OpenSea chief seeks to steer NFTs away from crypto crisis

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The chief executive of OpenSea, the world’s largest market for non-fungible tokens, has sought to steer NFTs away from cryptocurrencies as the sector reels from the impact of a series of scandals.

Devin Finzer, 32, told the Financial Times that the crypto industry had recently experienced setbacks, referring to the fall of FTX, the cryptocurrency exchange which collapsed in November, helping to trigger a decline in the value of digital assets.

OpenSea has risen in value as NFTs, which can be online collectibles and digital art built on the same blockchain technology as cryptocurrencies, have become a market fueled by hype over of the past two years.

But the head of the New York-based company insisted NFTs still have a bright future, saying consumers will continue to spend real money to acquire digital images and display them in their homes and virtual spaces. online.

It is not necessarily true that NFTs will always be bought and sold denominated in cryptocurrency as they are today, he said. There are various reasons why this makes sense in today’s ecosystem, but as we become broader and more accessible, there’s no reason why NFTs can’t at least be denominated in US dollars.

OpenSea saw monthly trading volumes in the cryptocurrency ether plummet 95%, from a peak of $4.9 billion in January last year to $253 million in November, according to the data from a user named rchen on Dune Analytics, information that OpenSea directed the FT to as a private company does not disclose its own financial numbers. The daily number of NFTs sold in ether on the platform fell 68%, from a peak of 2.3 million in January to 740,000 last month.

NFTs don’t exist in a vacuum, there’s the global macro climate that has changed dramatically, and that’s affecting consumer spending and the broader crypto climate, which is currently experiencing a winter, Finzer said.

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The company cut 20% of its workforce in July, with Finzer anticipating a prolonged downturn and leaving OpenSea with around 300 employees.

Finzer argues the company has a healthy track, having raised $423 million across multiple funding rounds since 2021, which have seen investments from venture capitalists Coatue and Andreessen Horowitz. Angels, including Reddit founder Alex Ohanian, actor Ashton Kutcher and singer Shawn Mendes, have also participated in previous rounds.

OpenSea raised the majority of its capital, $300 million, in its last funding round announced in January this year, valuing the company at $13.3 billion. A commission of 2.5% of the sale price is required on each transaction.

NFTs use blockchain technology to certify ownership of a digital asset, which is recorded on an immutable ledger of transactions. They use the same technology that underpins cryptocurrencies and are usually bought and sold in cryptocurrencies such as ether.

This year, the crypto market has suffered a series of scandals, including the collapse of stablecoin terraUSD and a market-wide crash that saw the price of popular tokens such as bitcoin plummet. A series of laws are being introduced to regulate the volatile industry, including the UK Financial Services and Markets Bill and EU regulations on crypto-asset markets.

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Governments and law enforcement agencies around the world also decide whether NFTs should be registered and disclosed as financial securities.

It’s really important for regulators and government officials to understand that this is not the same as the broader crypto industry, where the focus is on financial use cases, Finzer said.

He said the value of NFTs should be determined by how people engage with them, whether by using tokens to attend exclusive events, play games or display digital artwork in their homes. .

It’s already the case that people use Instagram [to share NFTs] with their friends, Finzer said. [In future] more and more of your property may be digital as opposed to physical art…right now they may be early adopters displaying NFTs inside their homes, but that could be something which keeps happening more and more.

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