On the evening of February 13, OpenSea announced on X the launch of the OS2 public beta and its platform token, SEA, while also hinting at an upcoming airdrop. Although the exact timeline and details have yet to be revealed, the announcement immediately caught the attention of veteran crypto users. Within just one hour, the post had garnered over a thousand comments and shares, sparking intense community discussions.

OpenSea CEO Devin Finzer also posted, emphasizing that “the OS2 we are launching is not just a new product, and SEA is not just a token—it is a completely new OpenSea built from the ground up.” Previously, there had been rumors that OpenSea’s new version would take inspiration from Blur’s trade-centric UI.

OpenSea is finally launching its token. If this had happened three years ago, it would have been a highly anticipated event in the crypto space. However, times have changed, and today’s market is dominated by MemeCoins, while NFTs have long been considered “outdated.” What’s even more regrettable is that even within the NFT sector, OpenSea is no longer at its peak. According to Dune data, OpenSea’s trading volume in January was only $195 million, a staggering 96% drop from its peak of $5 billion in early 2022, with annual revenue shrinking to approximately $33.26 million.

Additionally, data from nftpulse shows that as of writing, OpenSea’s market share over the past 30 days has plummeted from 95% in December 2021 to just 29%. On the other hand, OpenSea’s valuation has also declined from its peak of $13.3 billion in early 2023 to around $1.5 billion, and at one point, it was even on the verge of being “sold off.”

So, how did OpenSea, once the dominant force in the NFT trading market, end up in this situation?

Let’s take a look back at OpenSea’s development history—how it rapidly rose to prominence and how it eventually lost its throne in the NFT market competition. Finally, we’ll discuss what impact OpenSea’s decision to launch a token at this time might have on the overall NFT market landscape.

The Early Days: Struggling to Survive in the NFT Wilderness

There is no doubt that among Web3 startups, OpenSea is a legendary company that rose from nothing. Especially between 2021 and 2022, it skyrocketed from obscurity to becoming a $13.3 billion unicorn, firmly establishing itself as the leading NFT marketplace. However, behind this success lies a dramatic history of market ups and downs. In this sense, OpenSea’s rise and fall can be seen as a microcosm of the NFT industry’s journey from wild expansion to rational competition.

In September 2017, Devin Finzer and Alex Atallah secured seed funding from the renowned startup incubator Y Combinator with their innovative project “Wificoin,” which aimed to use

cryptocurrency for shared WiFi payments—completely unrelated to NFTs at the time.

However, in November 2017, Dapper Labs launched CryptoKitties, an Ethereum-based digital cat game, sparking a frenzy. The speculative hype drove CryptoKitties NFTs to fetch as much as 247 ETH—approximately $118,000 at the time.

That same year, CryptoKitties co-founder and CTO Dieter Shirley introduced the concept of Non-Fungible Tokens (NFTs) and played a key role in the proposal of EIP-721, which defined the NFT standard. (Techub News notes that EIP-721 was later refined and officially adopted in 2018 as the ERC-721 standard.)

This pivotal development changed the trajectory of Devin Finzer and Alex Atallah. Seeing the potential of NFTs, they abandoned their original Wificoin project and founded the NFT marketplace OpenSea in February 2018.

According to The Generalist, Devin Finzer remarked, “We saw the potential of the NFT market because a standardized framework had emerged. Everything that followed CryptoKitties would adhere to this standard.”

At that time, blockchain and cryptocurrencies were still in their early stages, and the NFT concept remained largely unknown. The NFT market was practically a barren landscape.

Despite this, OpenSea was not the only NFT marketplace at the time. On the same day OpenSea launched on Product Hunt, another competitor, Rare Bits, also debuted. Branding itself as a “zero-fee crypto asset marketplace similar to eBay,” Rare Bits held an initial advantage over OpenSea. Interestingly, OpenSea also described itself as “the eBay of crypto goods.” (Techub News notes that eBay is a global online auction and shopping platform where users can buy and sell items.)

