OpenSea grew over 500% and Co-Founders Devin Finzer and Alex Atallah speak to how they are scaling for success.
At the start of the year, it would have been reasonable to think of 2021 as the year of Bitcoin, and the mainstreaming of crypto overall. It may be the year for mainstreaming, but NFTs have become a force of their own competing with the world’s most famous cryptocurrency in terms of awareness and in the imagination of investors.
It’s easy to see the desire for self-expression, and to cash in on any notable name or property, just by doom scrolling Twitter where dropping your NFTs seems to be the new “hello world”.
However, the enthusiasm is accompanied by explosive sales. On August 18, NFT sales hit a record-breaking $897 million in sales from the past 30-days according to NonFungible, an NFT-tracking site.
In the search for a leading voice in NFTs, we spoke to the founders of OpenSea, the market-dominant NFT Marketplace. OpenSea increased $1.8 billion in trading volume over last month. We spoke with Devin Finzer, Co-founder and CEO at OpenSea, and Alex Atallah, Co-Founder and CTO of OpenSea concerning how they have achieved their leadership position as a platform and how they are preparing for continued growth on OpenSea and in NFTs overall.
Devin Finzer, Co-founder and CEO at OpenSea (Left), Alex Atallah, Co-Founder, and CTO of OpenSea (Right)
To what do you attribute the meteoric rise in the NFT market?
“OpenSea invested a lot in building the best possible NFT marketplace, but there were also curation platforms, wallets, a lot of work that went in over the last four years, to make the ecosystem more accessible to people.
People understand that this idea of a unique digital object that you can own in your wallet, and trade around freely is cool and exciting. Recently there's been a big uptake in these collectible art projects where there's some scarcity associated with the items or maybe there's a game associated with them. It's captured the imagination of a broader group of consumers.
There were a couple of different influences in 2020 that improved the infrastructure. I wouldn't say in 2020, it wasn't a single vector that made NFTs a lot more accessible to people. In 2020, we saw decentralized finance grow and artists come into the platform... Artists were a great breakout vertical for NFTs because digital artists weren't able to monetize their work successfully until NFTs built a new market for them. Before NFTs, these artists were often just posting their work on Instagram or DeviantArt and just cultivating some following there without really monetizing anything.
NFTs solved problems on both the collector side and the creator side. On top of it all, it's platform-independent. NFTs work across tons of different sites. You're not locked into the idiosyncrasies of the platform,” Atallah said.
Do you think that this groundswell of creators getting involved, including anyone with any sort of notoriety, is good for NFTs overall?
“It's good. The more content, the better. I think the market will pick and choose the content that works in the long run while we've seen a couple, well-known or celebrity creators, operate only in the short term and not cultivate communities around their collectors. That's often the differentiating factor for a long-term successful NFT project... So, but the communities like the creators that come in and just start creating additional items for their collectors’ new communities, where you have to own an NFT in order to get content that only collectors can access, including special experiences such as concerts with backstage passes that are only available to ticket holder or to NFT holders, all of that stuff is building your community. And, and that's what often makes a long-term successful drop,” Atallah said.
With so many people becoming NFT creators, who is doing it especially well? What are they doing right?
“They basically take art and create generic iterations of it that all have different traits combined in interesting ways. They allow each item inside of the collection to be completely unique, but to share a similar style. These generic art projects are exciting to communities because you're getting something unique, but you're also still to this oeuvre of art, all made by the same creators. And, we've seen the most success around projects like that. These include, Meebits and CryptoPunks by Larva Labs, Bored Ape Yacht Club. Cool cats, for example.
The other things we've seen do well are individual creators who have gone all in on their collector communities. These include people such as Josie Bellini, who was the first artist to go full time with NFTs.
If people detect that the creator is being authentic, then that contributes to their success. If they detect any kind of inauthenticity about it, then that's generally what makes it fail,” Atallah said.
How does it feel to be the top app on Ethereum?
“When we started OpenSea, at least for me personally, one thing I always wanted was to just be the top app on AppRadar... and we never got to be… So, it's this nice vanity thing to finally be the top, smart contract on Ethereum. We actually set our goals low, to start. We just wanted to build something cool on Ethereum and just have everyone in the Ethereum community know about us.
Things went a lot bigger than we expected, and we finally hit that very conservative milestone, which was getting to be the top app on Ethereum,” Finzer said.
In the past month, OpenSea had nearly 550% growth. Did that create a challenge in terms of scaling?
“Big kudos to the entire OpenSea team. Everyone has been working incredibly hard. Our infrastructure and platform team in particular have had to deal with levels of service and website traffic that we had never handled before... All of these things have been a huge effort over the last 12 months, as we've gone from about $1 million in Gross Merchandise Value (GMV) to now, over $2 billion in GMV in probably one of the shortest time horizons for any consumer marketplace. The team has just been hard at work, but the great thing is that everyone on the team loves this space and they are passionate about it.
