OpenSea Amid Insider Trading Controversy Deploys NFT App
A smartphone and screen show the OpenSea website, where digital artwork is sold through NFT. NFTs, non-fungible tokens, are unique cryptographic identifiers that are written into the blockchain attached to a file (image, music, video).
image alliance | image alliance | Getty Images
The largest NFT marketplace, OpenSea, is launching an app for users on Google Play and Apple App Store on Thursday.
Application rollout comes after a very busy month for the platform: In August, OpenSea’s website recorded two million transactions, totaling $ 3.4 billion in transaction volume and tripling activity compared to July. So far in September, daily trading volume has declined significantly from its high in late August, according to Dune analysis. Still, the app could build on the momentum of the business, providing users with a way to easily check non-fungible holdings, sales and trading histories on mobile.
The launch of the OpenSea app follows news that one of the company’s employees participated in an NFT insider trading program. The company, valued at $ 1.5 billion, admitted to the incident and co-founder and CEO Devin Finzer tweeted an apology to users on Wednesday:
“We are conducting a thorough review of yesterday’s incident and are committed to doing the right thing for OpenSea users.”
In a statement to CNBC via email, Finzer wrote: “I was incredibly disappointed with the news and this behavior does not represent our values ââat OpenSea. We are working with an outside law firm to conduct an internal review. “
So far, the company has secured financial backing from big names in the crypto community, including Coinbase Ventures, Blockchain Capital, and Mark Cuban. At just four years old, OpenSea achieved unicorn status with its latest round of funding led by Andreessen Horowitz’s a16z, with participation from Coatue, Ashton Kutcher and Shopify CEO Tobi Lutke.
OpenSea is riding the current wave of interest in non-fungible tokens – unique and collectible digital assets built on the blockchain. Flashy deals like the $ 69 million Beeple sale at Christie’s have caught the attention of the general public, but for co-founders Finzer and Alex Atallah, as well as others in the space, the excitement lies in this. which is still possible. âWe’re bringing new technology to a mainstream audience,â Finzer told CNBC. The company strives to provide consumers with a “fast, easy and really fun end of the day” experience.
Seems familiar? The Robinhood brokerage app started out with similar hopes of bringing a seemingly insular and highly guarded world to the masses, and in part Finzer is comfortable with that comparison. OpenSea and Robinhood both recognize that a smooth customer experience is key to platforms operating in worlds that seem complicated to outsiders. The products are different, however: OpenSea, Finzer pointed out, is a marketplace. OpenSea’s website currently offers a place to buy, sell, explore and show NFT collections, and the app will feature integrations with social media and functionality to “follow” other users.
Harvard Business School Associate Professor Scott Duke Kominers has pointed out that consumer ease is a principle of success for platforms in the NFT space. âA lot of the top performing players are those who have submerged part of the crypto-ness of the system in such a way that the consumer experience is more like a normal online shopping experience,â Kominers told CNBC.
OpenSea’s competitors include Nifty Gateway, FTX, and Mintable.
NFTs were originally touted as a way to support artists, and entrepreneurs like Gary Vaynerchuk have since seized on digital collectibles as opportunities for branding, marketing, and advertising.
âIt’s all of the above,â Finzer said. “It’s a whole new paradigm shift for the Internet.”
Ticket sales and games, as well as the art industry, could each find their place in the metaverse.
Barriers to entry into the NFT space remain high, according to Kominers. High costs and a long chain of mechanics are just two challenges for industry players. At present, aspiring NFT collectors must first open an account on a cryptocurrency exchange, open at least one crypto wallet, send money to a crypto exchange account, send it to the wallet, connect the wallet to the appropriate platform, pay a “gasoline fee” for the computational power the transaction takes on the blockchain, and finally, purchase the NFT in question, again incurring additional fees and risking the ‘failed transaction. The length of the logistics process is enough to discourage hesitant consumers.
The environmental impact is another sticking point for critics, who point to bitcoin’s carbon footprint. According to Digiconomist, the carbon footprint of ethereum, the blockchain favored by the NFT space, is comparable to that of Denmark. Ethereum relies on a ‘proof of work’ system that requires a large amount of processing power, but OpenSea and CTO co-founder Atallah highlights the company’s recent transition to the ‘proof of stake’ polygon blockchain as a way to fight against the leak of the metaverse. on energy resources.
Kominers says there are a lot of risks for the early rulers of space. The top players in an industry aren’t necessarily the top performers – take Vine and Tiktok, for example. âYour network needs to be powerful enough to defeat competitors who later borrow the successful elements of your business model and target a slightly different audience. ”
Still, he says total engagement is underestimated, which means NFT, OpenSea, and its competitors may still have room to function.