OpenSea.io makes it easy to purchase & trade digital collectibles. The platform is robust, inventive, and enjoyable to use. It enables anybody to enter this expanding sector for the initial period.
OpenSea makes money by collecting fees from successful transactions as a marketplace for NFTs (non-fungible tokens), rare digital products, and crypto collectibles. The cost is 2.5% from the seller’s standpoint. This implies that if you sell an NFT for 100 ETH, you will retain 97.5 ETH, and OpenSea would pocket 2.5 ETH (2.5%).
How does OpenSea generate revenue? What is the OpenSea business model? This blog will address the most commonly asked questions concerning OpenSea’s business model.
What is OpenSea?
OpenSea is the world’s first and biggest NFT marketplace, where you can purchase and trade a wide range of one-of-a-kind digital goods.
Other digital commodities accessible outside digital art include collectibles, avatars, gaming items, domain names, and even digital representations of tangible assets.
Simply said, OpenSea is the eBay of digital products and virtual environments.
Read also: A Detailed Understanding of NFT Drops Meaning
Ethereum serves as the foundation for this decentralized marketplace. While a few NFT markets are available, OpenSea is the largest and most popular.
History of OpenSea
Users can purchase digital art, trading cards, domain names, and gaming equipment on OpenSea, a peer-to-peer marketplace powered by a blockchain.
Founders Devin Finzer and Alex Atallah established the company in 2017, just as non-fungible token (NFT) concepts were gaining popularity. Finzer became interested in NFTs after learning about the CryptoKitties project, a digital cultural phenomenon where people were paying hundreds of thousands of dollars for collectible video game cats. Finzer also questioned whether cryptocurrencies were more than just a form of money and commerce in general.
A few months later, he joined forces with Atallah, a software developer who had graduated from Stanford and was developing an interest in cryptocurrencies. They gave a rough presentation of their ideas at a Techcrunch Hackathon in September, and after that, they were accepted into the Y Combinator programme to advance the project.
Finzer and Atallah returned to CrypoKitties and its supporting system. They created a digital marketplace where users could purchase NFTs in various categories. Launched in February 2018, the OpenSea platform bills itself as “eBay for crypto goods. Despite adding more categories, the OpenSea marketplace initially relied on game developers to promote revenue.
In December, the company acquired Atomic Bazaar, a competing online marketplace, thanks to an early $2 million round of funding. At the end of 2019, OpenSea was regarded as the leading NFT market.
This mindset was solidified after COVID-19 forced people to stay home, and the NFT industry experienced rapid growth. Sales in 2020 reached $94.8 million, a 30,000% increase from the prior year. The business had seven employees at the time and struggled to meet demand. With an average daily fee of $4.2 million, OpenSea will generate $27.5 billion in sales for 2021.
How OpenSea makes money?
The infrastructure of OpenSea’s platform is free; nevertheless, the business strategy requires them to collect a portion of the transaction price as a service fee. The price structure (of OpenSea) is comparable to that of different NFT markets, such as Rarible.
To boost the enthusiasm of NFT buyers and sellers to utilize the platform, OpenSea will pay all Ethereum gas expenses for all platform transactions.
Fee Details (Service/Minting)
OpenSea charges a 2.5% service fee for each platform transaction, which means that a $1000 transaction earns OpenSea $25.
Previously, OpenSea offered the bundles feature for addressing issues when Ethereum gas costs exceeded the price of an NFT; however, OpenSea now covers all Ethereum gas expenses.
Registration Fees
OpenSea charges a one-time cost ranging from $70 – $300 to set up a user’s account. To acquire accessibility to a user’s NFTs, OpenSea charges a fee ranging from $10 – $30.
Contract Approval Fees
Customers utilizing OpenSea NFT (custom ones) contracts pay a one-time approval charge for transaction authorization. One may also pay the fee the first time a new coin is used.
OpenSea’s Business Model
The OpenSea business model is scalable because it allows users to buy, sell, and trade non-fungible tokens through its website. They earn money by charging service fees when a digital asset is sold on their website. Since its inception, OpenSea has raised over $421 million in NFT sales.
Customer Segments & Value Propositions
OpenSea’s client segments include:
Buyers: Individuals who purchase NFTs from others; in the event of a popular NFT, buyers participate in auctions to outbid others.