So, it doesn't feel like work. It just feels like an exciting time for the whole NFT space and crypto community as a whole,” Finzer said.
What is your monthly trade volume looking like right now?
“Currently we're at about $2.1 billion on Ethereum. That doesn't include our polygon trading,” Finzer said. “The majority of that figure is secondary sales.”
With such a huge increase in volume, what are people buying?
“It's a mix of things, right? For example, there are these projects like CryptoPunks. It was the first NFT and there's only 10,000 of them. Regularly, they sell for very large sums of money because they're seen as this unique digital art piece that will truly never be replicated. Similarly, people are creating other sorts of projects where there's a similar level of scarcity associated with the project and they're adding additional utility additional functionality that makes them even more interesting than just a pure collectible. But it's a mix. It's art projects, collectibles, games… The floodgates have been opened.
Now all of these developers can come and create interesting things and see whether they work and consumers can engage with them and try them out. It's this fertile ground where lots of experimentation is happening. We can't point to one single application that has driven this crazy excitement. It's a rising tide lifting all boats,” Finzer said.
Were you anticipating this kind of growth? I mean, even two months ago?
“No, definitely not. I think it took us all by surprise. It came with a lot of challenges, but it's amazing to see this space grow so fast. It’s definitely not what we expected,” Finzer said.
What new features has OpenSea brought to market?
“Most recently we rolled out our Polygon integration, which we're gradually improving and iterating over time. What's really exciting about that is users can come on and use their regular crypto wallet, but trade Polygon items, which is a layer two Ethereum side chain, with zero gas fees.
At OpenSea we actually pay the transaction costs for all of the purchases and sales, which provides an awesome experience where you can come with the same kind of wallet that you normally use... There's a lot of new projects that are building on Polygon. For example, there are ZED RUN, which is a horse racing game, and Ember Sword, which is a cool MMORPG.... And then over the next while we're making core improvements to the platform, making it easier for new users to buy things,” Finzer said.
Why do more people use OpenSea than other NFT platforms?
“We were the first marketplace, so we have a first-mover advantage and we've stuck to our core principles, which is building an open marketplace that allows developers to be as creative as they want. That provides safety measures for buyers, including the longest-running collection, verification, safety lists in the market. Just the ability to find the most buyers, as a collector or as a seller or as a developer. And we build a lot of infrastructures.
It's also kind of part of openness, but towards developers, we built a lot of infrastructures that other platforms use to see what NFTs you have in your wallet and what NFTs are available in other collections. We're very collaborative with other projects. We strongly believe that a rising tide lifts all boats for NFTs because unlike other areas, or other verticals in tech, NFTs are platform-independent and have a built-in API that any company can use.
We've kind of taken that insight into our business development arm and partnerships arm, and used it as a justification for closely working with everyone, including our competitors, to make sure that users’ collectibles are well displayed on OpenSea. And that buyers are as safe as possible,” Atallah said.
In terms of attracting the creators themselves, is that what the creators value?
“One thing that creators want that we're focusing on this year is better ways of organizing and displaying their NFTs. That's about as many details as I can give right now, but having a really great profile that you're proud to show off and good ways of organizing around a tease and the specific new galleries or systems for displaying them to new users, we think is pretty important,” Atallah said.
Have NFTs brought self-expression to the crypto world?
“Yes, self-expression in a visual way that didn't exist before, but the power of NFTs is that they're decentralized metadata that involves any kind of media and the art that's being used for NFTs. Now is just the tip of the iceberg. We believe. It's a really important entry point to the larger part of the iceberg underneath it's the entry point that's most visible and literally, engaging, at a glance, but there's a lot of stuff that has not been touched. Yet,” Atallah said.
What advice do you have for new buyers in the NFT space?
“I would say join the communities of the NFT projects that you're interested in and try to become a member. Instead of just randomly buying things it’s important to understand what it means to be a part of the collection or a part of the creators work, and learn about the creator if you're buying NFT art, so that you understand the context, the motivation and where they're going and what the long-term view is,” Atallah said.
It’s difficult to pick a single voice to speak for a global movement in blockchain technology and digital ownership, but OpenSea has been on top of the heap for nearly 4 years -- a virtual lifetime in blockchain terms.
As we spoke to Finzer and Atallah, it struck us how the NFT space thrives on constant innovation and a steady diet of new ideas.
It’s true to say that the value of Bitcoin is staked in belief -- but perhaps NFTs have reached an even more powerful part of the human psyche by hitting us squarely in our ability to imagine and dream our creations into existence.
After all, belief can falter -- but humans are naturally curious animals and the history of technology shows that our imagination is virtually inexhaustible.
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