OpenSea: The Reasonable Revolutionary | The Generalist

If we want to get a sense for where else the company might go, revisiting Coinbase’s roadmap might be a good call. In many respects, that seems to be OpenSea’s closest analogue — a centralized crypto exchange that serves as the natural on-ramp to the ecosystem, and is keen to play by the rules.

NFTs are for real. Whether cynic or supporter, the numbers show that non-fungible tokens are far from frivolous. So far this year, NFT sales have totaled more than $13 billion, with much of that sum arriving in the last two months.

Investors may want to watch out for new types of NFTs. If you’re feeling irked you missed out on CryptoPunks, Bored Apes, and Art Blocks, there may be some consolation. New formats are constantly being created; two experts suggest music and “intelligent” NFTs are worth watching.

Richard Chen: It’s very difficult for OpenSea to be forked and vampire attacked. That’s because 99% of the engineering work is off-chain (e.g. search and discovery, infrastructure) and thus can’t be forked.

Richard Chen: Rarible launched a token for the sake of launching a token and didn’t think deeply about token economics. As a result they heavily incentivized wash trading from people farming the token, and for a few months last summer Rarible was doing more volume than OpenSea. But once the inorganic demand dried up then it became super clear that ... See more

OpenSea is extremely dominant. The exchange boasts a market share of 97%. That’s thanks, in part, to OpenSea’s superior asset breadth, easy listing process, and robust filtering system.

Decentralization doesn’t have to be doctrinal. Much of the crypto community seems to view decentralization as both a source of legitimacy and a cure-all. While there’s clearly room for decentralized players — Uniswap being one example in the token exchange space — centralized companies can also thrive. OpenSea is the latter.

Alex Gedevani: [OpenSea’s] emphasis on being a permissionless market for NFT minting, discovery, and trading [explains its market share accrual]. This enabled the long tail of creators to easily onboard given a low barrier to entry relative to other platforms. This approach is what scaled the supply sides of creators which attracted users and liqui... See more

With a permissionless approach to creation, a huge number of assets on the platform, and a strong filtering system, it looks like a business encircled by subtle but significant moats.

Richard Chen: People under-appreciate how important search and discovery is for NFTs. Each NFT project (e.g. Meebits, Lost Poets) needs custom search filters by attributes, which has to be added manually by OpenSea on a project-by-project basis. This creates a huge defensible UX moat for OpenSea that’s hard for other platforms to replicate. For exa... See more