Is OpenSea Really Worth $13 Billion

If Bitcoin crashes, will NFTs as well?

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I’m supposed to be covering Crypto news in this Newsletter to be positive with the Web 3.0 advocates. But I’m sorry, I slip into Op-Eds that take a contrarian perspective. I’m going to have to work on this. Maybe I can just spot bad marketing and PR stunts when I see them. Maybe I like investments that have fundamental values.

The 2020s is the era of scams, I’ve seen the new IPOs, SPACs, meme-stocks. My question is whether NFT platforms are also such or will become such in the Metaverse as some false flag event of what the deepfake future might hold for us.

How in the world is OpenSea worth $13 Billion? Hey I appreciate crypto platforms as much as the next guy, but. But. yeah.

After raising at a $1.5 billion valuation just six months ago, this new $300 million Series C round values OpenSea at an astonishing $13.3 billion. And with an estimated 18.5% stake in the business, co-founders Devin Finzer & Alex Atallah are now worth around $2.2 billion each.

OpenSea is just one among many NFT platforms. For critics of the present-day cryptoeconomy and NFT market, the round was perhaps more evidence of how overheated things have become.

I’m not always clear how Pomp lives with himself (I had cruelly mistaken Joe for this brother, and I’ve made amends with it all in a quick turn-around). Here’s his take on OpenSea on substack. I can when you have 1.4 million followers on Twitter and Bitcoin is viewed as God, you can basically say what you like as one of the prophets.

OpenSea, the most popular marketplace for non-fungible tokens made it big in late 2021 and early 2022, but what happens if Bitcoin continues to tank? I’m not clear if NFTs that are all the rage are ready, because the intersection of Web 3.0 and the Metaverse isn’t even particularly real. It’s almost like a deepfake sent to you via the crypto army that’s really controlled by the financial elite.

I’m not saying NFTs aren’t real, just that it’s still pretty nascent.

After all, OpenSea last raised at a fraction of its new valuation under a year ago, adding $100 million to its accounts at a $1.5 billion valuation in July. So why would it be $13 billion today or last month suddenly?

Non-fungible tokens have exploded in popularity, as everyone from global consumer brands to artists have rushed to sell digital collectibles, which can reach hundreds of thousands of dollars worth of Ether, a well-known cryptocurrency.  This is all subject to massive change, since Bitcoin is volatile and cryptos are tethered to Bitcoin’s price like some clockwork algorithm scam straight out of Silicon Valley gamification product manuals.

OpenSea is a pretty straightforward business to understand. It takes a 2.5% cut of transactions on its service. When I get paid on Substack, it takes 10% and Stripe takes another 3%, but I digress. Patreon takes between 5 and 12% plus additional transaction fees.

I am not even sure how OpenSea valuation squares up with its revenues, I suspect that it simply does not. In late December, 2021 per crypto data source Dappradar, OpenSea saw $2.91 billion in trading volume in the last 30 days. That works out to an anticipated gross haul from OpenSea of $72.75 million.

Data from Dune Analytics collected by @rchen8 has more granular historical data to parse. Per Dune, OpenSea saw trading volume of $3.25 billion in December, $2.37 billion in November and $2.64 billion in October. Combined, those figures work out to $8.26 billion in volume, a 2.5% cut of which would be worth $206.5 million.

This of course covers the very peak of NFT transaction volume in Bitcoin’s Second major bull market. Impressive, but just like a Coinbase or a Robinhood, it’s what happens to them when a crypto winter comes that will be the fun part to watch. At the peak of the ICO movement back in the day, most of the blockchain startups I worked with went out of business during the winter period.

OpenSea is a NY based company that has had $427.2 million in funding according to Crunchbase. Ashton Kutcher and the founder of Shopify are among the investors. OpenSea is now supposed to be some iconic platform for NFTs, but it could in theory be disrupted and gone tomorrow. Nothing is a sure bet in a distributed future where the ultra elite are the owners of Bitcoin and its crypto children.

Nothing is immortal, not even the Blockchain. In fact, Bitcoin and Ethereum are likely to persist amid better distributed ledge technology approaches that do the same things better over time. Our tradition of praying at the altar of Bitcoin just might not be forever.