje to address common complaints against OpenSea. It charges no platform fees and is built on the Fantom network instead of Ethereum, a decision that makes transactions faster and reduces gas costs.
Artion is the logical conclusion to A16z Partner Chris Dixon’s crypto mantra, “Your acceptance rate is my opportunity.” By taking 0% fees, Artion provides a strong incentive to use its platform. In turn, it has open-sourced its code so that others can easily fork and build upon it.
When Cronje was asked why he would build a project with no potential for profit, Cronje replied: "I like 'Arson.'"
Is the fee reduction enough to compete with OpenSea? Opinions vary. Chen said that OpenSea's product is difficult to replicate:
"OpenSea is hard to fork and 'vampire attack'. This is because 99% of the engineering work is done off-chain (e.g. search and discovery, infrastructure) and therefore cannot be forked."
However, Messari researcher Nystrom took a slightly different view, emphasizing the advantages of a decentralized platform:
"Permissionless protocols...will be more composable, community-driven, resistant to harmful regulation, attract better talent, and profitable. In the long run, these are the qualities most decentralized protocols will win reasons for over-centralizing competitors.”
Finally, Nystrom also explains how OpenSea can thrive in the presence of a strong decentralized adversary:
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vertical market
While not a direct competitor, OpenSea may see vertical platforms siphon off its transaction volume. To some extent, this is already happening, with several of the largest NFT projects facilitating trading on their own exchanges.
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Axie Infinity
A similar dynamic exists with LarvalLabs (creators of CryptoPunks, NBA Topshot, and Sorare), all of which handle meaningful transaction volumes on their own platforms.
cryptocurrency exchange
cryptocurrency exchange
In our article on "the Everything Exchange," part of the FTX trilogy, we outlined how Sam Bankman-Fried's business has positioned itself as a place for all manner of buying and selling. This includes NFTs.
They are not the only traditional cryptocurrency exchanges interested in this space. As we mentioned before, Gemini acquired Nifty Gateway, giving it a foothold, while Binance operates its own sub-platform.
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Fidenzas by Tyler Hobbs
Of course, this is not a threat, but can be seen as an opportunity for OpenSea. Partnerships with major exchanges could be mutually beneficial, with NFT holders gaining higher leverage and token traders gaining a way to purchase collectibles without having to move funds between wallets.
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Risks: Too Slow, Too Fast
Despite its size, OpenSea is still a startup with a few dozen employees and a track record of just a few years. While it executes well and capitalizes on the exciting market expansion of cryptocurrencies, it also has holes. Some may be within its control, many are not.
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Respond to customer feedback
Despite being the default venue in the cryptocurrency world, OpenSea sometimes comes across as an unpopular platform. Users have complained about the company’s fees, high gas fees for using the ethereum blockchain, and the lack of decentralized features like tokens.
To its credit, OpenSea operates a customer portal where users can suggest improvements and vote on previous submissions. The list is long:
One of the most common requests was for OpenSea to add support for other blockchains, including Cardano, Tezos, Solana and others. Currently, the company supports Ethereum and Polygon, the latter of which does have lower gas costs, although less used.
Supporting Solana should be an important item on the list. The project has exploded over the past year (explained well in Not Boring's "Solana Summer") and seems to have room to run. Its low fees and fast transaction processing may make it a good fit for NFTs, with the emergence of a range of chain-specific apes, cats, and chihuahuas, as well as the aggregator marketplace Solanart.
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Degen Apes on Solanart
During our discussion, when asked what he considers his strengths, Finzer replied, "I try not to get egotistical about things and see things for what they are."
Supervision
Supervision
Are NFTs securities?
If U.S. regulators make an affirmative decision, OpenSea's business will undoubtedly suffer. The market for securities and the sale of securities must comply with the rules of the SEC, a burden that will require OpenSea to do a lot of work and fundamentally change the NFT buying process.
So far, regulators have said little about how they view NFTs and whether they meet the four requirements of the “Howey test,” which determines whether an asset is a security. To qualify, the following conditions must be met:
Invested money (or equivalent)
It is invested in a "common enterprise"
The investment comes with "reasonable profit expectations"
Such profits come from the efforts of others
Legal scholars are best equipped to determine whether an NFT meets the criteria, but even outsiders would agree that the investment is a monetary equivalent, usually expected to increase in value. Those potential profits do seem to depend on other people's work. As to whether NFT projects represent a "common enterprise" is an entirely thorny question.
