Recent three NFT market mergers: Uniswap, Opensea, and eBay compete for territory

Author: Nianqing, Chain Catcher

The cryptocurrency market continues to bear, and the investment and financing market is also becoming calm and slowing down. However, the NFT sector has recently seen a series of mergers and acquisitions. Although the nature of these cases varies, they still convey unusual signals.

A couple of days ago, Uniswap Labs announced the acquisition of the NFT aggregation market Genie, officially entering the NFT space. Uniswap Labs stated that Uniswap will soon launch an NFT platform on its application, which is said to also integrate developer APIs and widgets.

As early as 2019, Uniswap launched an NFT product called Unisocks, which was backed by physical assets and only issued 500 pieces, once trading for nearly $100,000. Uniswap mentioned that NFTs are an important gateway to Web3, rather than "a separate ecosystem from ERC20."

Regarding this acquisition, Uniswap founder Hayden Adams mentioned in a Bankless blog that Web3 will ultimately realize different forms of value exchange, and Uniswap hopes to become a broader asset trading platform, with NFTs representing assets of different ownership. Uniswap will apply its experience in building DeFi products to NFTs to meet its users' trading needs for more types of assets.

For a long time, Uniswap, as a cryptocurrency trading protocol, only supported trading of fungible ERC20 tokens, while trading of ERC721 tokens was provided by trading platforms like Opensea. Currently, there is still no decentralized trading platform that supports trading of both ERC20 and ERC721 tokens simultaneously.

As the leading DEX, Uniswap's acquisition of Genie can be seen as the first case of vertical integration between the ERC721 NFT market and the ERC20 token market, which will change the landscape of the entire NFT market to some extent. From Uniswap's statements, this acquisition will break the trading boundaries between NFTs and fungible ERC20 tokens. For example, trading markets like Opensea generally use ETH for purchases, while in the future on Uniswap, users will be able to purchase NFTs using any ERC20 token, significantly enhancing the convenience of user transactions.

Moreover, Genie is not just a simple NFT trading market; it is also an NFT market aggregator. This means that after Uniswap integrates Genie, it won't need to invest more effort in NFT liquidity and can focus more on refining the products of both parties.

Currently, Genie has aggregated trading platforms such as OpenSea, NFTX, NFT20, LooksRare, Rarible, X2Y2, and Coinbase NFT, supporting ERC-721 and ERC-1155 protocols. The biggest highlight of Genie is that it allows users to purchase NFTs from all major markets in a single transaction, saving up to 40% on gas fees.

Like many price comparison platforms in Web2, NFT aggregators make it easier for users to find the cheapest NFTs and create a positive cycle with smaller platforms. Thus, the emergence of aggregators like Genie has also brought more liquidity and opportunities for smaller platforms like X2Y2 and LooksRare to compete with Opensea.

At this point, it is necessary to mention the acquisition of another NFT aggregator, GEM, by Opensea two months ago.

On April 25, OpenSea announced the acquisition of the NFT market aggregator Gem, stating that this move is an "investment in the future of professional communities" to improve user experience. After the acquisition, Gem will continue to operate independently as a separate product and brand from OpenSea.

However, it is clear that this is a "defensive" acquisition from a monopolistic standpoint.

Gem launched its Beta version on December 28 last year. Although it appeared later than Genie, Gem has captured a larger market share due to its smooth user experience and close community relations. In terms of trading volume, project numbers, and user counts, Gem far exceeds Genie.

Data Source: Dune Analytics

Gem currently aggregates markets such as NFTX, NFT20, Rarible, OpenSea, Larva Labs, and LooksRare. Additionally, it can help users route through Uniswap V2 and V3, SushiSwap, and any liquidity via 0x, allowing users to pay for NFTs using various ERC-20 tokens they hold, and even combine different tokens for payment (if Opensea hadn't acquired it first, Uniswap might have preferred to acquire Gem).

Furthermore, OpenSea emphasizes that the acquisition of Gem is to "invest in the future of professional communities" because Gem is more inclined to adopt community feedback in its technical development and feature iterations. For example, features unique to Gem, such as shopping carts, rarity, flashbots, and whale purchase notifications, are all functionalities that the community has long hoped OpenSea would add.

However, because Gem does not charge platform fees and lacks a good profit model, the community speculates that this is also one of the reasons Gem accepted the acquisition.

Related Reading: "Analyzing OpenSea's Acquisition of NFT Aggregator GEM: A Monopolist's 'Elimination of Threat'"

In addition to the above two insider acquisition events, there is another cross-industry acquisition worth noting.

Previously, we often compared OpenSea to "the eBay of NFTs," and now eBay has personally entered the NFT market. On June 22, eBay, the e-commerce giant, announced the acquisition of a UK-based NFT market, stating that it would further promote its business in the digital collectibles field.

eBay had also dipped its toes into the NFT space earlier this year. In May, eBay launched the "Genesis" NFT series through the NFT platform OneOf, interpreting iconic athletes from the covers of Sports Illustrated over the years in 3D and animated formats. Perhaps this trial run made eBay realize the potential of the NFT market.

The acquired KnownOrigin was established in Manchester, UK, in 2018 and is an NFT market built on the Ethereum ecosystem, allowing artists and collectors to create, buy, and sell NFTs.

However, unlike NFT markets closely tied to Web3 culture like Opensea, KnownOrigin is closer to traditional markets. It is an artist-centric NFT trading platform where NFT works resemble digital art rather than the avatar collections found in mainstream NFT markets.

KnownOrigin's original intention is to help digital creators monetize their art. KnownOrigin has also collaborated with brands like Adobe, Adidas, and Netflix to develop a royalty system that allows artists to earn money through secondary sales. It completed a £3.5 million funding round led by GBV and Sanctor Capital in March this year. Currently, its sales have exceeded $30 million, collaborating with over 5,000 content creators. In contrast, OpenSea's cumulative sales have surpassed $30 billion.

However, as one of the most popular trading platforms globally, eBay will become the first stop for many people entering the NFT or even Web3 space. The upcoming NFT market from eBay will also be more oriented toward traditional markets. Just like the previously launched NFT series in collaboration with Sports Illustrated, as NFTs penetrate fields like fashion and sports, KnownOrigin will attract more global users from traditional markets through partnerships and cross-industry collaborations.

In summary, OpenSea defensively acquired the potential "dragon-slayer" Gem aggregator, nipping in the bud the threat of NFT aggregators aiding smaller platforms like LooksRare in capturing market share. On the other hand, OpenSea will also absorb Gem's advantages to optimize user experience and strengthen its service capabilities for the community, thereby solidifying its monopolistic position.

As the leading DEX, Uniswap's acquisition of the NFT aggregator Genie will break the boundaries between ERC20 tokens and NFT assets, greatly reducing friction in NFT trading. This also represents Uniswap's attempt to challenge the inherent advantages held by Opensea, while bringing more imagination to its own development prospects.

As one of the mainstream trading platforms globally, eBay's acquisition will enhance its layout in the NFT space, combining its traffic advantages in traditional markets with the professional capabilities of the acquired platform, laying a foundation for future explorations in the crypto space.

It is foreseeable that as the market continues to remain sluggish, project valuations in both the primary and secondary markets of the crypto industry will significantly shrink compared to before. This presents a favorable opportunity for well-funded giants to engage in mergers and acquisitions, and we may see more similar actions in the future.