THE NFT MARKETPLACE WARS
This is where it all begins, the nft exchange wars, with Blur aggressively winning market share, OpenSea has made an interesting move, trying to recapture a lost portion of their shares. But is it too late? In this article, we will deep dive what this means for you as a creator, founder or end-user.
[Article has been updated due to recent developments]
Some History on OpenSea
OpenSea was founded back in 2017, as a smart contract platform, that enables user to trade, sell and create nfts, in a more visual way, making it easier for users with no tech background to build, groundbreaking at that time.
OpenSea remained the monopolist, for years to come, but now the market is shifting and they are dramatically losing market shares. Where has OpenSea gone wrong?
OpenSea has not innovated -much- since they launched, they did improve the protocol, but they have never rewarded users on their platform, and they’ve been getting a pretty big portion of sales ever since (2.5% per sale); which is fairly high for a platform that doesn’t reward its users, or offer an innovative tool set.
We can fairly say that the customer service of OpenSea is horrible. Months to resolve tickets or to get a response. Crazy hard to receive API keys for developers. Getting verified is nearly impossible unless you know someone within the team. Shady team members being kicked out for insider trading, and the list goes on. Not very bueno if you ask me.
So in hindsight, has this been a long time coming?
Who is stirring up the juice?
Blur…. Where do we start? Superior trading platform, faster, more tools and a lucrative token incentive for users (and creators); add into the mix that it has a way better creator and user customer support.
Blur started the first wave of Optional Royalties, Blur was mainly targeting active traders in the market, and also rewarding them with a token, which did exceptionally well.
There are some downsides tho, for artists the platform is not very good in terms of user experience and there is no mobile version, yet.
The execution of Blur is one for the records books.
1) Targeting active traders by offering a discount on trades (no royalties)
2) Aggressively acquiring market share
3) Rolling out a near perfect token (free money brrr)
4) After capturing a large portion of the market pushing OpenSea to be blocked by creators, so they receive full royalties on Blur
5) Check-mate
So what the $#@! is going on?
Quite frankly. Let’s first look at the stats.
The graph above showcases the growth of Blur and you can now understand why OpenSea is starting to move.
As you can see here, Blur is aggressively capturing OpenSea’s shares. We can argue this is mainly due to the BLUR token airdrop and people farming for the new season.
Charts: https://dune.com/hildobby/blur-vs-opensea
OpenSea is making a scared cat move
After a successful token launch by BLUR, it was time for OpenSea to react. And what did they do? They are stepping away from their royalty model for creators/founders. Forcing legacy contracts (which don’t have an operator filter or block list) to receive 0% royalties, or what the user decides upon (zero is the answer here)
The full thread:
TLDR
1) OpenSea goes from protecting creator royalties towards: screw you, we love money
2) OpenSea now forces legacy contracts to migrate to a contract with an operator filter or block list, removing all previous stats or trading volume, which creates trust for the buyer and frankly is the history of a project. Knowing OpenSea customer service is horrible, this will yet again open a window for Blur to aggressively help creators out.
3) OpenSea limited time 0% is a desperate move to recapture lost traders and market share, and since it’s a limited time, it’s just a concealer.
4) OpenSea is hinting towards a token or airdrop
5) OpenSea legitimately pissed off nearly all legacy founders by pulling this move, the only way they can recoup and retain these projects is by offering them migration functionality of previous statistics, which I doubt will happen seeing their backlog.
What caused all this?
One picture says it all. This. Genius marketing done by Blur.
This picture is now outdated and Blur has stated that due to this recent move by OpenSea, you don’t have to block OpenSea anymore, and you can now receive royalties on both if you opt-in through a operator filter.
What are the options for creators and projects?
For new project founders, or creators, not much is changing to be frank. The biggest effect is on legacy contracts which do not have the operator filter or block list build into their contract.
If you build in the operator filter/block list into your smart contract, you now have three choices.
[UPDATE DUE TO RECENT DEVELOPMENTS]
1) Enforce on both platforms, with the operator filter, receive royalties on both
2) Do nothing, have no operator filter, get 0.5% optional on both platforms
4) Opt-in blocking all, and go towards a private marketplace
What are the options for smart contracts (projects) without the operator filter, aka legacy contracts?
For Legacy contracts without upgradability (proxy contracts); these are your three options.
I’ve left out marketplaces with a low market share because users tend to use the biggest marketplace(s); which currently are OpenSea and Blur.
1) Do nothing, lose all of your royalties on both OpenSea & Blur
2) Migrate to a new contract, lose all statistics, but you can add in the operator filter and block list, either choosing Blur or OpenSea for enforcement of royalties.
3) Create a private marketplace, such as CryptoPunks did, and block trading on all other platforms. Your statistics and trading volume will be picked up by Blur and OpenSea, but you can’t trade on those platforms.
Biggest risks
Losing your credibility and stats of your previous contract
Users will need to migrate (burn old token, get new token)
Biggest wins
OpenSea could help creators out, by migrating statistics, yet I doubt they have the man power, but if they do, they could recapture some of the shares.
Blur could once again aggressively help out creators outperforming OpenSea a win for creators and founders.
What does this mean in terms of end-users?
This one is going to sting a bit. But essentially, all collections need to pivot to higher mint prices. The era of lower sales fees are upon us.
We’re opening up a gateway for corporate run projects which are injected with VC funds. Which only have one thing in mind: Profit.
Free mints will come under a lot of pressure, but as showcased above, nothing is really changing. You as a founder, or user.
Final thoughts
Not much is changing really after all. But we do see a monopolist crumbling down. This is completely fine and happens all the time. The flip side is that legacy, or OG creators are getting rekt in the process. Is that bad? Yes. Some smaller projects will have to endure the costs of migrating, losing a part of their users which are sleepers (not active traders or nft folks).
I’m excited to see where this all goes, and if OpenSea can recover this big hit, because the announcement from their side is not good and frankly shows that they are in it for the money, and not to protect the creators after all.
I think OpenSea opened the flood gate even more towards Blur by pulling this move. And I personally think Blur will be the winner of this game.
Perhaps OpenSea can finally drop that token they have been hinting towards for years, but will it be enough? Time will tell.