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What is OpenSea?
If you know your ERC721 from your ERC20 tokens, chances are you've frequented OpenSea in 2021, at least briefly to see what all the fuss is about. If not, here's what you're missing.
OpenSea is a decentralised marketplace that enables the buying, selling and trading of rare non-fungible tokens (NFTs). Once proclaimed as the "eBay for CryptoKitties", OpenSea has expanded beyond collectibles to become a marketplace for other types of non-fungible assets such as game items, music, domain names and many more.
The platform is the premier NFT exchange in the crypto industry and was founded in January 2018 by programmers Alex Atallah and Devin Finzer to facilitate the trading of the first generation of digital collectibles. Today, OpenSea is the largest NFT marketplace by volume, according to data from DappRadar. The platform allows you to explore and acquire millions of NFTs in hundreds of categories. You can also list NFTs that you've created or bought from somewhere else.
How does OpenSea work?
As a decentralised marketplace, OpenSea's smart contracts allow users to interact with the platform without surrendering custody of their NFTs. Your digital assets do not need to leave your wallet until you make a transaction. You don't even need to create an account as long as you have a supported web3 wallet such as MetaMask.
All assets within the marketplace are owned by OpenSea users, not the platform itself. You can buy these NFTs using Ether (ETH) and other supported cryptocurrencies. The marketplace has a Browser page that allows you to search for NFTs.
If you're after a specific NFT, you can go over to the search bar and look for it. You can also filter out your search by category, collection, blockchain network and status. Once you get the results of your search, you can sort them by listing date, price or viewers.
The OpenSea platform was initially powered solely by Ethereum smart contracts but has recently added support to the Klaytn chain in light of its goal to become a cross-chain marketplace that supports more than one blockchain. Furthermore, it has added Ethereum layer-2 protocol Polygon (MATIC) to enable low-cost and fast trading.
What currencies can you use on OpenSea?
OpenSea primarily accepts ETH or DAI for purchases. However, over 150 other tokens such as UNI, MANA, REVV and WHALE are also accepted.
Exchanges that offer Ethereum (ETH)
What types of NFTs can you buy on OpenSea?
OpenSea offers virtually all types of NFTs. It has around 200 categories, 8 of which stand out:
- Art. Digital artworks that come in the form of images, gifs or short video clips made to convey an artistic expression, such as The Hills.
- Music. Songs, beats, remixes and mixtapes made by music artists, some of which come in video format, for example, Ultraviolet Loyalty #226/340.
- Domain Names. Blockchain-based domain names are censorship-resistant websites that cannot be shut down by anyone, such as finder.eth or pets.crypto.
- Virtual Worlds. Also known as metaverses, these are essentially virtual-reality spaces and all the materials and users they contain including the environment, characters, game items, virtual lands, virtual objects and more. Examples include The Sandbox and Axie Infinity.
- Trading Cards. These are akin to physical trading cards but have added attributes besides being digitally native, for example, BCCG and Sorare.
- Collectibles. NFT collectibles are digital objects such as pets, avatars and characters that users collect and trade. Their scarcity gives them value as each of them is unique and has a limited number of variants available, for example, CryptoPunks and Nyan Cat.
- Sports. These are NFTs with sports elements such as Animated NBA logos.
- Utility. There are types of NFTs that have specific functions or purposes like Urbit ID and Emblem.Finance.
How do you buy an NFT on OpenSea?
Buying NFTs on OpenSea is fast and easy once you get the hang of it. But for beginners, there is a bit of a learning curve at first. Let's run through the process step-by-step.
Do you need to store your NFTs? How do you do so?
Yes, you need to store your NFTs in a wallet since OpenSea does not take custody of any assets. You can store your NFTs on MetaMask or other supported web3 wallets such as Bitski, Fortmatic, WalletConnect, Portio, Kaikas and the like.
How do you sell an NFT on OpenSea?
You can sell your NFTs on OpenSea by simply listing them in the Marketplace. Follow these steps to list your digital assets:
- Connect your web3 wallet.
- Navigate to your profile page.
- Click on the NFT you want to sell.
- Select "Sell".
- Now fill in your desired price, type of auction and other details. Once done, click on "Post Your Listing". Note that OpenSea charges a one-time gas fee for first-time sellers.
You can view all the assets you have listed for sale by clicking on your profile page and then clicking on the "Activity" tab.
Selling options on OpenSea
- English Auction. A seller puts up an NFT for sale, sets a minimum price and waits for buyers to bid. OpenSea will automatically accept the transaction if the auction finishes above 1 ETH. If the auction finishes below 1 ETH, it is the seller's choice if they want to accept the highest bid. The seller is under no obligation to complete the transaction.
- Dutch Auction. Similar to fixed-price listings but the price falls over time. A seller initially puts an asset up for sale at an extremely high price which progressively lowers over time. Once the price drops to a valuation equal to a buyer's bid, the buyer can receive the item right away. Buyers are also welcome to make an offer.
- Fixed Price. A seller lists an NFT and the price never changes.
- Bundles. The Bundle feature allows you to sell multiple NFTs under one transaction. You can list up to 30 items in a bundle.
- NFT Creation. You can mint your own NFTs in the platform and sell them on its marketplace.
Is OpenSea safe to use?
Yes, OpenSea is a relatively secure NFT marketplace since it's completely decentralised and simply connects different cryptocurrency wallets with each other without taking custody of the assets in question. Decentralised platforms are in theory more secure than centralized marketplaces since they don't act as custodians that hold user funds and also have no central point of failure such as a server that can be targeted with Distributed Denial of Service (DDOS) attacks.
For example, centralized NFT marketplace Nifty Gateway suffered a security breach in March 2021, when hackers managed to obtain the credentials of a few customers who didn't have the 2-factor authentication secure measure turned on, and absconded with some of their NFT assets.
Moreover, unlike more vulnerable DeFi protocols, OpenSea doesn't employ staking or any feature that requires depositing assets to smart contracts, which means there is no way hackers can steal user funds through bugs or other exploits. All NFT assets remain in user wallets unless they are bought.
However, it must be noted that hackers often come up with ingenious ways to trick victims, and that users should be especially vigilant against practices such as phishing sites. Always make sure that you're indeed connecting to the official OpenSea.io site, and not a counterfeit version.
Pros and cons of OpenSea
- Large quantity. OpenSea offers a vast array of various types of digital assets and is the largest NFT marketplace as of 2021.
- Low platform fees. The platform boasts one of the lowest fees among all major NFT exchanges in the space.
- Secure. OpenSea is a decentralised protocol that has never been hacked.
- No fiat support. Decentralised systems like OpenSea do not support payments with conventional currencies like AUD or USD.