In May 2018, OpenSea raised $2 million from investors including 1confirmation, Founders Fund, Coinbase Ventures, and Blockchain Capital. However, Rare Bits had raised $6 million a month earlier, with investors such as Spark, First Round, and Craft.

From a VC investment perspective, OpenSea seemed to be at a disadvantage, but 1confirmation partner Richard Chen was more favorable towards OpenSea. He believed that “Rare Bits’ understanding of NFTs was not as good as OpenSea’s. OpenSea’s team is more efficient and capable. Devin and Alex have done a great job discovering new NFT projects and pushing them onto OpenSea. Also, by the time we invested in April 2018, OpenSea’s transaction volume was already four times that of Rare Bits.”

Furthermore, the two companies had different sales strategies. OpenSea maintained a 1% transaction fee (which was later increased to 2.5%) to sustain its operations with steady income. Rare Bits, on the other hand, adopted a “zero fee” strategy in 2018, promising to refund users’ gas fees, trying to attract traffic by reducing user costs. This strategy initially drew some attention and seemed more user-friendly, but it was not conducive to the platform’s long-term development. The high operational costs meant Rare Bits would struggle to survive, especially when the “2018 cryptocurrency winter” hit.

During this period, Rare Bits also tried to expand its business from NFTs to a broader range of virtual goods trading. For example, it collaborated with the anime platform Crunchyroll to launch “digital stickers” and explored trading non-NFT assets such as in-game items.

Unlike Rare Bits’ diversification, OpenSea remained focused, with its main priority being to improve the NFT trading business.

However, before the dawn came, OpenSea’s journey was also challenging. The platform’s early trading volumes remained low, and early projects were limited to just a few NFTs like CryptoKitties and CryptoPunks.

According to reports by TMTPost, in March 2020, the team consisted of only 5 people, and the monthly transaction volume was around $1 million. At a 2.5% commission rate, OpenSea’s monthly revenue was only $28,000. If it weren’t for a $2.1 million “lifeline” investment from strategic investors like Animoca Brands at the end of 2019, the startup might have disappeared during the industry downturn. As for Rare Bits, it had already shown signs of instability by 2019 and completely exited the market in 2020.

In hindsight, OpenSea’s rise to become the leader in the NFT field can be attributed to its focus on its core business and streamlined operational decisions. Devin Finzer mentioned in an interview, “We were willing to develop long-term in this field, regardless of the growth trajectory at the time. We wanted to build a decentralized marketplace for NFTs and hoped it could last 3-4 years.”

By the second half of 2020, the dawn was approaching. This year marked a turning point for OpenSea. As the crypto market began to recover in the latter half, OpenSea, benefiting from being a pioneer in the NFT market, started to reap the rewards. Its platform’s transaction volume began to rise rapidly. Dune data showed that in October 2020, OpenSea’s monthly transaction volume reached approximately $4.18 million, a 66% increase from September’s $2.46 million.

To offer more types of NFT assets and attract broader liquidity, OpenSea began to fully implement the “open market” product strategy.

In December 2020, OpenSea launched the new “Collection Manager” feature, allowing users to mint NFTs without transaction fees (gas fees are borne by the buyer). The official referred to this feature as “Lazy Minting,” which separates on-chain issuance from metadata. Users could upload metadata to OpenSea for free, and only when the item was first sold would it be minted as an on-chain ERC-1155 NFT.

This feature significantly lowered the barriers for creators, and with the characteristic that OpenSea NFT listings do not require review, every user could directly mint and issue NFTs on OpenSea. Apart from this advantage, OpenSea also covered the broadest range of trading types among similar platforms, including digital avatars, music, domain names, virtual worlds, trading cards, artworks, and various other NFT collectibles. Its strategy maximized the supply of creators’ works, attracting more and more users from both the primary and secondary markets.

Objectively speaking, the potential of the NFT market, poised for growth, contributed to OpenSea’s subsequent success, but the rapid rise of the sector would not have been possible without OpenSea’s contributions.

In 2021, the Crypto market ushered in a full-fledged “bull market,” and OpenSea, which had been dormant for two years, finally began to show its true strength.

