Yesterday OpenSea, the nonfungible (NFT) marketplace, announced a Series A funding round of $23 million, led by Andreessen Horowitz. Amongst the many other investors are Mark Cuban, Naval Ravikant, Tim Ferris and Alexis Ohanian. The owner of the $69 million Beeple art, Metapurse, is also an investor.
OpenSea’s previous funding was $2.1 million raised in November 2019 from Animoca Brands and several others.
As shown by the graph, nonfungible tokens have taken off this year. Each token represents a blockchain-based unique right to an object, which is often digital, such as an image, video, a sports collectible or an in-game item.
So how is OpenSea different from other players in the space? The answer is it wants to be the eBay of NFTs. It’s certainly not the only marketplace. Other sites, such as Mintable, Rarible and MakersPlace, all have marketplaces and enable you to create, buy and sell NFTs. Opensea does the same but additionally acts as an aggregator, pulling in the data from other sites that want to participate, thereby creating more eyeballs. It’s not dissimilar to the way e-commerce sites often also have a presence on Amazon and eBay.
Most other NFT marketplaces focus on a single type of NFT such as art, whereas OpenSea lists numerous types, including art, trading cards, sports collectibles, and in-game items for blockchain-powered virtual worlds such as Decentraland.
For now, the site mainly supports Ethereum NFTs but has plans for other blockchain protocols, recently announcing Tezos was next.
Its current business model is to take a small cut of every sale. But it’s a matter of time before it expands that. One obvious area is decentralized lending, given NFTs are assets. However, the specialist DeFi lending sites can do that themselves.
While some may think OpenSea has been an overnight success, it’s had a fair amount of patience. It was set up in late 2017 and by late 2019, monthly gross sales started to reach $1 million and continued that way for most of 2020 until September. The last two months can only be described as crazy growth.