OpenSea, the world’s largest NFT marketplace, announced that it will lay off 20% of its staff. This is not a surprise. Cryptocurrencies, the main driver of value for NFT speculators, are trading 50%-70% below their all-time highs, and NFT trading volume on OpenSea has tumbled as well. Then, there’s the overarching problem: while OpenSea continually evolves, NFTs continuously evolve.
When eBay started back in 1995, the only way to purchase an item was through a second-price (Vickrey) auction. eBay provided an exceptionally efficient online marketplace for ordinary people to sell things they created, collected, or simply accumulated. If you visit eBay today, you will be hard-pressed to find an ordinary person offering something they have collected or accumulated via an auction. For better or for worse, eBay has transformed from an auction site to an online marketplace. Remarkably, with all the protections eBay has tried to put in place, the admonition caveat emptor is as important as it has ever been.
OpenSea started in 2017 as an NFT auction site. OpenSea provided an exceptionally efficient online marketplace for ordinary people to sell NFTs they created, collected, or simply accumulated. Today, the sellers are a mixed bag of professionals, ordinary people, and bad actors. It’s exactly what history tells us to expect – and OpenSea needs to adapt.
What should OpenSea transform into? Should it be a marketplace of professional sellers? A pure auction site? Have some e-commerce functions? Should there be guarantees of quality or authenticity or other “central authority” kinds of protections for buyers? The decentralization mantra of the Web3 purists adds additional layers of complexity to these questions.
For now, the company will resize, rein in costs, and weather the crypto winter. Ultimately, however, OpenSea will have to match its service offerings to the continuously evolving behaviors of NFT buyers and sellers – and that’s way easier to say than to do.
Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it.