Let's talk Web 3: OpenSea Product Review
As the crypto and Web 3 scene continues to expand, the grading of each new product is still unknown. This means that for the average person, we’re more so pushed toward the most popular products in the market right now. Whether it’s an application or protocol, this entire space continues to develop and we have the opportunity to define the new landscape.
This series aims to dive into the most popular crypto & web 3 products to:
Break down the ‘why’ behind its popularity
Uncover the benefits & challenges
Question the design
Introduce the alternative options
Gauge developer’s sentiment
Provide recommendations and peek into trending news
This is our opportunity to set the bar, so join me through this article as we tackle OpenSea.
What is Opensea?
If you're looking to purchase your first NFT, you’ve most likely heard of OpenSea in the same sentence. An NFT marketplace that has gained tremendous attention in the past few months and undoubtly will continue to excel in the years to come.
But before we take any step forward, let’s quickly understand what NFTs are. Non-fungible tokens or commonly known as NFTs are digital assets that are completely unique and cannot be replicated. How is this possible? These tokens are held on the blockchain making each and every token immutable, secure, and transparent.
These NFTs are usually displayed in the format of images but their attachment to the blockchain can unlock much more. Similar to a typical marketplace, OpenSea allows you to purchase, sell, and trade NFTs directly on the platform. All these transactions take place primarily using crypto and just recently announced with most regular payment tools that we’re used to. For crypto, your options are limited to Ethereum (ETH)/WETH, USDC, or DAI and regular payments consist of Visa, Mastercard, American Express, and even Apple Pay.
Simple UI, Immense Populaity, Basic Analytics
Rarible, Mintable, SuperRare, Foundation, Fractal
Help Center, Platform Status, Partnerships, Blogs, Documentation, Newsletter
Phishing attacks, Marketplace flaws, Automated bots
🚀 Debunking the Popularity
In the world of Web3/Crypto, OpenSea is one of the largest and most popular platforms racking in outrageous amounts of capital and growing incredibly fast. Founded back in 2017, the platform has seen over 600K users with $23.5 billion USD in sales volume and there’s no sign of slowing down. As a matter of fact, DappRader explains that there’s been an 11% increase in sales volume in the past 7 days of March with an average price of $1.1K per NFT from the day of this writing.
These crazy numbers don’t end just there. According to Dune Analytics and an amazing dashboard created by @rchen8, OpenSea reached a monthly volume of nearly $5 billion USD, nearly $250 million USD in daily volume, and a staggering 2.4 million NFTs sold in a month. With the immense rise in popularity of Web3 and NFTs, OpenSea has been able to capture all the interest by becoming the go-to marketplace for users of all backgrounds.
Now that we’ve covered the staggering amount of capital flowing through this platform, let’s cover the question you’re most curious about. Why have NFTs become so popular?
Since the creation of the CryptoKitties by Dapper Labs back in 2017, the rise of Bitcoin & Ethereum, the adoption of various Web3 projects and the launch of countless NFT projects by notable individuals & companies - these cards have continued to stack on top of one another to add up to a great expansion into the mass public to what we have today. Bybit also explains that the impact of COVID19, verifiability of NFT ownership, and of course, NFTs serving as gateway keys into communities/ecosystems are all impactful reasons driving this immense rise over the recent years.
🧑💻 User Experience & User Interface
Though OpenSea is a Web3 platform, it doesn’t stop any curious mind to browse through its numerous features and NFT projects. OpenSea is a comprehensive and beginner-friendly marketplace to explore and create NFTs with the additional features to buy, sell and trade digital assets.
Rather than the typical registration that we may be aware of in Web2 consisting of providing the user’s personal information (i.e. name, email, etc.), the user identity in Web3 is replaced by the wallet/address serving as the login/registration. This means that to properly use the platform, you’ll need to have access to a crypto Wallet to access the entirety of the platform. When it comes to the wallet options, OpenSea provides a wide range with MetaMask being the most popular.
Once you’ve logged in/registered by simply connecting your wallet, you’ve gained full access to start exploring and purchasing (mint) NFTs. Once you start looking into various collections you may get overwhelmed at first, but trust me, there’s nothing to fear - that’s exactly how I felt when I got started. The platform offers the ability to filter based on the type of NFT (i.e. Domain Names, Music, Sports, etc.) and find the trending/top collections on the platform. So dive into the topics that interest you the most and ones that you’ve never heard of.
