OpenSea, the world’s largest NFT marketplace, is keeping pace with January’s total volume of $5 billion by generating over $1.3 billion in total volume in the last 7 days. However, the number of active users has decreased by more than 30%, according to data from Dune Analytics.
This data becomes worrisome because it suggests that there may be a market correction in the NFT space in the near term or there is a shift in investors and collectors trading activity to another marketplace they are participating in.
The closest rival to the marketplace is LooksRare, a new NFT marketplace that began operations in January 2022. The platform has generated approximately $3.49 billion in the last 7 days, but persistent issues of wash-trading have also decreased its active trader count by 3%.
What you should know
Last month, OpenSea was hacked for 332 ETH which at the time was valued at $780,200. The hack was detected by Peck Shield, a blockchain security company that aims to elevate the security, privacy, and usability of the entire blockchain ecosystem.
The hack was due to a bug in the front end of the marketplace and it is prevalent with Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) NFT collectibles, where the exploiter managed to buy them at their old listing price and then sold them for the current market price.
Users have complained repeatedly, with its latest report to have been done in December 2021 but the platform did nothing about it. This may be a factor causing the drop in OpenSea users.
As previously mentioned, OpenSea has a fierce and new competitor, LooksRare, who may be taking away its user base. For example, an Anime inspired collection, Azuki, has closed out over $313 million in total volume according to OpenSea, since the launch in January 2022. In the last 7 days alone, it generated over $33 million, but the average number of sales per day has declined by nearly 66%.
Despite the decreasing number of average sales and volume, Azuki has increased its average sales price significantly, rising approximately 40% in nearly one month. This suggests many collectors are willing to pay handsomely to hold these NFTs. The floor price chart from OpenSea shows that Azuki’s floor price has dipped slightly below 10 Ether mark, but on LooksRare, buyers are happily forking out at least 11 Ether per NFT. However due to LooksRare trading rewards, it has seen the collection to trade at a $3,000 discount on LooksRare and because of this, users are opting to purchase pieces on LooksRare rather than OpenSea.
Conclusion
As previously reported, OpenSea announced a $300 million Series C financing round in January, led by venture capital firms Paradigm and Coatue. The fresh cash brought the firm’s valuation to $13.3 billion, with the intention of using it for product improvement and boosting employee numbers. This is a 786% increase to $13.3 billion from a valuation of 1.5 billion in July 2021.
OpenSea has clearly started the year with a record-breaking performance however, there is concern that the gains seen in the market become unsustainable due to the drastic cut in active traders and daily volume.