Competition is Increasing for OpenSea, With FTX US, Zora, and Coinbase in the Ring
It seems that major non-fungible token (NFT) marketplace OpenSea will have tougher battles to fight in the future to stay on the top, with FTX US coming in hot with options such as USD payments and lower fees.
The US arm of major crypto exchange FTX has launched its new NFT marketplace, as its President Brett Harrison announced. The exchange will allow users to trade, mint, auction, and authenticate Solana (SOL)-based NFTs.
And while only the Solana-based ones are available for now, a number of news outlets reported that the exchange’s plan is to expand the support to NFTs on the Ethereum (ETH) blockchain as well.
Additionally, to deposit, buy or sell NFTs, users need to pass know-your-customer (KYC) procedure level 1, while to withdraw NFTs above a certain USD value, same as withdrawing crypto, the user must complete KYC level 2, said the president.
NFTs deposited on the platform are listed in SOL, but NFTs minted on FTX US can be listed in either SOL, ETH, or USD, according to their FAQ. Crypto and USD from credit cards and bank accounts are supported to buy SOL on the exchange. This ability to buy NFTs with credit cards, bank transfers, and USD differentiates this from other platforms.
In comparison, OpenSea lists its “core currencies” to be ETH, WETH, DAI, and USD coin (USDC), with over 150 other coins available. However, “it's not currently possible to use non-crypto currencies like USD and the Euro,” they said.
There is no listing fee on FTX US, and there is a 2% exchange fee on all NFT sales, deducted from the seller's proceeds. Additionally, the exchange will deduct a percentage from the seller's proceeds for royalties, “to be paid to the creators according to the specification on the NFT metadata (capped at 40%).” In comparison, OpenSea charges 2.5% fixed fee on sales.
The exchange also said that they will “try to support as many Solana NFT collections as we can [but] will reject any NFT from a collection/project that distributes or advertises the distribution of royalties to NFT holders.” According to Harrison, this is due to regulations in the country.
That said, there's still a long way to go to catch up to OpenSea. According to Solanalysis, Solana NFT collections have generated USD 62.5m in trading volume over the past week, down 24%. Per DappRadar, OpenSea has seen USD 692.84m in the same period, down 53%.
But FTX is far from the only competitor OpenSea is facing, and another one has recently become stronger. Protocol and NFT marketplace Zora raised just below USD 8m in equity sales, per a filing to US Securities and Exchange Commission (SEC) dated March 31 this year. The document also shows that five investors participated.
Also, today, Coinbase announced Coinbase NFT, an NFT marketplace. The initial launch will support Ethereum based ERC-721 and ERC-1155 standards with multi-chain support planned soon after, the company said, adding that the waiting list is now open for potential users. "We’re making NFTs more accessible by building user-friendly interfaces that put the complexity behind the scenes. We’re adding social features that open new avenues for conversation and discovery. And we’re going to grow the creator community exponentially, a win for artists and for fans," Coinbase said.
Meanwhile, OpenSea has recently suspended trading in a pixelated turtle project DAO Turtles. Per the company’s reply to the project, this was done “due to violations of our terms of service.” The team has denied any violations.
The commenters have said that there is a lesson to be learned from this suspension, but also that there is a long road ahead of developers and regulators alike when it comes to the NFT space.
As reported, in mid-September, OpenSea CEO and co-founder Devin Finzer said that the platform will continue its work to expand onto other blockchains beyond Ethereum, while also broadening its offering when it comes to NFT categories that can be traded.
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(Updated at 17:29 UTC with an announcement about Coinbase NFT.)