Next up are the stats and transparency of blockchain being leveraged on OpenSea. As per the foundation of blockchain technology, the data behind the NFTs and the holders are all accessible to the public. So how does this apply to OpenSea? A feature that OpenSea provides and common to many NFT marketplaces is being able to show the stats (i.e. volume, price history, floor price, etc.) behind the specific NFT and its collection as well as display the holders of the project (linked to Etherscan).
OpenSea also clearly recognizes the difficulty in onboarding into Web3 and it provides extensive amounts of resources to enhance the user experience. No matter your experience in Web3, issues will definitely occur but the various resources consisting of the help center, platform status, partnerships, blogs, documentation, and newsletter - all combine to be great support provided in the user experience.
The simplicity of the marketplace is the root of the reasoning behind its growth and mass adoption. The user interface abstracts the difficulty behind NFTs and Web3, ensuring that users are not required to engage with any technical aspects but rather use the platform just as we are all used to in Web2 platforms.
The community plays a vital role in crypto projects as it not only ensures the primary traction but supports its ability to sustain its popularity as it continues to scale. In Web3, everyone has skin in the game and collectively works together to go through a continuous interactive process to develop the best products.
With OpenSea’s role in the Web3/Crypto space, the category of the community can be divided into two streams - its own community driving the growth of the platform and OpenSea serving as the central hub for communities to be built on (indirect). These two streams both speak to the extent of OpenSea’s reach and impact driving this entire ecosystem forward.
The platform’s community consists of 358K users in March, a community of over nearly 200K discord members, and over 2M across their social media. Bringing it back to the numbers, as of March 31st it’s had nearly 33K users active on the platform consisting of 58K transactions and $115M in sales volume. With a combination of its active social media, articles, guides, and blogs, OpenSea has built a strong community to support its continued growth.
Serving as the home to millions of NFTs and hundreds of collections/projects, OpenSea can be considered the facilitator of the keys to NFT communities and ecosystems. Many NFTs provide much more than the PNG that is displayed, but rather utility behind the artwork containing features that unlock once the transaction is processed. This means that each and every community driven by NFTs will ensure to support the OpenSea platform by sharing resources, blogs, tax information, documentation, newsletter, and guides, and in turn, drive more users towards the platform (indirect support to the community).
🛠 Developer’s Corner
With millions of dollars following through OpenSea, similar to any developer I was immediately curious to find out how this platform is built.
To our eyes, the frontend is built with React, GraphQL, Next.Js, TypeScript, and a few more. Behind the scenes, OpenSea is powered by Wyvern Protocol, a decentralized digital asset exchange protocol that enables the auction, buy & sell and trade features. In essence, it is a collection of smart contracts built on the Ethereum blockchain that support the fundamental features of the platform. These smart contracts interact directly with the Ethereum blockchain.
By recognizing its role as the largest NFT marketplace and a leader in the Web3 space, OpenSea provides several tools to empower developers in its community. These tools consist of its API, SDK, and numerous developer-friendly tutorials.
NFT API - The Non-Fungible Token API is directed toward developers for the purpose to leverage in their own projects. This free API provides the ability to monitor NFTs and cache metadata (activity & account/wallet information) with integration with numerous crypto wallets.
Developer Tutorials - Develop with the support of various tutorials that cover the creation of an entire marketplace that can be customized and integrated with insights. Another option is to create crowd sales to sell/gift items and create loot boxes for a gamified experience. Though the developer tools are limited, the tutorials provide a method of familiarization with everything in a few hours.
On the news, you’ll constantly come across millions of dollars lost in NFTs. Whether it’s a hacker or a system bug, many of the reasons behind the skepticism that exists towards Web3 and NFTs derive from the numerous hacks that take place.
Though there are brilliant minds working on the most innovative projects in the space, it comes down to the fact that this space is moving faster than we can keep up. From a bird’s eye view, hundreds of millions of dollars are being poured into this space to develop various interesting projects, however, this creates targets for these projects to seek out any to all vulnerabilities that exist. With this in mind, security across OpenSea is important to be proactive and most importantly, reactive as these unique scenarios are near impossible to predict.
