Original title: "Can OpenSea Bounce Back?"

Original author: William M. Peaster

Original translation: Lucy, BlockBeats

Editor's note:

As the world's first and largest market for discovering, collecting and selling NFTs, OpenSea's NFT trading volume and market share have recently declined sharply. Coupled with layoffs, royalties and the Sisyphus incident, OpenSea's development faces serious resistance.

Bankless senior writer William M. Peaster used Blur as an example to analyze OpenSea's development potential and how to deal with resistance. He believes that at present, OpenSea has not yet released its own token or its own L2, which 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 in the absence of airdrop incentives.

Once the undisputed giant of the crypto space, OpenSea has undeniably faced some serious headwinds of late.

On one hand, NFT trading volumes are down significantly from their 2021 peaks, and so is OpenSea’s market share of trading volume. The market has also been facing massive layoffs lately, VCs’ expectations have been drastically reduced, and $BLUR is on the rise again.

The platform is also dealing with an ongoing royalty dispute that has pitted it against Yuga Labs, the creators of Bored Ape Yacht Club. The split led Yuga to begin working with upstart OpenSea competitor Magic Eden to develop its own marketplace.

Now that OpenSea is in trouble, can it return to its previous dominance in the NFT space? It’s possible. That said, OpenSea will need to leverage its strengths to achieve a lasting resurgence.

A Humble Giant

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

But we’ve also heard your feedback loud and clear: at times, OpenSea feels like a follower, not a leader. That’s not who we want to be. We want to move forward with speed, quality, and conviction, making more meaningful bets.

—Devin Finzer, November 3, 2023

The marketplace also offers a range of premium services like Deals, Studio, and OpenSea Pro, which remain my favorite NFT marketplace experiences to date.

Besides this, OpenSea has not yet released its own token or its own L2, so it still has two potential trump cards up its sleeve.

In my opinion, dropping the OS token will bring more attention and interest to OpenSea than BLUR has to date to Blur. This will be a huge move that will generate huge activity and can help the platform achieve equilibrium.

OpenSea can launch its own L2 with or without a native token first. So far, Base and Zora Network have both had great success with L2s and have used ETH as gas to date. If OpenSea develops deeply into this layer and follows the Frame playbook by deploying an NFT-centric L2, it will automatically become a major player in the Ethereum Rollup scene.

Blur and Values Betrayal

As we discuss solutions, there is one thing worth reflecting on. Two years ago, at the peak of the NFT bull market, OpenSea's one move caused it to lose its lead, which is incredible.

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

Blur has always structured and marketed itself as a platform for “professional traders,” so it’s no surprise that the platform doubled down on financialization, downplayed NFT visuals, and shied away from creator-set secondary royalties.

Despite its notable activity, it likely never would have been home to the group of creators that made OpenSea dominant in the first place. But in its effort to catch up to Blur and win back sales, OpenSea backpedaled on secondary royalties, alienating many of its core users, from small independent artists to large studios like Yuga Labs.

Of course, I do think OpenSea could have had its cake and eaten it too. The platform could have kept creator-set royalties on its main platform and only reserved optional royalties for OpenSea Pro to align its offshoot with a direct competitor to Blur. Instead, top creators went to war with the core marketplace and looked elsewhere for companies whose values aligned with theirs.

Ultimately, I don’t think most users are leaving OpenSea and going to Blur because of low fees. Instead, most of the Blur volume is chasing token incentives, i.e. airdrops to mine $BLUR.

So if OpenSea started enforcing creator royalties again, launched a governance token and “OpenSea Network” L2, and started a public rewards system for OpenSea Pro users, you have to admit they’d be in a better position than they are now.

The reality is that the demand for the NFT space is broader than Blur addresses. Blur’s “advanced trading” niche is exactly that. Take away Blur’s token incentive advantage, and I think, all else being equal, you’d see a lot of people return to OpenSea.

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

So, to get OpenSea back to its former glory and beat the competition, I suggest fighting tooth and nail on one front with OS tokens + L2 to win back degens, while returning to its values, updated royalties + casual UX 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 follows the same lines. I will say that it’s still hard to say for sure if OpenSea can achieve the same dominance as before, especially with the rise of new challengers, so the platform definitely faces a battle.

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

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