OpenSea Goes to Zero Fees

By doing so, it's turning off its cash cow — it generated $500M in fees in 2022

Author

The Metadata
February 20, 2023

GM. It's time to shake off the weekend cobwebs and jump into a brand-new week. I hope you're feeling refreshed and ready to take on whatever comes your way. As for us, we're feeling as bright-eyed as a squirrel with a caffeine addiction. Let's dive into it.

 BTW, if you haven't been following our Twitter, please give it some love! We gave away Doodles beta passes to 3 lucky winners (Congrats to @terrarekt, @stephemo_ & @Mylo_Meer 🏆) and another 5 allowlist spots for Cyber Stadium over the weekend. We want everyone here to learn, grow and win together, that's our commitment to you ✊

Today we cover:

  • Market Update: Blur's Bidding Pools at ATH

  • OpenSea Goes to Zero Fees

  • Today's Coolest Tweets

  • New Project Corner

Market Update: Blur's Bidding Pools at ATH

There wasn't much movement in NFTs over the weekend, but floor prices have been holding relatively strong. Jack Butcher's Checks, an Open Edition art project, made a move. It doubled to a floor price of 2.2 ETH on 3000+ ETH of daily volume

People are starting to realize is that the high levels of bid liquidity on Blur make it much more difficult for the floor prices of NFTs to move up or down. We could see a period of lower volatility for NFTs.

OpenSea Goes To Zero Fees

💲 What to know: In a move that surprised everyone, OpenSea announced that it was reducing its marketplace fees to 0% for a "limited time". 

OpenSea is the largest NFT marketplace today, and it's the first time OpenSea has reduced its fees. Prior to this, it charged 2.5% for every sale done on its NFT marketplace.

☘️ In the weeds: This move is a reactionary response to Blur, an NFT marketplace and aggregator that has hogged the news headlines this past week with the launch of its BLUR token. Blur has been able to capture a significant amount of market volume from OpenSea because:

  • It charges zero marketplace fees (unlike OpenSea's 2.5%)

  • It incentivizes liquidity for NFTs through its bid pools, making it easier/quicker to buy and sell NFTs

  • It has a great product that traders enjoy using

OpenSea is feeling the heat, for sure. So it decided to respond by entering into a war of attrition with Blur. By setting its fees to 0%, it's turning off its cash cow — it generated $500M in fees in 2022 (see chart above for OS's monthly fees). Clearly, this is not sustainable.

But OpenSea is doing this because it believes it can win. And perhaps with good reason: it still has the best brand awareness today, a huge war chest, and years of runaway ahead.

🤑 Why it matters: When competition happens between businesses, usually the end consumer wins. Think Uber vs Lyft in the US, or Uber vs Didi in China. That's not a bad thing. We expect to see more competitive fees in the long-term, aggressive strategies to acquire new users, and a strong focus on improving the product experience for users.

At the same time, it signals how creator royalties (also a type of fee) are likely trending towards 0. This would mark the end of a golden era of NFTs, and a shift into a new paradigm where creators — artists, musicians, and builders — would need to rely on new business models to survive.

Today's Coolest Tweets

🐥 Get paid to take out a loan on your NFT

🐥 DAOs are bidding on the Key, for $1.1M

🐥 A thread on creator royalties

🐥 We're all cool people.

🐥 Is this the end of NFT art's golden age?

New Projects Corner

🍿 (Collectible) Utopia Avatars minting on 21 Feb. FaZe Banks is an advisor 

🍿 (Collectible) Free mint from Japan

🍿 (Collectible) SuperPUMA launching on 22 Feb 

🍿 (Art) Crypto Coaster by Cool Cat's co-founder

🍿 New Polygon-backed membership ecosystem.

That's it for today folks, see you tomorrow. If you want more, follow us on Twitter (@the_metadata).  And if you aren't already a subscriber, join us now to get all the daily alpha you need.

We're looking to improve the newsletter and make it as relevant as possible for you. If you have any feedback to share — please just reply to this email and let us know. Or even to just say 'Hi'. 

Disclaimer: This newsletter is for educational purposes only. None of this is financial or investment advice. It is not a solicitation to buy or sell any assets. Minting and buying NFTs is risky. Please do your own research.