🎙 "We're Not Really at an Inflection Point Yet:" OpenSea's Nate Chastain
In this week’s episode we interview Nate Chastain, head of product at OpenSea. Opensea got its start back in 2017 when CryptoKitties launched on Ethereum. After those digital cats, the NFT space was pretty dead for the next couple of years. Now OpenSea is ...
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In this week’s episode we interview Nate Chastain, head of product at OpenSea. Opensea got its start back in 2017 when CryptoKitties launched on Ethereum. After those digital cats, the NFT space was pretty dead for the next couple of years. Now OpenSea is reaping the rewards of hanging through that NFT winter, as NFT summer explodes with punks, apes, penguins and more cats.
Nate was openSea’s first product hire and now he’s making sure that what started out as a platform for essentially CryptoKitties and a couple of other projects, can deal with millions of digital assets. He talks about the scaling challenges OpenSea is facing and what’s next on the roadmap after raising $100M dollars in a round led by a16z. The daily records in volume and users, are proving the founders right in thinking maybe it’s not finance that will take crypto to mainstream, but something that looks like a cute game.
The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Camila.
🎙Listen to the interview in this week’s podcast episode here:
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Camila Russo: I have been wanting to do an interview with someone from OpenSea for a while. I mean, as you all know, listening to this podcast, NFTs are exploding right now and a large part of that activity is happening on OpenSea. It's the largest NFT marketplace at the moment. And Nate is one of the few people kind of leading the operation of making sure that everything runs smoothly as the market goes absolutely crazy. And things have it heated up even more than they already were just in the past few days. August has been insane so far. So definitely want to get into that but first curious about your background, like what led you to crypto what were you doing before joining OpenSea?
Nate Chastain: Sure. So I'll start all the way at the beginning. Coming out of college, I was moving into a career as a comedy writer, so I was working at Mad magazine and then The Onion as a staff writer there. And I was enjoying doing that work, but one of my reservations after, after eight or nine months working at The Onion was that it put you in this, in this head space, that was a little bit problem-oriented without being solution-oriented. You were constantly thinking about what was frustrating people or what was, what was painful about someone's daily life and then mapping that to jokes and headlines for the paper.
So ultimately, it just felt like a healthier headspace to, to be in, to pivot into thinking through ways to translate those insights into solutions through software or other tools. So I had this lingering interest in product in fact for a long time. And ultimately just taught myself how to code. So I've been in the blockchain space for the past four and a half years. I was working on a product initiative at MetaMask before joining OpenSea, led a couple of initiatives that ConsenSys and was a front end developer for a few years before that.
CR: Well, so interesting. I think that's a transition, not a lot of comedy writers do, to blockchain.
NC: Certainly that is unorthodox yet. I think it was helpful to get started on that wavelength of frustration because I think a great strength for a product manager is being able to empathize with the user sort of making use of your product and understanding what's causing them pain. So I had already strengthened that muscle early on and, and felt comfortable making that assessment. Users also are quite vocal about what they are frustrated by with open speed, but that there are many who are power users for our app who are spending several hours a day on OpenSea and some minor frustration encountered several times a day can ultimately boil over into a tweet or a support ticket or something else. So we benefit from the passion, I would say that users have for using OpenSea.
Leap of Faith
CR: When did you join OpenSea and what was it about it that you found interesting?
NC: Sure. So I started speaking with Devin and Alex in December of last year, about a potential role. I had spoken with a friend of mine who was an early investor and he was encouraging me to spend some time speaking with their team at that point. So they been around for a couple of years, and I was aware of them, at least in my peripheral vision at ConsenSys. But certainly the NFT space had not matured to where it is today. It was still honestly the competitive landscape was still pinning Rarible against OpenSea in terms of the market share that each product was commanding. And it was unclear at that time, how that would play out. So part of the attraction that I had to working with the team was I thought that Devin and Alex were very strong founders who had the DNA to move up and see to the next inflection point as a company.
And I also felt like given that there hadn't previously been someone installed in a full-time product role, there was a lot of alpha that I could add to the organization by coming in. So there was one person on the team who was working as a part-time designer, but most of the UX and product work was being done by committee, by a number of people on the team who had strong product sense for really making those determinations on a daily basis. So I felt that joining OpenSeawould just allow me to solve some problems that had been lingering there and tune up some of the user flows that were causing problems.
CR: It seems so you were the first full-time hire dedicated to product.
NC: Yes, I, I started as the head of product, we were just starting to search now for our first product managers, but at the time the product org was comprised of one person.
