Bankless: With two potential trump cards in hand, can OpenSea bottom out?

Original title: Can OpenSea Bounce Back?"

Original by William M. Peaster

Original compilation: Luccy, BlockBeats

*Editor’s note: As the world’s first and largest marketplace for discovering, collecting, and selling NFTs, OpenSea’s NFT trading volume and market share have recently declined significantly, coupled with layoffs, royalties, and the Sisyphus incident, which has made OpenSea’s development face serious headwinds. *

*William M. Peaster, Senior Writer at Bankless, uses Blur as an example to analyze OpenSea’s potential and ways to deal with resistance. He believes that at the moment, OpenSea has not released its own token or its own L2, and these are two potential trump cards. In addition, he also pointed out that even though Blur is currently booming, users will eventually choose to return to OpenSea due to the lack of airdrop incentives. *

OpenSea used to be the undisputed giant in the crypto space, but there’s no denying that it’s faced some serious headwinds lately.

On the one hand, NFT trading volume has dropped significantly from its peak in 2021, as has OpenSea’s trading volume market share. Recently, the market has also faced mass layoffs, with VCs’ expectations significantly lowered, and $BLUR rising again.

The platform is also dealing with an ongoing royalty dispute that has led to a falling out with Yuga Labs, the creator of the Bored Ape Yacht Club. This split led to Yuga starting to develop its own marketplace with emerging OpenSea competitor Magic Eden.

Now that OpenSea is in trouble, can it regain its previous dominance in the NFT space? That said, OpenSea needs to take full advantage of its strengths to achieve a lasting revival.

Humble giants

These strengths include executives such as CEO Devin Finzer, who remains one of OpenSea’s most respected leaders in the space despite many recent setbacks. OpenSea also has strong brand recognition and has more users than most crypto projects have, even during the recent bear market decline.

But we’ve also heard loud and clear feedback from you: sometimes, OpenSea feels like a follower rather than a leader. That’s not who we want to be. We want to move forward with speed, quality and conviction to make more meaningful bets.

—Devin Finzer, November 3, 2023

The marketplace also offers a range of premium services, such as Deals, Studio, and OpenSea Pro, which are still my favorite NFT marketplace experiences to date.

In addition to that, OpenSea hasn’t released its own token or its own L2 yet, so it still has two potential trump cards.

In my opinion, abandoning the OS token will bring more attention and interest to Blur than BLUR has so far, thus sparking OpenSea’s attention and interest. It would be a huge move that would generate a huge amount of activity and could help the platform achieve balance.

OpenSea can launch its own L2 regardless of whether or not the native token is launched first. So far, both Base and Zora Network have had great success with L2 and are using ETH as gas to date. If OpenSea delves into this layer and follows the Frame playbook by deploying NFT-centric L2s, it will automatically become a major contender in the ETH Rollup scene.

Blur and Values Betrayal

When we discuss solutions, there is one thing worth reflecting on. Two years ago, at the height of the NFT bull market, OpenSea made a move that cost it its lead, which was pretty incredible.

Where OpenSea really started to go wrong was when it started trying to compete directly with NFT marketplace Blur. To combat this traffic-stealing threat, the platform betrays many of its original creator-centric values.

Blur has always built and marketed itself as a platform for “professional traders,” so it’s no surprise that the platform is ramping up its efforts to financialize, downplay NFT visuals, and shy away from secondary royalties set by creators.

Despite its notable activity, it’s likely that it will never be home to the group of creators who initially gave OpenSea a dominant spot. But in an effort to catch up with Blur and win back sales, OpenSea has regressed in terms of secondary royalties, alienating many core users, from small indie artists to large studios like Yuga Labs.

Of course, I do think OpenSea can have it both ways. The platform could have kept the royalties set by the creators on its main platform and only the optional ones to OpenSea Pro in order to align its offshoot with Blur’s direct competitors. Instead, top creators are waging war with their core market and looking for other companies that align their values.

Ultimately, I don’t think most users leave OpenSea and choose Blur because of the low fees. Instead, the majority of Blur trading volume is chasing token incentives, i.e., airdrop mining $BLUR.

So, if OpenSea starts enforcing creator royalties again, launches governance tokens and “OpenSea Network” L2, and launches a public rewards system for OpenSea Pro users, you’ll have to admit that they’re in a better position than they are now.

In fact, the demand in the NFT space is broader than that of Blur addresses. That’s exactly what Blur’s “premium trading” niche is. Stripped of Blur’s token incentive advantage, I think all else being equal, we’re going to see a lot of people coming back to OpenSea.

As an NFT power user, I appreciate the more casual feel of OpenSea UX compared to Blur’s hyper-financial vibe. NFTs are a new type of cultural object full of social magic, and I simply don’t feel that reality on Blur. Interestingly, I sense that many other people feel the same way.

Therefore, in order for OpenSea to return to its former glory and beat the competition, I propose a tit-for-tat in the form of OS tokens + L2 on one front to win back the degens, while returning to its values, an updated royalty + casual user experience approach to win back creatives and more casual NFT enthusiasts.

The marketplace is about to unveil its 2.0 vision, so we’ll see if it’s been following the same lines. I would say that it’s still hard to say for sure if OpenSea will be able to achieve the same dominance as before, especially with the rise of new challengers, so the platform definitely has a battle in front of it.

I believe they are capable, but only time will tell.

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