In five years of existence, OpenSea has become the first NFT platform in the world. Its co-founder, Devin Finzer, analyzes the current crisis in the sector and provides his vision of a market still in its infancy.
JDN extension. OpenSea is often billed as an “eBay for NFTs”. Does this comparison seem fair to you?
Devin Finzer. That’s a really simple way to describe the business ofOffshore which is the target market for discovering, buying and selling NFTs. Inspired by the emergence of CryptoKitties, we launched Offshore in 2017 starting with the Ethereum blockchain. Since then, our market has opened up to other ecosystems blockchain including Polygon, Klaytn, Solana or even 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, allowing creators, brands or even video game designers to fully launch and manage their NFT projects. From this point of view, OpenSea could now be considered rather the Amazon of NFTs.
The NFT market has plunged more than 90% since last January’s peak. What is the impact on Opensea’s business, which at this time had over one million active wallets?
Trading volumes have actually decreased. The current numbers are somewhat healthier as they are now less affected by market fluctuations. It is also an indicator that prices have fallen. But despite everything, we observe that a significant number of people remain enthusiastic about this economy of NFTs. The other important thing to point out is that the cryptographic universe is a new macro-environment that seems to work in cycles. We believe we are only at the very beginning of adopting NFTs.
Have you observed an evolution in OpenSea user profiles since this sudden drop?
NFT buyers have very varied profiles. Those interested in art will turn to “collector’s” type NFTs. There are also video game enthusiasts. Today we are seeing many new projects in this area. Start-ups Web3 in the gaming industry they have raised billions of dollars and are currently working on designing video games that will integrate NFTs into their virtual economies. Some of these games will take years to develop. All these investments in the NFT sector make me think that in a few years there should be many interesting projects on the market.
Do you think the high speculation on NFTs is behind us? Will this market decline mark a turning point in the type of NFTs traded on OpenSea?
OpenSea was 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 people collect works just for fun. However, we intend to offer other types of NFTs that integrate various uses. I can give you the example of the Veefriends collection created by the American influencer Gary Vaynerchuck. These NFTs are actually admission tickets that allow access to his Veecon conference and exchange with the community. Another example with The sandbox offering to buy virtual land in NFTs. You can then build whatever you want there or monetize these spaces by renting them or by charging entry. These are just a few examples, though many uses have yet to be invented.
Some players, such as 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 have subsequently started building experiments around this collection to give them additional use. For example, a video game has been created that allows you to race your Cryptokitties. This translates into the promise of these digital assets that they can be used in different video game platforms and therefore have different experiences. Many players are working on the infrastructure that will, in the future, allow their NFTs to be used from one platform to another. I am very enthusiastic about this idea.
Twitter, Reddit and Instagram have integrated NFTs into their platforms. An advantage to promote the adoption of NFTs among the general public?
“Twitter, Reddit, and Instagram integrations make sense to accelerate NFT adoption”
Actually. The fact that a platform like Reddit distributes collections of NFTs has allowed millions of people to familiarize themselves in record time with the functioning and usefulness of a wallet. Will NFTs necessarily reach all audiences? It’s less secure. The Internet doesn’t already reach all audiences. However, it seems obvious to me that there will be more and more massive adoption of NFTs by populations already familiar with the Web, as is the case with the Reddit user community. These Twitter, Reddit, or Instagram integrations logically help accelerate NFT adoption. We are also in direct and regular contact with all these platforms that use theAPIs of OpenSea to facilitate these integrations.
Apple said the commission rate applied to NFT sales transactions made through the app store would be 30%, well above the 2.5% charged by OpenSea. Could this be a brake on mobile NFT adoption?
In some ways, Apple’s announcement is a welcome step in terms of recognition for the industry as the company enables access to applications for NFT trading and exploration. So it’s going in the right direction. The in-app purchase method, on the other hand, 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 encourage the development of this NFT economy and make sure we don’t put too much burden on users’ shoulders. All of this is recent and therefore there is still work to be done to improve the rules in force.
What is your advice for creators who would like to launch 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 and the platform is therefore the preferred tool for understanding the motivations of a community and analyzing what is popular. In the case of NFT-type collectibles, the modalities are quite similar to those of the art world. It is important to work on the shell of a project, i.e. storytelling and marketing, but also to offer something new. Attempting to replicate existing collections will not work and will not appeal to potential buyers. It is therefore important to think early on about what you want to create, how you will reach potential clients, which artists you can collaborate with, etc.
After raising $300 million in Series C last January at a $13.3 billion valuation, is an IPO expected in 2023? What are OpenSea’s projects?
An IPO is not planned for 2023. We want to continue building a user-friendly marketplace for anyone to experience NFTs. Our second goal is to build a relationship of trust with our users. This is why we want to make sure that we give visibility to the best NFT projects and don’t valorize those who misbehave. 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 the Web3 ecosystem more generally?
A few years ago it was necessary to convince the most skeptical with words, making them imagine what the future could be like. Today it is already possible to test concrete projects in the Web3 area. Whether it’s with The Sandbox in the metaverse industry, with OpenSea in digital art, or even trying to build a portfolio to understand how it works. So my advice would be to try out these new tools and platforms. We must also remember the beginnings of the Internet. At the time, there were a lot of useless web pages where there wasn’t much to do. We are here at the same point and it is important to realize that the Web3 ecosystem and its uses will grow over time.
Devin Finzer is the co-founder and CEO of OpenSea, the leading marketplace for NFT discovery and trading. Surpassed by YCombinator, the start-up, which now employs 250 people, counts a16z, Paradigm or Coatue among its investors. Before that, Devin built a fintech app called Claimdog (acquired by Credit Karma) and worked as an engineer at Pinterest. He is a graduate of Brown University.