Low-threshold NFTs are on the rise, with individual values of these assets being relatively small, but they can attract a wider audience, thereby affecting the overall market indicators.
By Jessica, Odaily Star Daily
On August 19th, after weighing the pros and cons, OpenSea announced the cessation of support for BNB Chain, as the support costs have exceeded the returns.
This decision was made as OpenSea added support for L2 such as Base and Zora, and some people are saying that BNB Chain is going to cool down. But in fact, it's not BNB Chain that's cooling down, it's OpenSea, which relies on NFTs for a living.
From a data perspective, the cryptocurrency market is currently in a deep bear market, and NFTs are experiencing a more widespread decline.
According to DappRader data, in August, NFT trading volume decreased by 16% to $559 million, and the number of transactions decreased by 13% to 3.2 million.
Next, let's take a look at OpenSea's revenue, which mainly comes from a 2.5% transaction fee. In January 2022, it reached its peak, with a monthly transaction volume of $4.8 billion, bringing OpenSea a monthly gross profit of $120 million. In February 2023, the monthly transaction volume shrank to $657 million, and the gross profit also decreased to $16.43 million per month. However, in August 2023, the monthly transaction volume was only $105 million, and the gross profit also decreased to $2.63 million per month.
With the significant decrease in NFT trading volume, OpenSea's market share is also decreasing.
With a substantial decrease in revenue and market share, it is indeed difficult to support more NFTs in the ecosystem. In addition, this is also related to the decrease in OpenSea's share of BNB Chain.
From the statistical data from 2022 to July 2023, Ethereum almost dominated most of the trading volume on OpenSea, with BNB Chain peaking at only 0.8% (November 2022).
On August 18th, OpenSea announced a change in creator royalties, canceling permanent royalties and adding optional royalties of 2.5% to 10% in secondary sales. Some community users believe that this damages the artists' ongoing income. Yuga Labs announced that, in view of OpenSea's announcement of the discontinuation of mandatory royalties, it will implement an optional creator royalty plan for all NFT secondary sales after February 2024. Yuga Labs will gradually stop supporting all upgradable contracts and new series on OpenSea SeaPort, planning to complete this process simultaneously with OpenSea in February 2024.
The cancellation of royalties also reflects OpenSea's predicament, as Blur is replacing it as the leader, leading OpenSea to make efforts to reduce licensing fees to maintain competitiveness.
On the other hand, OpenSea CEO Devin Finzer stated that this change is a step towards enhancing innovation and adaptability. In addition, he acknowledged the limitations of the previous model and encouraged creators to try alternative strategies. This view is committed to nurturing diverse sources of income and creative possibilities.
Furthermore, this move has stimulated the emergence of creator-centric platforms and ecosystems, which have established their own markets to protect the rights of creators.
A typical example is Art Blocks, which is the cornerstone of NFT-generated art and launched its own secondary market as early as March this year. After OpenSea announced this news, Art Blocks reiterated its commitment to protecting the rights of creators through its own NFT market.
Unlike Yuga Labs' collections, which mainly trade on Blur, most of Art Blocks' collectors continue to trade on OpenSea. As of August 21st, Art Blocks' 30-day trading volume reached $5.32 million, with a significant portion occurring on OpenSea. Therefore, the possibility of Art Blocks leaving OpenSea could indeed affect the platform's revenue. Given the increasing popularity of NFT-generated art, this effect becomes particularly significant.
OpenSea's decision to cancel mandatory royalties means losing another major NFT market advocating for creators. This change may trigger a trend where more projects choose to create their own markets. After Yuga Labs announced its withdrawal, it is not difficult to imagine that they may soon start the process of launching their own market.
This also indicates some subtle changes in the NFT market. The rise of "low-threshold" NFTs, with relatively small individual values, can attract a wider audience, which may affect the overall market indicators.
OpenSea does not support BNB Chain, but the activity of BNB Chain still occupies a leading position. In the past month, it had 500,456 daily unique active addresses, accounting for 24% of the market share.
Among the active DApps on BNB Chain in the past month, the top three are TinyTap, LifeForm, and PancakeSwap, with the first two being social-related. This also indicates that social and game-related assets are growing in the NFT market.
In addition, BNB Chain itself has a native NFT exchange, such as Binance NFT Marketplace. Binance Labs has also strategically invested in NFTrade, Tabi (formerly TreasurLand), and Tofu once dominated the NFT exchange rankings on BNB Chain. OpenSea is not doing well.
There is also a small detail that Binance NFT will no longer support the Polygon network after September 26, and will focus on supporting BNB Chain, Ethereum, and Bitcoin after streamlining.
This move will provide an opportunity for native NFT exchanges in the Polygon ecosystem.
Some people believe that the current situation of NFTs "stopping support" indicates that the NFT market is "dying," after all, the cryptocurrency market itself is very small. While the underlying layers are striving for interoperability and compatibility, NFTs are creating barriers and causing difficulties for traders. However, others have different views, indicating that the NFT market is gradually becoming more specialized, after all, NFTs on different chains do not have the need or significance for "cross-chain" transactions.
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