CR: Well and, and yeah, as you mentioned, I mean the NFT space, was nowhere where it was last year. So it was still kind of a, I guess, like a leap of faith, believing this would take off on that Open Sea would be the winner or, I mean, so far the leader.
NC: So what's happening here to some of my friends and family outside of the space and notably a few weeks before accepting my offer at OpenSea. I had been in a conversation with my girlfriend about CryptoPunks. And when I moved into an explanation of the market that this company I would be joining was in she was already sort of had reservations about the idea of a marketplace that's specialized in assets like CryptoPunks. The asset is not something that's immediately accessible to someone outside of the space, the value behind an asset, like a CryptoPunk is not immediately apparent to someone who isn't deeply aware of how someone would be treating that token.
Appealing to Mainstream
CR: No, totally. I think it's becoming this year, it's becoming more clear to, I guess like a mainstream audience. Do you know more of the founding story of OpenSea, just to get that context? Like how many years ago was it founded? What was being traded, I don't know, years ago when all of these animal drops weren't available.
NC: Sure. Well if you go back in time to one of the first animal-related NFT releases would being a CryptoKitties, that was really the marker for when OpenSea started to take form as a product. It emerged as a marketplace for trading CryptoKitties and only another couple of projects. There were, there was such a short list of NFT projects at that time that they were all represented in a single sidebar. So really a very small scope problem, but I think coming out of YC, Devin and Alex were interested in finding and identifying a use case for crypto would really take hold amongst a mainstream audience. And some of them were financial applications of crypto. Some of the financial products that were being conceived of at that time, the hypothesis was that those would not ultimately be that use case and that there was still one remaining to be found.
“Coming out of YC, Devin and Alex were interested in finding and identifying a use case for crypto would really take hold amongst a mainstream audience”
I think it's so obvious in retrospect, but like moving crypto from being an entirely financial product to something that embeds art and culture directly into the experiences is something that I think powered this movement and made it something that a more mainstream audience could find accessible and find value in. So getting back to your original question I don't know that I, I'm not certain that Alex and Devin had a sense that things would escalate this quickly, but I think they had high conviction that there was something here and that the early indications that they were receiving that users were finding this experience compelling of trading NFTs powered a few years that were a little bit where things were a little bit more uncertain.
I think that it's important to remember that OpenSea has existed for several years, right. It hasn't, it's not something that emerged only in this last wave. So part of the reason that I think OpenSea has been successful this year is that there's a lot of shared understanding and the collective consciousness of the organization about previous experiences that we've seen, or like some insight into how, how users previously made use of this product before there was a more fragmented market for NFT marketplaces.
CR: Ah, that's so interesting. I mean, yeah, the fact that OpenSea was founded around 2017 when CryptoKitties started, just as this smaller marketplace for a few NFT projects, but with this big vision and huge, like incredible foresight of saying maybe finance isn't going to be the use case that brings crypto to the mainstream and maybe there's something else. It looks like a lot of just normal people enjoy trading these you know, digital objects.
I think it's really interesting for founders listening too, to realize that you know, I think iit's worth sticking to that vision because yeah, there was some initial success in 2017, but between 2017 and now, or maybe late last year, not much happened really in the NFT space. So you joined you said sorry, last year?
Catalyst for NFT Boom
NC: My, my start date was February of this year, but I had been, in conversations from December onwards. So I had sort of been in the process of joining OpenSea for a couple of months ahead of that start date. And I would say just flagging, one item that you brought up there. I think the true catalyst of this it's a combination of factors that I think produced this interest in NFTs, but the backdrop of COVID one of the most isolating experiences in modern history that, I think served as a pretty important backdrop for individuals exploring other ways to create shared experiences or communal experiences.
“The backdrop of COVID one of the most isolating experiences in modern history that, I think served as a pretty important backdrop for individuals exploring other ways to create shared experiences or communal experiences.”
So looking to Bored Apes Yacht Club, as an example of a successful NFT project, I think what they nailed was putting the membership access front and center in their products, their project's value proposition and in all of their branding around that release like above the fold on the Bored Apes Yacht Club site, they were showcasing the art around the club itself, right? Not the actual tokens. Only when you scroll down the page, did you become aware that these individual apes were what conferred access or membership to this group?
So I think that that alone is an interesting case study in the world and NFTs why BAYC was able to so quickly capture the imagination of so many people in the space. But I think the notion of NFTs as membership access tokens is something that really resonated with people at a time when some of our traditional ways of having shared experiences had sort of been removed.