NFTs Became Phenomenally Popular, and OpenSea Ascended to the Throne with Monthly Transaction Volumes in the Billions of Dollars

According to data from Dune, February 2021 marked the first explosive growth for OpenSea. On February 2, OpenSea’s daily transaction volume surpassed $5 million, while the total transaction volume for January was just over $7.5 million. Ultimately, OpenSea’s transaction volume for February approached $95 million, more than a tenfold increase compared to the previous month.

Starting from early 2021, a large number of commemorative NFTs began to be issued on OpenSea. Bands, entertainment stars, sports celebrities, and well-known artists all started releasing their own NFTs, while many famous brands launched commemorative NFTs or used NFTs for user loyalty programs. It can be said that NFTs, which began with CryptoKitties, first bridged Web3 and traditional industries, allowing many people who were previously unfamiliar with crypto to encounter a completely new “species.”

Budweiser’s NFT series

As the largest NFT trading platform, OpenSea finally saw the arrival of the right moment. Data shows that in March 2021, OpenSea’s transaction volume exceeded $100 million for the first time, surpassing $300 million in July. By August, the volume grew over tenfold, reaching $3.44 billion. It was also in March that OpenSea completed a $23 million funding round led by a16z, with several angel investors, including Mark Cuban, participating in the round.

Although NFTs began to develop rapidly from early 2021, the floor price for the CryptoPunks series NFTs rose from single-digit ETH at the start of the year to around 10 to 20 ETH by mid-year, the main narrative of the market in the first half of 2021 still centered around DeFi. At that time, people’s focus had not yet fully shifted to NFTs. The reason for this was not only because DeFi was still trending, but also because the NFT sector had not yet produced a hype-worthy target or concept.

Entering the second half of the year, the launch of a series of PFPs, represented by BAYC, completely ignited the market’s passion, and NFTs were regarded as another phenomenally significant concept following DeFi. With the surge in NFT trading, OpenSea’s monthly transaction volume remained consistently high at several billion dollars, with the figure even surpassing $5 billion in January 2022. OpenSea’s product head, Nate Chastain, tweeted at the end of August 2021, stating that the company had only 37 people, and that month OpenSea’s fee revenue alone exceeded $80 million, with each person contributing over $2 million—an incredibly impressive figure in any industry.

By the end of 2021, OpenSea had spent most of its time relentlessly accelerating. During this period, aside from Nate Chastain’s departure due to an insider trading scandal, OpenSea had no other negative news. Even though other NFT trading platforms secured large amounts of funding, they had no way of shaking OpenSea’s position. In fact, almost all NFT trading platforms’ products were, to some extent, influenced by OpenSea.

Challengers Eyeing OpenSea, But OpenSea “Betrays” Web3 by Planning to Go Public?

Amidst the prosperity, a twist arrived quietly, and it all began with rumors of OpenSea’s IPO…

In early December 2021, Bloomberg reported that Lyft’s CFO Brian Roberts would join OpenSea as CFO and that he was planning the company’s IPO. This was initially an ordinary news item but sparked some discussions within the Web3 industry. Many believed that OpenSea should issue a token to reward its users, which they felt was the right thing for a Web3 project to do.

Perhaps feeling some pressure, Brian Roberts clarified two days later, stating that there were no IPO plans and that “there’s a big difference between thinking about what an IPO might look like and actively planning an IPO. We don’t have any plans to go public, and if we did, we would seek community involvement.”

This somewhat ambiguous statement didn’t alleviate the community’s concerns but instead reinforced their belief that OpenSea would eventually go public, especially since there was no mention of issuing a token.

Had OpenSea decided to issue a token at that time, the NFT trading platform sector might not have had such an exciting follow-up. It was precisely the “selfish” choice to pursue an IPO that created a crack in what was once a seemingly impregnable wall.

At the time, OpenSea held over 90% of the NFT trading market on Ethereum, and after its stance of not issuing a token became known, some entrepreneurs saw an opportunity and quickly launched NFT trading platforms that issued tokens. LooksRare was one of them. Although it wasn’t the first to launch a “vampire attack” on OpenSea, its influence clearly grew after OpenSea’s IPO rumors surfaced.

