OpenSea: A Guide to One of the Most Important NFT Companies Today

Key Points

• OpenSea is currently the largest marketplace for NFTs (Non-fungible tokens) in the world.
• OpenSea is a relatively new company that was created in response to newer technology known as NFTs.
• OpenSea acquired Dharma Labs, a cryptocurrency wallet maker and lending platform.

The History of OpenSea: What to Know

OpenSea is currently the largest marketplace for NFTs (Non-fungible tokens) in the world. Or, as they put it: “Today, we’re proud to remain the largest general marketplace for user-owned digital items, supporting multiple blockchains, with the broadest set of categories and the best prices for new emerging digital item classes.”

After recognizing the potential future and profitability in the trading of blockchain-based products, Devin Finzer and Alex Atallah teamed up and began dreaming up ideas for platforms that facilitated these transactions. Soon, the two released OpenSea Beta in 2017 and officially launched.

At its outset, OpenSea was a marketplace that operated solely on the Ethereum blockchain. Currently, they operate on many more, including Ethereum, Klatyn, Polygon, and Solana. Additionally, the company has grown to become the largest digital marketplace for digital collectibles and other NFTs.

Currently, OpenSea has 200+ employees, 600K users, two million collections, over 80 million NFTs, and over $20 billion in trading volume.

The Founding of OpenSea: How it Happened

OpenSea is a relatively new company that was created in response to newer technology known as NFTs. NFTs are digital assets that have a unique identification tag on a public ledger, allowing anyone to track or claim ownership of a digital asset. Essentially, NFTs allow you to own digital goods with proof. The company was founded as a direct response to this new reality when the NFT collection CryptoKitties was first launched. This consumer-facing project spurred the founders of OpenSea, Devin Finzer and Alex Atallah, to begin working on a platform to facilitate the transactions of this new technology.

In December of 2017, OpenSea Beta was launched. Initially, the company only operated on the Ethereum blockchain but began expanding its offerings as NFT technology became more common with other tokens. With its launch in 2017, OpenSea became the first open marketplace for NFTs on the Ethereum blockchain.

OpenSea Through The Years

2017

OpenSea Beta officially went live in December of 2017. After months of planning, Devin Finzer and Alex Atallah announced and launched the platform, albeit in an early beta stage. Although NFT technology was new and relatively unheard of, OpenSea became the first real player in the game and the only NFT marketplace on Ethereum.

2018

In 2018, OpenSea opened a pre-see round of funding. One of the earliest investors in the company was Y Combinator, an American tech startup investment firm. Y Combinator has invested money into other notable platforms, including Stripe, Airbnb, DoorDash, DropBox, and Twitch. Total investments in 2018 numbered in the hundreds of thousands.

2019

In 2019, OpenSea began official rounds of funding, acquiring over $2 million through various funds and angel investors. By the end of 2019, the platform was well-established, cash infused, and ready for NFTs to become more mainstream.

2020

In 2020, OpenSea launched its minting platform. To create an NFT, digital assets must be “minted” and assigned an unique ID from a blockchain. The minting platform on OpenSea was launched and allowed users to create, upload, and mind their own NFTs, totally free of charge.

2021

In 2021, OpenSea saw massive growth and the further expansion of its platform. In March, the company announced that future NFT collections wouldn’t require approval. While this allowed the rapid growth of the platform, it also allowed plagiarism to sweep across the platform. In September, the Android and iOS applications for OpenSea were widely released. By the end of 2021, OpenSea had raised over 100 million in funding.

2022 – Present

In January of 2022, OpenSea acquired Dharma Labs, a cryptocurrency wallet maker and lending platform. That same month, the platform announced that it would limit the amount of NFTs that a user can mint within a period, only to reverse it the following day. In April, OpenSea acquired Gem.xyz, a marketplace aggregator. Within the first half of the year, over $300 million of funding was raised, and a company valuation of over $13 billion was given.

What Are the Most Important Products From OpenSea?

OpenSea doesn’t have many products. Instead, they operate as a large platform that facilitates the trading of NFTs and other digital assets.

NFT Trading

The primary business of OpenSea is the facilitation of NFT trading. Users can post collections of NFTs for sale, and other users can bid on elements of the collection. Currently, NFT trading is available on the Ethereum, Klatyn, Polygon, and Solana blockchains. Users can receive payment in a variety of ways, although eth is the most commonly traded token.

NFT Creation

In addition to NFT trading, OpenSea also offers NFT creation. Users can upload digital assets and “mint” them, turning them into an NFT. This feature is free and available to any users who wish to use it.

How Does OpenSea Make Money?

OpenSea makes money through service fees. Currently, service fees run 2.5% on each transaction. If a $100 NFT is being traded, the company takes a cut of $2.50. At its peak (circa late 2021), the daily trading volume on OpenSea was nearing $500 million. Currently, it sits closer to $15 million daily.

OpenSea Acquisitions

January 2022: Dharma – Undisclosed

In January of 2022, OpenSea acquired the American company Dharma Labs. Dharma Labs is based in San Fransisco and was founded in 2017. The primary business of Dharma Labs is their Ethereum wallet, the acquisition of which allows for the company to provide more utility to users.

April 2022: Gem.xyz – Undisclosed

In April 2022, OpenSea acquired the Singapore-based company for an undisclosed amount. Gem.xyz was founded in 2021 and was a market aggregator that specifically aggregated data around NFT purchases. The acquisition of Gem.xyz allows OpenSea to further their data capture on NFTs worldwide and expand their offerings.

OpenSea Notable Controversies

December 2020: Approved Collections

In December of 2020, OpenSea announced that collections would no longer need to be approved before publicly being listed. The community feared that this would cause rampant plagiarism, which it did.

January 2022: Free Minting Tool

In January of 2022, OpenSea announced that they would limit the number of NFTs that users could mint at one time using their free tool. The next day the rule was reversed after massive community backlash and pushback were heard. In a later announcement, the company explained that over 80% of users using the too were plagiarizing or posting spam.

January 2021 and June 2022: Insider Trading and Fraud

In January of 2021, OpenSea’s Head of Product was found to be keeping NFTs that he knew were going to be listed on the homepage. In 2022, the company’s Product Manager, Nathanial Chastain, was charged with wire fraud and money laundering associated with a different insider trading debacle.

Interested in more crypto? Read about other crypto companies here: Bitcoin, Coinbase, and Crypto.com

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