OpenSea: The Reasonable Revolutionary | The Generalist

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.

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

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.

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: 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

Running lean is vital for markets with high volatility. OpenSea maintained a small team for its first few years, with just 7 employees as of late 2020. That allowed the company to weather the crypto bear market, hanging in until NFTs took off.

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.

Maria Shen: Capturing the “buy now” mechanism is important because the more “buy now” NFTs you have the more liquid your markets [are]...Opensea has the most “buy now”.