The OpenSea business model has scalable capabilities centered around allowing users to purchase, sell, and trade non-fungible tokens via its website. They make money through service fees generated whenever a digital asset is sold on their website. Since its launch, OpenSea has raised more than $421 million through NFT sales.
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OpenSea was founded in 2017 by Devin Finzer and Alex Atallah. The platform created a revenue source for game developers like CryptoKitties looking for ways to generate profit from their game characters.
Devin together with Alex drafted some rough business drafts and applied for a grant from YCombinator, from which they got their initial funding of $120,000. At its launch, their project focused on the concept of using blockchain technology to share Wi-Fi bandwidth.
In early 2018, they released OpenSea, and, by March of the same year, they had already sold digital collectibles worth more than $500,000.
By the end of 2019, OpenSea became the undisputed leader among NFT marketplaces, and this was achieved thanks to their acquisition of business competitor Atomic Bazaar and the introduction of more features, like the sale of digital assets in bundles, which also helped to offset Ethereum gas fees. The investments by high crypto investors, such as 1confirmation, Founders Fund, and Blockchain Capital, who injected more than $2 million into the business, also helped to boost the business.
As a very recently founded company, OpenSea is, as presumable, owned by its founders: While Alex Atallah remains a Co-Founder, Devin Finzer holds the position as the CEO. Furthermore, Nadav Hollander is the CTO, and Brian Roberts is in charge of the CFO position.
“To build an open digital economy”
OpenSea offers the infrastructure of its platform free of charge, however, the business model dictates that they take a percentage of the transaction fee as a service fee. Their fee structure matches the likes of other NFT marketplaces like Rarible.
To encourage NFT buyers and sellers to use the platform, OpenSea covers all Ethereum gas fees for all transactions on the platform.
For every transaction on the platform, OpenSea takes a 2.5% service fee, meaning that a transaction of $1000 generates OpenSea a revenue of $25.
In its earlier days, OpenSea introduced the bundles feature to alleviate problems where Ethereum gas fees are more than the cost of an NFT, however, currently, OpenSea covers all Ethereum gas fees.
To initialize a user’s account, OpenSea charges a one-time fee between $70 and $300. OpenSea charges a fee of approximately $10 to $30 to gain access to a user’s NFTs.
Users that use OpenSea’s custom NFTs contract pay a one-time approval fee for authorizing transactions. The fee can also be paid whenever a new cryptocurrency is used for the first time.
Let’s take a look at the OpenSea Business Model Canvas below:
OpenSea’s customer segments consist of:
OpenSea’s value propositions consist of:
OpenSea’s channels consist of:
OpenSea’s customer relationships consist of:
OpenSea’s revenue streams consist of:
OpenSea’s key resources consist of:
OpenSea’s key activities consist of:
OpenSea’s key partners consist of:
OpenSea’s cost structure consists of:
Below, there is a detailed swot analysis of OpenSea:
OpenSea is a marketplace for trading digital assets, and the OpenSea business model is based on minimal transaction fees. As the platform gets more popular, more and more transactions are expected to happen on OpenSea, which will result in more revenue from transaction fees.
Their value proposition for users is really simple: They want to provide a safe and reliable way for users to buy and sell the digital assets they want, so they don’t have to face the risk of losing thousands of dollars on a scam. Business-wise, that means dedicating a lot of their resources to trust and transparency, and this has continued to increase users’ trust in the platform, resulting in revenue increase.
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