On January 10, 2022, LooksRare officially launched, and the team announced that users who had traded at least 3 ETH on OpenSea could list an NFT on LooksRare and receive an airdrop. Additionally, users could stake their LOOKS airdrop to share in the platform’s transaction fees. Just two days after its launch, LooksRare’s daily trading volume surpassed OpenSea’s, and by January 19, 2022, its seven-day trading volume was more than three times that of OpenSea.

Once the crack was made, and the market realized that OpenSea wasn’t completely invincible, everyone began showing their cards. Platforms like X2Y2, launched in February 2022, Element focused on BNB Chain, Zora specializing in high-end art NFTs, and Magic Eden, focusing on the Solana NFT market, all began steadily eating into OpenSea’s existing market share and potential growth. Perhaps calling it arrogance is a bit harsh, but at the very least, during its peak, OpenSea failed to take preventative measures, which was a significant strategic mistake.

Despite this, OpenSea’s market influence remained largely unshaken. As we entered the second quarter of 2022, on one hand, Yuga Labs was about to launch the APE token, and on the other, the trading of “blue-chip NFTs” like Moonbirds and Doodles remained active. As the most liquid NFT marketplace, OpenSea still controlled the lifeblood of the NFT market.

The main catalyst for changing the entire NFT space or even causing the NFT market crash quietly emerged at this point, fundamentally altering the stereotypical image of what the NFT market should look like.

Blur’s Sudden Rise, NFT Market’s Top Spot Changes Hands

At the end of March 2022, Blur announced it had completed a $11 million funding round. At that point, many people were still puzzled as to why a new NFT trading platform would emerge, but by the end of October, when Blur officially launched, it delivered a major shock to everyone.

With a completely different UI, Blur made it clear that listings, bids, and transactions would all have airdrops, but the catch was that users didn’t know how many tokens would be in the “loot boxes.” The UI was purely designed for trading, and the airdrops were both clear and unclear. Blur excelled in product and gameplay design. While many initially criticized Blur’s UI for being difficult to use, over time, users found that this design was much more practical for buying and selling compared to OpenSea. To make a comparison, if OpenSea is the e-commerce platform for NFTs, Blur is the exchange for NFTs.

Prices are listed from low to high, and the right side displays real-time transactions and the distribution of transaction prices. This user-friendly UI design, combined with the expectations of airdrops, led to a large influx of funds into Blur. Although many NFT trading platforms relied on tokens to attract short-term traffic, OpenSea’s market share in transaction volume remained unchallenged in monthly or quarterly data. However, the emergence of Blur caused OpenSea’s transaction volume market share to fall back below 50% just a week ago.

But this also gave large capital the ability to manipulate the market—aggressively buying and selling. Along with the crypto market being deep in a bear phase, the large capital pushed through trades in order to earn airdrops, which caused NFT prices to almost collapse. Retail investors lost interest in NFTs, and with Bitcoin falling to around $20,000, even the “last line of defense” for crypto assets left the market. The collapse of the NFT market, combined with the rise of the new leader Blur, left OpenSea in the dust.

At the beginning of 2022, OpenSea completed a $300 million Series C funding round with a valuation of $13.3 billion. However, by early 2024, OpenSea’s CEO admitted that they were considering being acquired. In the “one-man bull market” of Bitcoin, apart from airdrop-expecting Pudgy Penguins, the floor prices of many once-blue-chip NFTs had fallen to devastating lows. For OpenSea, failing to change might mean losing years of hard work, which is definitely not what they want to see.

Therefore, OpenSea has decided to launch its platform token SEA. On one hand, it’s a self-rescue measure to address the ongoing decline of the platform’s business; on the other hand, this former leader may still have some reluctance and ambition to return to its peak. The question now is: will OpenSea’s token launch change the competitive landscape of the NFT market?

Has OpenSea’s Recent Trading Surge Set to Reshape the NFT Market Competition?

