OpenSea, which plans to go public, has turned wool into revenue

Author: 0x13

"Garbage OpenSea."

Last night, the NFT community was bustling, and OpenSea was criticized again. The reason was that Brian Roberts, CFO of the leading American ride-hailing company Lyft, became the new CFO of OpenSea.

This should have been a good thing, but the new CFO announced his new plan right after taking office: he wants to plan an IPO for OpenSea. He said, "If a company is growing this fast, it would be foolish not to consider going public."

Currently, no company has issued its own token after going public; countless people have been trading on OpenSea with hundreds of wallet addresses to get the "potential" airdrop, bringing revenue to OpenSea with their trading volume, but they are likely to end up with nothing.

In fact, many people anticipated that OpenSea would choose an IPO instead of issuing a native token. First, OpenSea is headquartered in New York, and issuing a token would inevitably face many compliance challenges. Second, fundamentally, OpenSea is just a centralized internet product.

OpenSea is no different from eBay; it simply replaces physical goods with digital goods (NFTs). They are both traditional C2C e-commerce platforms that earn revenue from transaction fees. As of now, OpenSea's total trading volume in the second half of 2021 reached $12.347 billion, and OpenSea charges a 2.5% fee on each transaction, resulting in total revenue of $309 million.

"The world has suffered from OpenSea for too long"

This is a common saying in the community. Despite OpenSea's impressive achievements, holding 97% of the NFT market share and having 750,000 users, OpenSea, as an internet product, has not provided the user experience that internet products should offer.

With the explosive growth of NFTs in the second half of this year, OpenSea's website traffic surged, but it was clear that OpenSea was not prepared for this. Almost every time a phenomenon-level NFT was released or when KOLs like Beanie and Gary Vaynerchuk promoted a certain NFT series simultaneously, the OpenSea website would crash due to the surge in visitors.

If such problems occurred when NFTs first exploded, it could be understood as the team not anticipating the rapid growth of NFTs. However, now that it has been half a year since the explosion began, the frequent occurrence of this issue must be attributed to the OpenSea team's procrastination and negligence. OpenSea even experienced a period where all NFTs could not be listed, leading to already listed NFTs being bought one by one, causing a severe shortage in market supply and a rapid increase in floor prices. Once the issue of listing was resolved, market supply returned, and floor prices quickly fell, causing countless buyers to suffer losses due to problems caused by OpenSea.

Moreover, while OpenSea's "competitors" continue to develop, OpenSea's growth seems to have stagnated.

SuperRare launched a tipping feature, Nifty Gateway will open the ability to trade NFTs using Ethereum wallets in January, significantly saving on gas fees, Rarible introduced a messaging feature and tools for creating practical applications in the NFT space with Rarible Protocol DAO; NFT Trader allows people to trade their NFTs through bartering, and Genie enables bulk buying and listing.

Other trading platforms are thriving, frequently launching new features that give the community confidence to continue supporting them, but OpenSea is standing still in the tide of the times. Indeed, the 97% market share provides OpenSea with ample security, and hardly any platform has the opportunity to defeat OpenSea in a short time. However, after OpenSea's once most efficient product manager Nate Chastain was dismissed due to the "mouse warehouse" incident, more and more suggestions were ignored, and an increasing number of people reported issues and requested help without receiving replies. The declining efficiency of OpenSea and the arrogance of the team have led to growing dissatisfaction among users.

People often seek to have a Web3 product with a Web2 user experience, but it seems that OpenSea is clearly a Web2 product with a Web3 user experience.

OpenSea's Web3 Ideal

This sense of contradiction is also due to the OpenSea team's inaccurate self-positioning. OpenSea's "semi-decentralization" has made the entire platform somewhat "neither fish nor fowl." On one hand, they want to be open like a decentralized platform, so there is no review step when users create NFTs; on the other hand, they can very centrally delist or freeze users' NFTs.

However, the OpenSea team has repeatedly expressed the vision of making OpenSea a Web3 application. The founder of OpenSea mentioned in an interview on The First Mint podcast that the significant difference between Web3 and Web2 lies in the collaborative relationships among multiple companies, and the new CFO of OpenSea explicitly stated the goal of building the future of NFTs, Web3, and the digital economy.

Tokens play an incredibly important role in Web3 applications, whether for community governance, user attention compensation, or Skin-in-the-Game (shared benefits and risks). Tokens are indispensable tools, which is why people are looking forward to OpenSea issuing its native token and believe that if OpenSea issues a token, it will definitely provide airdrops to users. Given OpenSea's scale and revenue, any airdrop would be quite valuable, leading some to spend manpower and resources to interact with OpenSea using hundreds of accounts, hoping to make a fortune when airdrops are distributed.

When the news of OpenSea planning an IPO broke, the community erupted in criticism.

Some were upset because their dreams of airdrops were dashed; they initially thought they could benefit, only to realize they were contributing to OpenSea's revenue. Others were angry at the company's lack of ambition.

The founder of OpenSea once mentioned in an interview that OpenSea's success was due to "being in the right place at the right time" and actively listening to user suggestions to understand what they really wanted. Once, OpenSea, with its first-mover advantage and active community engagement, made its way to today, thanks to the community and users. At that time, OpenSea indeed showed that the team was working hard towards Web3.

However, after becoming so large, OpenSea has become somewhat "stubborn."

The new CFO of OpenSea said, "If a company is growing this fast, it would be foolish not to consider going public." But is it truly "smart" for OpenSea, born from Web3, to choose to abandon its Web3 ideals after achieving success?

Indeed, from the perspective of OpenSea's revenue, an IPO is a way to gain more profits, but this choice also means abandoning its Web3 ideals.

OpenSea's choice has faced countless criticisms. OpenSea's revenue comes from the residents of Web3, but OpenSea chooses to distribute these profits to the residents of Web2, rather than sharing them with its own users. OpenSea's brand is built on community support; it is the frequent use by hundreds of thousands of Web3 users that has made OpenSea renowned and profitable. OpenSea should provide incentives, but choosing an IPO means that these supporters must buy OpenSea's stock to receive incentives.

Nowadays, when we think about which platform can take on OpenSea's functions and be more Web3, it is hard to come up with an answer. Many people can't even name other platforms; OpenSea's monopoly has left many NFT platforms without a chance to survive. There were once some new platforms that tried to adopt the SushiSwap model to compete with Uniswap for a piece of OpenSea's pie, but in the end, OpenSea's market share remains an astonishing 97%.

We cannot make choices for OpenSea, nor can we easily guess the OpenSea team's thought process. Perhaps OpenSea just wants to replicate the old path of its predecessor Coinbase; perhaps OpenSea's choice is common in the Web2 era, but in the Web3 era, it is clearly unreasonable.

The founder of OpenSea said, "We are well-prepared with enough resources to safely get through the winter." But when winter comes, where should we go to find warmth?