Sellers: create, market, and sell NFTs as single assets or as a group (bundle).
The following are OpenSea’s value propositions:
Buyers: OpenSea marketplace is handy with a wide selection of NFTs. The platform has paid for Ethereum gas costs.
Sellers: OpenSea NFT marketplace is free to join with a large buyer pool. Service costs account for just a tiny portion of the entire NFT cost. There is more profit to be gained since the platform covers gas prices.
Channels
OpenSea’s channels consist of:
- Website
- App for Android and iOS
Customer Relationships & OpenSea Revenue Streams
OpenSea’s customer relationships consist of:
- Customer Service
- Social Media
OpenSea revenue streams consist of:
- Service Fee/Minting Fee
- Registration Fees
- Contract Approval Fees
Key Resources
OpenSea’s key resources consist of:
- App and Web Services
- Active Sellers & Buyers
- Digital Assets
Key Activities
OpenSea’s key activities consist of:
- Payment Processing
- Marketplace Management
- Peer-to-Peer trade of digital assets
Key Partners
OpenSea’s key partners consist of:
- Investors
- Buyers
- Sellers
Cost Structure
OpenSea’s cost structure consists of:
- Payment Processing Fees
- Salaries
- Website Maintenance
OpenSea’s Strengths
1. Wide Variety of Assets
Due to its position as the first NFT marketplace and its purchase of rivals, OpenSea has been able to acquire and provide a wide variety of digital assets;
2. No Gas Charge
To make the platform far more appealing, OpenSea has waived Ethereum gas prices for its users, like the majority of its rivals;
3. Low service fee
OpenSea continues to keep a service cost or minting fee price of 2.5%, which gives them the required edge to remain the undisputed marketplace for digital assets in contrast to their competitors;
4. Royalty charges
On OpenSea, creators can add on a 10% royalty for each sale their asset generates;
5. Recognizable brands
The platform is already a well-liked and reputable location for digital trading assets, thanks to its first marketplace status.
OpenSea’s Weaknesses
1. Royalty payment
The ability of original creators to tack on license fees of up to 10% to their assets reduces resellers’ profits;
2. No Fiat support
OpenSea does not facilitate the exchange of digital assets for fiat money, in contrast to rivals like Mintable and SuperRare.
OpenSea’s Opportunities
1. Market Opportunities
Due to the recent increase in NFT and Metaverse stocks and popularity, as well as the rising number of games that use NFTs in their gameplay, the market is increasingly in need of an efficient asset marketplace with a low entry barrier;
2. New Features
Features like Collection Manager with no gas fee, and the addition of new features, will set it apart from its rivals and guarantee that it maintains its top ranking.
OpenSea Challenges
Despite the platform’s success, OpenSea has not had an easy ride. The platform only produced $28,000 per month in March 2020, creating a make-or-break situation for the firm.
The founders believed the NFT business was dying and vowed to shut shop if their income did not double by the end of the year. As it turned out, they’d meet that target by September.
When Larva Labs, the author of CryptoPunks, submitted a DMCA takedown order against Polygonpunks, a replica of CryptoPunks was kept on a separate network from CryptoPunks. The firm was forced to delist a collection of NFTs. However, Polygonpunks returned in September after a successful appeal.
On September 15th, it was found that OpenSea’s Head of Product, Nate Chastain, had been trading on sensitive information. Simultaneously, it permitted the sale and trading of antisemitic and Nazi-glorifying artwork, exacerbating the conflict.
Nonetheless, OpenSea is the global leader in NFTs, with a market share of more than 95%. This may change as Coinbase, one of the world’s largest cryptocurrency exchanges, plans to create its own NFT marketplace in late 2021.
OpenSea’s Competitors
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Rarible
In 2020, Alex Salnikov and Alexei Falin founded the company based in Moscow. Unlike OpenSea, Rarible charges buyers and sellers a 2.5% service fee. However, the seller has the choice to pay the whole 5%. In July 2020, Rarible developed its governance token (RARI).
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Mintable
Like OpenSea, Mark Cuban founded Mintable in 2018 with a marketplace for digital assets and NFT minting services. But it distinguishes itself by enabling the exchange of digital assets for fiat money.