There’s no doubt that OpenSea’s token launch and the release of its OS2 public beta are likely to impact Blur the most. Blur, which emerged as a formidable competitor to OpenSea, has been in decline following the downturn in the crypto market. However, as of writing, its market share over the past 30 days still exceeds 44%, maintaining its position as the leader in the NFT market.

In addition to its unique product UI and gameplay design mentioned earlier, Blur attracted a large number of users with its Bid Airdrop (token reward for bids) and zero-fee model. In 2023, it conducted several airdrops to seize market share, as shown by the data:

• On February 15, 2023, Blur carried out the first season of a 360 million BLUR token airdrop, accounting for 12% of the total initial supply, which was immediately released. According to Glassnode’s report, following the BLUR token airdrop, Blur’s market share surged, with its NFT trading volume market share rising from 48% to 78%, while OpenSea’s dropped by 21%.
• On February 23, 2023, Blur launched the second season of a 300 million BLUR airdrop. This airdrop led to a significant increase in Blur’s trading volume, surpassing OpenSea. According to DappRadar data, on February 22, 2023, Blur’s trading volume reached around $108 million, while OpenSea’s was only $19.27 million.

To some extent, Blur’s large token airdrops played a key role in breaking OpenSea’s “moat.” As the saying goes, “an eye for an eye,” OpenSea could potentially replicate this strategy by using its SEA token to attract users through airdrops or staking rewards, similar to how LooksRare, x2y2, and other “OpenSea killers” once targeted Blur with “vampire attacks” to seize its core users.

In fact, since OpenSea confirmed it will carry out an airdrop, it has sparked a great deal of excitement and discussion on Twitter, with many users anticipating it will be one of the biggest airdrops of the year.

Additionally, in terms of fees, OpenSea’s recently launched OS2 beta has reduced the marketplace fee to 0.5%, with transaction fees set to 0%. This directly competes with Blur’s zero-fee model. Once the SEA token is launched, OS2’s combination of “low fees + token incentives” could create a highly flexible competitive strategy.

Objectively speaking, most users are profit-driven. If the SEA token’s reward mechanism proves to be more attractive, and given that some of Blur’s current users originally came from OpenSea, it could potentially lead to these users returning to OpenSea. However, Blur’s “moat” lies in its faster transaction speed and higher Gas efficiency, giving it a technical advantage in the short term.

The market has already reacted to the news of the token launch. According to data from nftpulse, as of writing, OpenSea’s daily trading volume has reached approximately $29.8 million, with its trading share surging to 70.6% of the total daily trading volume.

For the entire NFT market, the launch of OpenSea’s SEA token is undoubtedly a positive development. In addition to significantly stimulating NFT trading volume in the short term, OpenSea also mentioned in a tweet that OS2 now supports cross-chain trading on 14 chains, including Flow, ApeChain, and Soneium. This raises the question: could the SEA token become the universal token for multi-chain NFT ecosystems, thus driving the development of NFT markets on Ethereum sidechains (such as Solana)? This is something to look forward to.

However, from another perspective, the intense competition between OpenSea and Blur will likely squeeze the survival space of second-tier platforms such as LooksRare and X2Y2. Blur, of course, will not sit idly by as its former competitor makes a comeback. Blur may introduce more token applications or further incentivize user loyalty through token rewards. Furthermore, Magic Eden, another emerging platform, should not be underestimated. With its dominant position on both the Bitcoin and Solana chains, Magic Eden’s total platform trading volume reached $3.2 billion in the past year, accounting for more than 30%, second only to Blur’s $3.8 billion (around 36%). In contrast, OpenSea’s trading volume over the past year was only $1.2 billion, accounting for less than 12%.

In short, I believe the SEA token from OpenSea is not only a key to the platform’s self-rescue, but it could also become a driving force for the NFT market to recover from its downturn. In the long run, the competition between OpenSea and Blur will push the NFT space toward greater financialization and multi-chain development. Whether OpenSea can reclaim its dominant position or whether Blur will continue to reign supreme depends on how the SEA token performs after its launch. For now, let’s wait and see!

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