Can OpenSea Bounce Back? | Bankless

OpenSea, once an undisputed juggernaut in crypto, has faced some serious headwinds lately—there’s no denying that. 

For one thing, NFT trading is significantly down from its 2021 peak, as is OpenSea’s volume marketshare. Recently, the marketplace has also faced big layoffs, vastly lowered expectations among VCs, and $BLUR on the rise once more. 

The platform is also dealing with an ongoing royalties controversy that has led to a high-profile falling out with Yuga Labs, the creators of the Bored Ape Yacht Club. The divorce has led Yuga to begin work on its own marketplace with upstart OpenSea competitor Magic Eden.  

So OpenSea is clearly in trouble, but can it bounce back to its previous dominance in the NFT space? It’s possible. That said, it’ll take OpenSea making the most of its advantages to mount a lasting resurgence. 

A Humbled Giant

Among those advantages are executives like CEO Devin Finzer, who remains one of the space’s most respected leaders despite OpenSea’s many recent setbacks. OpenSea boasts strong brand recognition, too, and more users—even during this recent bear market dip—than most crypto projects will ever have.

The marketplace also has a range of quality services like Deals, Studio, and OpenSea Pro, which remains my favorite NFT marketplace experience to this day. 

Beyond this, OpenSea hasn’t released its own token or its own L2, so it still has two potential aces up its sleeve. 

In my opinion, dropping an OS token would catalyze more attention and interest for OpenSea than BLUR has done for Blur so far. It’d be a gigantic move that would generate tremendous activity and could help the platform pull even. 

And OpenSea could launch its own L2 with or without having launched a native token first. Both Base and Zora Network have been great L2 successes so far, and both have just used ETH for gas to date. If OpenSea dives in here and also follows the Frame playbook by deploying an NFT-centric L2, it’d automatically become a major contender in Ethereum’s rollup scene. 

Blur and a Betrayal of Values

As we discuss solutions, it’s worth reflecting on how inconceivable the idea of OpenSea losing its pole position would have been two years ago at the NFT bull’s heights. 

Ultimately, where things really started to go wrong for OpenSea was when it started trying to compete directly with the competing NFT marketplace Blur. Fighting against this volume-stealing threat made the platform betray many of its original creator-centric values. 

Blur has always structured and marketed itself as a platform for “pro traders,” so it’s not shocking that the platform dialed up the financialization, deemphasized NFT visuals, and eschewed creator-set secondary royalties. 

Even with all of its headline-grabbing activity, it was likely never going to become the home of the creator crowd that first brought OpenSea to dominance. But in efforts to chase Blur and win back volumes, OpenSea backslid on secondary royalties, alienating many of its core users, from small indie artists to large studios like Yuga Labs.

I do think OpenSea could have had its cake and eaten it, too. The platform could’ve retained creator-set royalties on its main platform and just siloed optional royalties to its advanced arm, OpenSea Pro, to align the offshoot as the direct Blur competitor. Instead, top creators went to war with the core marketplace, looking for other value-aligned companies instead.

Ultimately, I don’t believe most users left OpenSea for Blur because of low fees. Instead most Blur volume was chasing token incentives, i.e. airdrop farming $BLUR. 

So, had OpenSea started enforcing creator royalties again, launched a governance token and an “OpenSea Network” L2, and kicked off an overt rewards system for OpenSea Pro users, you’d have to think they would be in a better place than they are now.

The fact of the matter is the NFT space has a wider range of needs than Blur addresses. Blur’s “advanced trading” niche is exactly that: niche. Take away what gives Blur its bite, token incentives, and I think you’d see many people coming back to OpenSea, all else being equal. 

As an NFT power user myself, I appreciate the more casual feel of OpenSea’s UX compared to the hyper-financial vibes of Blur. NFTs are this new sort of cultural objects imbued with a kind of social magic, and that reality just doesn’t come across for me at all on Blur. Anecdotally, I get the sense that many other people feel the same way. 

So, for OpenSea to return to its former glory and vanquish competitors, I say fight fire with fire on one front with an OS token + an L2 to win back the degens while returning to its values to win back creatives and more casual NFT lovers with a renewed royalties + casual UX approach.

The marketplace is on the verge of unveiling its 2.0 vision, so we’ll see if it’s been thinking along the same lines at all. I will say that it’s far from certain that OpenSea does achieve anything like its former dominance, especially with new challengers on the rise, so there’s absolutely a fight ahead for the platform.  

I believe they have what it takes, but only time will tell for now.