CR: I think you're totally right. People were looking for community and a way to connect and, and be with kind of like-minded people and not feel so alone as you're kind of quarantining and spending all your time in your apartment. You want to feel kind of a sense of, okay, I'm a part of something fun. Just like, you know, a lighthearted joke or what's something that seems like an inside joke, like all these NFT communities kind of do.
So now about just like the recent weeks because I agree for NFT picking up this year maybe some of it last year, too, a lot of it was driven by COVID and also just there's like, there was like this perfect storm of being confined and also all this stimulus and people just spending money on different kinds of assets online. And I think all of that kind of drove NFTs.
But if, I don't know, looking at just like the numbers for August, there was like a shift. It just like completely exploded. Like daily volume went to like over $60 million for the first time. A couple of days ago, like maybe two days ago, and that compares to like lower than $20 million for most of the time before that. So I mean, you see volume tripling over just like a couple of days. So what do you think happened?
New Vs. Repeat Users
NC: Well, I definitely don't want to ascribe it to any radical change that we made to our product. So I think we deserve a very small amount of the credit for building the product that powers this. I would say I have been somewhat attentive to the market, but I think it's hard sometimes to diagnose or to pinpoint the reason why there's this like an explosive uptick in interest around the particular space. There could be just pockets of different subcultures that gravitate to NFTs. And then once a tastemaker from that space changes their avatar to a BAYC or CryptoPunk or something else that entire subculture becomes more interested in exploring what NFTs represent.
I think as users have participated in, in a few drops, the cognitive load of participating in subsequent drops decreases. So most of that volume is coming from repeat the number. The total number of wallets is actually something that we're working to increase, but the total number of active wallets is not necessarily moving in lockstep with the uptick in volume.
So we do think that there is a lot of there, there is a lot of value remaining to be unlocked in bringing new users into the platform. And that's something that we're trying to be mindful of in the next few months is working through some of those important onboarding challenges around getting someone set up with a wallet for the first time and coaching them through in the app. The first deposit, there's a lot of work that remains to be done in that area. And I think if we are finding product-market fit with repeat buyers, that's great, but, I do think that it's a small sliver of what could ultimately be the size of this market.
“If we are finding product-market fit with repeat buyers, that's great, but, I do think that it's a small sliver of what could ultimately be the size of this market.”
CR: That's so interesting. So what, what percentage of volume would you say is from repeat buyers?
NC: I would have to look into the analytics here, but I know that like many of the new releases we have been tracking, which wallets are participating in them. And, and most of the drops that do well on OpenSea, attract repeat buyers who have been on OpenSea for a longer duration. So there are a handful of projects that bring in entirely new users when we had a release earlier in the year of Kings of Leon and one with Rob Gronkowski, both of those brought on many new users who were sort of getting set up for the first time with MetaMask and had questions about that process.
So we are searching for some of those breakthrough projects that can sort of overcome the activation costs here, but it's a pretty substantial ask of a new user to have them not only feel comfortable exploring this new product in OpenSea, but also in song a browser extension, like MetaMask that they may not have exposure to. So I think handling that dual onboarding process, or, or that sort of like paired onboarding has been something that has slowed our user activation certainly.
CR: Oh, okay. Do you have data to know whether most of OpenSea users are crypto native or are you seeing a bigger volume of first-time crypto users?
NC: Well, it's tough because the support tickets that we get definitely are weighted in, in the direction of being less crypto native or crypto literate users. So many of the support tickets that we're answering and ways that we're helping users through the app are coming from that category of users. Once you have moved in the direction of making your first deposit to MetaMask, or you're making your first NFT purchase on OpenSea, I think we were delivering an average to above-average user experience, but then, the process of getting there is just a little bit cumbersome.
So I, I don't have a clear sense of prior to joining OpenSea or prior to connecting a wallet for the first time on OpenSea, what that user's like crypto exposure was. My intuition is that we are still attracting a more crypto-native audience. We're not really at an inflection point yet. I would say like the narrative of this past year has been, we functioned exclusively as a crypto native solution to an NFT marketplace for so long. And now that we're bringing in a much larger audience, we have to start thinking about creative ways to abstract away some of those complicated UX patterns, or even, even the language that we're using. Getting away from using the word transaction in places where we can just say purchase.
CR: What other ways are you thinking of onboarding non-crypto native users? Any kind of creative solutions that you're resting?