Here are a few stories to highlight:
$1.7M in NFTs stolen by phishing attacks
A common issue in the tech world is phishing attacks and this is much more prevalent in Web3 as the sole identity is simply attached to a crypto wallet. Specifically, with OpenSea, this was an attack on users that leveraged the flexibility of Wyvern Protocol that possibly had used the same contracts as OpenSea to add on complex orders (unknown to the user) and simply wait for the wallet approval by the user. Devin and Neso both dive deeper into their Twitter threads.
Rarible and OpenSea integration flaw resulting in a loss of 332 ETH
As OpenSea remains to be the leading marketplace for NFTs, it provides access to its platform via its API. Rarible, a popular NFT marketplace extracts NFTs from OpenSea to list on their platform - however, there was an important flaw that was not properly detected. Previously listed NFTS that were deleted on OpenSea were shown to be active on Rarible, providing access to the hacker to exploit the cheaper NFTs and resell them at a higher price.
$350,000 Bored Ape NFT sold for $115
An untraditional security issue but an interesting situation that highlights the ease of selling an item for a drastically lower price than its value due to simple negligence which cannot be overturned. These simple mistakes include accepting the wrong crypto (DAI over ETH) or listing error - which can be immediately snatched by automated bots.
In an NFT marketplace, the security can almost be equally placed on the users and the software. As a user, it should be vital to ensure that you’re proactive in securing your crypto wallet (secure seed phrase, not handing out information, etc.). From the software, OpenSea would need to ensure that they are actively engaging with the community to better understand the challenges that are being encountered and the measures that they would need to implement for a secure user experience.
Alternatives & Competition
When it comes to this market’s landscape, OpenSea is undoubtedly the leading platform for beginners to advanced users in the Web 3 space. The fame that it has developed over the past few years is due to its first to market* product, simplistic UI, basic user onboarding, and simple analytical insights. Though these are great factors to consider, here are the alternative options: Rarible, Mintable, SuperRare, Foundation, Fractal
Rarible - A very popular NFT marketplace similar to OpenSea with a strong goal of becoming a DAO driven through their native $RARI crypto token. This marketplace offers a no-code NFT development and a seamless method to sell the NFTs with an option to enable royalties. The limiting factor to this marketplace is its 2.5% commission fee, but should still be on your watchlist for years to come.
Mintable - A NFT marketplace active since 2018 scores mediocre amongst NFT creators looking to mint and sell or simply browse/resell on their platform. The overall marketplace does not have strong differentiating factors from OpenSea, however, creates limitations with its fees. These fees range from 2.5% for normal NFTs, 5% for gasless NFTs and 10% for printable NFTs.
SuperRare - Sitting at the intersection of NFTs and real-world art, this platform provides users to collect NFTs from handpicked artists, direct access to the traditional art world (i.e. galleries) and of course, royalty payments up to 10% (artists to receive 85%). The limiting factor is, of course, the 3% purchase fee with a 15% commission fee at the first sale.
Foundation - An online marketplace created back in 2020 with the primary focus on exclusive digital art. There are more than 177,000 NFTs available ranging from images, videos and 3D digital art that will individuals to collect unique art with the limiting factor of a 5% fee. There is also a 10% royalty rate cap for creators.
Fractal - A pivot from the traditional art NFTs, this NFT marketplace is focused on creating gaming NFTs on the Solana blockchain. The gaming NFTs primarily target the play-to-earn principle and Fractal leverages the opportunity to bridge the gaming world with NFTs. With this specialty in gaming NFTs, this is a marketplace that has strong growth potential as more traditional gaming companies are looking into blockchain.
These are a few of the most popular NFT marketplaces, but please note that this is not an exhaustive list. As mentioned previously, this is an ever-changing market and we will only continue to see innovative projects continue to create sparks in this space.
📰 Recommendations & News
Crypto winter has arrived - OpenSea installs are down 94%. Read more.
NFT store redesign for its profile and collections page. Read more.
Launch of Seaport marketplace protocol - allowing for NFT bartering
Users “can agree to supply a number of ETH / ERC20 / ERC721 / ERC1155 items” in exchange for an NFT.