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SuperRare
The company Pixura, formed in 2017 by John Crain, Charles Crain, and Jonathan Perkins, is the source of the crypto collectable technology that powers SuperRare. The platform allows NFT creators to increase their earnings when their digital works are resold. SurperRare deducts 15% from the first sale before paying the author 85% of the proceeds, with an additional 3% for each subsequent deal.
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KnownOrigin
In the year since it was established by David Moore, Andy Gray, and James Morgan, KnownOrigin has made more than $1.3 million in sales. They have worked with companies like Netflix, Adobe, and Adidas, and they have created secondary sales systems that are just like SuperRare’s.
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Coinbase NFT
One of OpenSea’s main rivals, Coinbase, already has more than 1.1 million users signed up on its NFT waitlist, which exceeds OpenSea’s whole active user base. Coinbase NFT has already collaborated with collections including World of Women, DeadFellaz, and Lazy Lions;
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FTX NFTs
Unlike OpenSea, FTX NFTs don’t use any P2P networks. Considering that it is centralized and secured, user data is retained on the platform’s network. It is not completely anonymous on the platform
Future Prospects Of OpenSea
Compared to the sheer speculation in other cryptocurrencies, users will get a different experience on the OpenSea platform. The representation of digital artwork by NFTs is a natural object in high demand among collectors.
Because of its low commission price of just 2.5 percent of a transaction and one-time fee to set up an account to sell infinite NFTs, OpenSea is the market leader in the NFT marketplace.
Read also: Top 10 NFT Minting Platforms to Watch Out
The OpenSea idea is ingenious and astonishing in its simplicity. The initial transaction creates the account and its first NFT on the Ethereum blockchain.
Other additions to an account’s collection of for-sale products are only uploaded to the Ethereum blockchain after a sale. This solution saves the needless work and expense of adding an item to the Ethereum blockchain until it sells.
The biggest critique of the OpenSea system is that creating an account is still rather difficult. Nonetheless, many NFT designers and traders demonstrate that this complexity is not a barrier to admission into the fascinating NFT sector.
Significant profits are available for NFT developers, with the risk confined to registering an OpenSea account.
Conclusion
OpenSea is a digital asset trading platform with a business plan centered on low transaction costs. With the platform’s popularity, more transactions will likely occur on OpenSea, resulting in more transaction fees.
Its value offer to consumers is straightforward: they aim to give users a secure and dependable means to acquire and sell digital assets so they don’t have to risk losing several dollars on a scam. In business, this means devoting a significant portion of their resources to trust and transparency, which has increased user trust in the platform, resulting in increased revenue.
FAQs
1. What is the OpenSea NFT marketplace?
OpenSea is the largest user-friendly exchange platform for buying and selling NFTs. The founders; Devin Finzer and Alex Atallah established OpenSea after the great success of NFT CrypoKitties. It is a great marketplace to browse through, buy, and sell NFTs, including music, collectibles, art, and video game things. It offers an opportunity for users to trade with one another in a quick, complete, and trustless manner. Users get full access to and control over their cryptocurrency wallets due to the noncustodial aspect of the platform.
2. What is the business model of OpenSea?
The OpenSea business model is flexible because it enables users to buy, sell, and trade non-fungible tokens online. OpenSea turns a profit via service chary. Each successful sale of a digital asset via a platform leads to the collection of these charges. Collectors can safely transfer their money for rare digital products.
3. What are the pros and cons of selling NFTs on OpenSea?
There are certain pros and cons related to selling NFTs on Open Sea. Let’s start with the pros. OpenSea offers significant NFT assets. This NFT marketplace has more than 150 different cryptocurrencies, which makes it easy for investors to trade in NFTs. It also accepts over 14 different cryptocurrency wallets for transactions.
Talking about the cons, payments to OpenSea can only be done via cryptocurrencies. Users need a suitable crypto wallet to buy and sell NFTs on the OpenSea platform. Users normally pay money for cost recovery due to OpenSea’s reasonably high minting fees.
4. What are the features of Opensea clone scripts?
The OpenSea Clone Script was built by top-tier computer experts and is completely customizable as per the user’s needs. And experts are 24/7 available to add and remove features based on the user’s requests. OpenSea clone scripts also provide the feature to buy, sell, and trade all the cryptocurrencies and enable the users to trade cryptocurrencies in many domains.