Polygon Tokens
NC: Sure. Well, we launched support for Polygon minting and trading earlier this year in July. And that has enabled us to strip out some of the base fee structure that was presenting problems for new users, where a user who wants to get started selling items on OpenSea previously had to pay an initialization fee that could represent a few hundred dollars. So stripping that out of the user experience certainly has allowed us to create a lighter-weight introduction to the space.
I think also that's allowed us to start experimenting with ways that we might make use of I think Polygon tokens as a tool could, could be used by teams that are trying to generate interest in their product through like selective airdrops, or some other growth factor making use of this token.
So, whereas projects typically have to rely on users to pay the gas costs to mint an item on Polygon, it's much easier to just represent something of value in the form of a Polygon token and distribute that to your community. That's not something that we're necessarily looking at, but something that I have had conversations with the team about this is like setting up some form of a batch system that's represented by Polygon tokens. So in the same way that Foursquare might use badges to incentivize certain favorable behaviors in the app, we might start rewarding certain behavior in the app with you know, a token that does not have monetary value, but might have reputational value.
“So, whereas projects typically have to rely on users to pay the gas costs to mint an item on Polygon, it's much easier to just represent something of value in the form of a Polygon token and distribute that to your community.”
CR: Oh, interesting. So, sorry, you're mentioning a Polygon token. So do you mean like using Matic or using an OpenSea token?
NC: Not definitely not the latter. I want to be very careful about not promising anything in that, in that territory, but yeah, a Polygon token by that I just mean a token that is deployed on Polygon.
CR: But what do you mean like, like projects listing on OpenSea would reward users with their tokens?
NC: In the event that you're starting a new NFT project and you want to build buzz around that or, or generate some momentum around the project, certain projects have started to identify community members and airdrop NFTs to them in the form of Polygon tokens. When you're deploying your project on Polygon, it's easier to transfer NFTs without incurring substantial fees back through MetaMask transactions. So you, you don't pay anything for transfers. So that has made it easier for certain projects to bootstrap themselves.
CR: Oh, that's interesting. So that could be kind of like a new wave of incentivizing or like encouraging people to participate in these projects, if these projects are distributing an additional token on top of their NFT. So it would be something similar to kind of liquidity mining or like yield farming but on OpenSea.
NC: Well, it's not necessarily something that would have to take place on OpenSea. Another way that this could be framed is like previously I, how should I say this? The value proposition of polygon is just that it's, it's much easier to distribute and transfer tokens that may be priced at a lower price point. So, whereas gas costs typically made transfers cost-prohibitive for lower price items, now it's possible to launch a project that has tokens price at five us dollars or one us dollar, because the gas cost is no longer representing a significant fraction of that. Right now I think the price structure of NFT releases is partially informed by those gas fees being embedded in that, in that fee structure.
CR: Yeah. So maybe NFTs can start to become more accessible.
NC: Well, yeah, and not necessarily. There will always be NFTs that are listed at higher price points. But I think that something that excites me about Polygon or other layer two solutions is this market that's now forming around lower price items, where there are certainly tokens of value that should command lower prices or are more ephemeral in an in-game universe. So I do expect enabling support for Polygon will open up that use case a little bit more than we have in the past.
Record-Breaking Two Days
CR: Very cool. Can you talk about just some of the most recent numbers that you're seeing like after the surge like daily active users new users volume I don't know any, any other kind of metrics that you look at?
NC: Sure. Well, our, our daily volume has been certainly I would say it's definitely been a surprising. It has eclipsed our total. In the first two days of August, we had already far surpassed our total for the entirety of 2020. So our volume is now that we're, we're sort of letting records stand for 24 hour periods in terms of daily volume where, I just pulled this up and today we're up to $62.5 million in daily volume on Ethereum alone. And our all-time high on August 4th was $64.1 million on Ethereum that does not include the total volume on Polygon. So we're now in this sort of uncharted waters where it's exciting, but I also want to ensure that we're not correlating this directly with — that we're not resting on our laurels here, or assuming that this is because our product has been entirely smoothed over there, there, so a lot of work to do to make this a compelling user experience.
“In the first two days of August, we had already far surpassed our total for the entirety of 2020.”
CR: So what have been the biggest challenges in this explosion?
NC: I would say that it is underreported how difficult it is to scale a startup quickly in that there are a number of organizational challenges in making sure that you're setting a high bar for incoming hires that the management structure is in place in order to support a growing organization. That's been something that was sort of unfamiliar to me previously in product roles.
