OpenSea, the world’s most popular NFT marketplace, faces another blowback amidst a year of financial success tempered by intense criticism from artists and collectors. Several crypto-data analysis services, including DappRadar and Dune Analytics, have reported a steady decline punctuated by an enormous drop in Ethereum (ETH) trading volume on OpenSea since May of this year. For context, Dune Analytics illustrates that OpenSea peaked with a recorded monthly trading volume of 1.6 million ETH in January, whereas the month of August yielded only 292,000 ETH in comparison.
Earlier this year, OpenSea came under fire over its alleged mismanagement of scam operations, security flaws, and plagiarism on the platform. Many users also complained that OpenSea’s response time for tickets was abysmal, taking to social media to collectively air their grievances. (OpenSea later shared via a blog post that the company was making substantial investments to improve customer support, trust, and safety across the board.) And in July, Devin Finzer, Opensea’s co-founder, tweeted that the company was downsizing. Finzer shared a screenshot of a message to OpenSea’s employees stating that 20% of staff members were let go, referencing the need to enhance the company’s longevity so that it can survive what Finzer predicts is a five-year “crypto winter.”
And winter is here, according to several reports. In response to an article in Fortune claiming that OpenSea’s trading volume was down by 99%, CFO Brian Roberts pointed out that the data referenced, compiled by DappRadar, compared OpenSea’s highest-volume day to one of its lowest — a methodology he described as “reckless.” But activity is by any measure down on the platform: Fortune clarified that according to Dune Analytics, ETH volume decreased by 62% from May to July and is slated to decline further.
OpenSea did not provide additional comment for this article.
Some NFT enthusiasts have found hope in the pivot toward so-called “utility NFTs” — which offer exclusive perks, such as holders-only events and access to new collection drops — to survive the bear market. According to Shaun Abdi, the founder of the Legendary Racers NFT collection, the key is community building. “A tight-knit community continues to support an NFT project even if the market conditions are volatile,” Abdi wrote for NASDAQ. But some utility NFTs such as those from the popular Bored Ape Yacht Club collection have also seen significant price drops in recent months.
Dan Chen, co-founder of ONBD, a Web3 curatorial space that educates and connects artists to the NFT market, maintains that regardless of the market trends, art-oriented NFTs still hold relevance. “The Blockchain technology has created a secure, traceable means of distribution of digital art in the form of NFTs, and I believe this medium will continue to thrive,” he states. “Fine Art NFTs and Utility NFTs can exist side by side, each playing their own role in a growing ecosystem.”
Editor’s note 9/9/22 3:15pm EDT: A previous version of this article attributed a tweet to OpenSea CEO David Finzer; the tweet was by CFO Brian Roberts. The article has been corrected.