OpenSea should use this period of uncertainty to proactively work with regulators to help define appropriate boundaries and ensure their platform leads the way in compliance. If they manage this well, regulation may prove to be less of an issue of vulnerability than a source of defense against smaller, less stringent players. Nystrom from Messari mentioned this, while adding that this may limit OpenSea's options:
“As NFTs grow, OpenSea may end up relying on building a regulatory moat (similar to Coinbase) rather than offering riskier assets.”
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market crash
As much as we believe in the creative and social power of NFTs, this space is truly a cult phenomenon. Fraud, wash trading, and speculation are rampant, and prices are not always rational.
In the short term, this situation will likely cause buyers to turn bad, which in turn will reduce OpenSea's transaction volume. In all likelihood, this will be fueled by a broader shift away from cryptocurrencies.
The current bull market certainly cannot last forever, with investors moving from the more fanciful fringes of this world to established projects. This could actually have a positive impact on blue-chip NFT projects. Cryptocurrency investors may view CryptoPunk or Fidenza as a fairly secure store of value. But at the very least, smaller projects, and many of the projects that support them, may have their "payback" on paper wiped out.
How will OpenSea respond to this decline?
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Prospects: What's next for OpenSea and NFTs?
What will NFT become?
This is the kind of question that can drive fantasists wild. Currently, this form already includes pictorial art, music, fashion, games, realms, and countless other overlaps and overlaps between these forms. Just as importantly, the situation is changing daily as new projects continue to pop up on established boundaries.
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Lootswag
According to Chen, music NFTs may be worth watching:
"Audio NFTs surprisingly haven't taken off yet. A big reason is that NFT metadata mostly only serve images or videos right now. OpenSea is working hard to support rendering important metadata for audio files, which will benefit projects like Catalog, The project is building a platform for curated 1-of-1 NFT music."
Looking further ahead, "smart" NFTs may represent another frontier. Nystom outlines the opportunity:
“We can expect the evolution of NFTs, from static to dynamic, aka “smart” NFTs, including artificial intelligence (AI) integration and other cool features that evolve based on NFT usage.”
This is exciting stuff, and the only real boundaries are legal and technical. Someday in the future, we may buy virtual characters with "real" personalities whose minds change and adapt.
If NFT is now expected to reach tens of billions in transaction volume, how should a mature market respond?
The challenge for OpenSea is how to successfully catalog these increasingly complex and bewildering objects. The opportunity now is to capture as much of the growing sales volume as possible.
Doing so may require new products and features. Over the past few weeks, OpenSea has launched a mobile application. While it does not yet allow buying and selling, this is the first step towards a true multi-platform product that could further popularize NFTs.
It might be a good idea to revisit Coinbase's roadmap if we want to see where else the company might go. In many ways, this appears to be the closest analog to OpenSea, a centralized cryptocurrency exchange that acts as a natural gateway into the ecosystem and is keen to play by the rules.
That said, we should expect OpenSea to offer an institution-friendly product, unlike Coinbase Pro. This handles hosting, high-priced purchases, and provides white-glove service.
If regulatory feasible, fractional ownership of NFTs would represent a huge unlock for the industry. As it stands, many people are excluded simply because of pricing. For example, the current "base price" of Bored Ape is 38.7 ETH, which is about $140,000. This is beyond the reach of all but the wealthy.
At the same time, holders of these NFTs have few options when it comes to locking in earnings. If you were lucky enough to buy a CryptoPunk for $10,000 and see it increase in value to $1 million, should you sell? What if a similar piece sells for $10 million next week?
Now, whether it is buying or selling, it is either all or nothing. Segmentation will allow newcomers to buy their favorite properties for less. For example, buy "shares" of CryptoPunk, and holders can make some profit while preserving the upside.
This article comes from Tao of Yuan Universe, reproduced with authorization.
This article comes from Tao of Yuan Universe, reproduced with authorization.