I would also say that one of the challenges of building a marketplace for a varied design space is there are a number of ways that we can better serve certain types of projects that are not being well-served by the experience that we've designed on OpenSea to fit a majority of projects. So if you look for instance at our item page the size of the artwork, there would not really be optimal for an art-based project. And if you, if you consider a collectibles project, we likely should be exposing traits and properties of that item more so than, than we are today.
So in some ways we've tried to borrow from traditional e-commerce design patterns, where if you're browsing Amazon, you have a fairly, it's fairly cohesive in that no matter which product you're purchasing the checkout experience is identical. The item page is identical. They reduce cognitive load that way, but I think in the near future, we may explore ways to create more interesting variants around popular use cases for NFTs, given that they are such a complicated and varied design space.
CR: Do you mean, for example, having like a special page for collectibles, a special page for art and so on?
NC: Well, it, this would translate to, to design decisions that we're making on the pages where we showcase these assets. So one example might be, if we start building out greater support for 3d models, for instance, a 3d viewer would be something that we would feature much more prominently on that token page. So I think just making thoughtful design decisions around how to best support some of the proudest categories of entities is something that will serve us pretty well in the future, rather than trying to represent entities in the same way across the app.
CR: Okay. So, so you're saying it's, it's underreported, how, how hard it is to quickly scale a startup and with OpenSea, where has the need to scale been the most apparent. Is it on just the load of users coming to the platform, or is it more of the side of what you were saying before, just how the pages are designed?
Scaling Pains
NC: Well I think the like multiplier and growth that we've seen has, has caused systems that were previously quite resilient to break and for certain processes to start breaking. One that I've been dealing with increased frequency in the past couple of weeks has been the volume of incoming fraud reports has become difficult to manage for the size of our team.
“The volume of incoming fraud reports has become difficult to manage for the size of our team.”
So we've had to start making thoughtful decisions about how, how we can make our project make our processes more mature and make sure that we're not fielding these requests to take down fraudulent projects on a minute by minute basis. So we're, we're exploring ways to automate this and to make reporting tools more accessible to users. They're just like product level decisions that we have to make for some of the support ticket categories. I think that's something that I would identify as a scaling challenges.
The bandwidth that we have to solve problems for users ultimately gets eaten away once the size of the user base is 10 times or 14 times the size as opposed to a few months ago. So we have to start identifying places where we can better serve users through the product rather than through a support system, and then build our support system and to,
CR: So how big is the team right now?
NC: Under 40 people.
CR: And how many projects are listed on OpenSea at the moment?
NC: Oh I can pull that up. I mean, it's, this is a situation where we import all, all NFTs that are deployed to Ethereum. Really, we're definitely benefiting from the protocol rather than the product in that we are automatically importing contracts that are deployed. So I can probably look this up, but it is now far above where that, like comparing this even month over month, there's growth that is definitely exceeding expectations and not something that we have previously encountered even on the collection creation side.
CR: So are NFTs on Ethereum, like in, in the hundreds of thousands or in the millions, what kind of range do you think they are right now?
NC: Well on OpenSea, we are currently featuring about 17 million unique assets. Some of those represent there, there are a number of ways that that number can be sanitized. There are some projects that are 10,000 item projects, and they're all using the same artwork. I mean, that's, that gives you a sense of the order of magnitude, but I don't know if it's entirely fair to say that 17 million assets are available on OpenSea. That's the number of unique assets that we support there.
CR: Okay. So it's 17 million assets , and a 40 person team. And like what percentage of those you think are frauds?
NC: Oh well, not certainly not in the millions. I, I hesitate to put a number to this because we take them down so quickly that the creation of one doesn't necessarily, I would want to include that in, in that total, in that would imply that it's still active, but certainly something that we've seen recently is user-generated content coming through verbal or other user-generated content marketplaces. We, we call these communal contracts. That is a place where if projects are not in place, someone can easily deploy a contract featuring four, eight yacht club assets, for instance, through the Rarible collection. And users on OpenSea end up believing that this is the official imported Yacht Club collection and that the Rarible collection name has a sort of trust indicator.
CR: I think, I mean, it must be a really kind of fine line too, to decide what is fraud in the NFT space, because you're also dealing with this idea that, you know, you're in this permissionless world and that would make you think that anyone can list anything. But then you do have people who are purposely trying to trick buyers into thinking that one thing is something that it's actually not. There are also derivative projects, projects that are riffing off other projects that aren't specifically frauds. I don't know how, how do you draw that line?
Not the Arbiter
NC: Yeah. So this is a really tough question in that I don't think that the future that we want to create for ourselves is to position OpenSea as the arbiter of what constitutes original work. So our responsibility to users I think, is to just identify as best as we can whether the item that they've landed on is what they are intending to purchase. And there are a number of community signals that we can leverage to do that simple things like connecting social accounts to an OpenSea collection page, so that there's a verified link to Twitter or Instagram or some other form of social trust. That's one way to do this, but I think it's become clear that we need to evolve our approach to identifying the type of derivative collection that you're describing, where it's not as problematic.
“I don't think that the future that we want to create for ourselves is to position OpenSea as the arbiter of what constitutes original work.”
There's a clear transformative element in the project, but I've spoken about this with a few teams that have had questions about our treatment of projects in this category, where there may be just a background color change, for instance. And that may be presented as original work now where this gets really tricky is I do think that a lot of the value in NFT projects is tied to their community. So there are some projects that build really strong communities around this derivative artwork. And at that point, it's sort of like taking its own identity on once they've formed a community around this project. So I would in the near future, like to expose through OpenSea’s UI that's, something is referencing another project and have the ability for creators to just like in good faith, identify the original IP that they are performing a treatment on.
That's something that I think would appease or satisfy our requirements for buyer safety while also crediting the original artists in the case of something like one project that has gotten somewhat popular on OpenSea recently is, is called Fast Food Pumps, for example. And that involves just using CryptoPunk artwork with a McDonald's hat. And that's really like not a decision that I want to make that I'm not quick to determine whether that's transformative as the derivative, but I would like to in the future, be able to show a user who lands on that page and may not be aware of the context of that project. This project is referencing this other collection, CryptoPunks. Here's a link to that collection.
CR: Yeah, that makes a lot of sense. I think it's, it's a good solution. Versus just taking down a project that looks like it's copying another project, just presenting the user with all the information available and have them make the choice. Maybe they do want something that's a copy of something else, if it's a bit cheaper or maybe they like the community better. But I, I really liked that way of thinking of just like letting the user decide what it
NC: Something that, that we also have to there are a couple of other factors in play that I should just, you know there, there are always going to be a small sliver of projects that represent like terms of service violations for OpenSea. If they're, if they represent certain types of content those, we would have to still retain the ability to take down. And also this is an area where we do have to defer to the content, the original IP creators in some cases, because if we are issued a DMCA for instance, we have to comply with that notice. So in the event that a content creator determines that something is infringing on their work we would still have to defer to their judgment rather than defer to our own product judgment.
CR: Okay. Yeah, that makes sense. So what, w what does your terms of service say in terms of like, which projects aren't allowed?
NC: It's just like, there's something that would surprise anyone they're just like certain types of content that we're legally not allowed to, to support. I don't think there's anything there in our terms of service that I, I mean, almost any other platform that relies on user uploaded content has similar terms around what, what constitutes content that they're uncomfortable with.
CR: All right. Okay. So probably the, probably like pornography or like things like calls to violence or
NC: Not necessarily. So on that explicit content we are permissive towards some forms of that. We, we just designate that category of projects as not safe for work, and then we give users control over whether they want to see that, but certainly like certain types of explicit content are not something that we can support. And, and there are other no certain financial products that we're not allowed to support on an open seat and things of that nature. Okay.
CR: So, okay, so you recently raised a $100M in a series B round led by Andreessen at a $1.5 billion valuation. So NFT unicron here. What's OpenSea using those resources for? What's the big long-term vision for the company?
Big Vision
NC: I think so, ultimately we want to be the best marketplace for NFTs. What that entails is ensuring that we are always remaining a source of truth for what, what is the current state of things on blockchains, but it also requires us to start investing in becoming a multichain platform. So we we've started to dive into that category or that work stream of just making sure that we can support chains that we anticipate will start building momentum over the next couple of years.
“We want to be the best marketplace for NFTs. What that entails is ensuring that we are always remaining a source of truth for what, what is the current state of things on blockchains, but it also requires us to start investing in becoming a multichain platform.”
I think the short answer to your question about where we're deploying that capital is just we have wanted to grow our team to support some product initiatives that we had forecasts we get, we can start working on you know, sometime next year when we have more resources now that timeline is sort of compressing and we can tackle some validated product initiatives that we were excited about, but didn't have the bandwidth to, to tackle.
So I do think we want to double down on our marketplace functionality and likely we will dip our toes into some of, some of the I would say that we don't want to necessarily make social a strategic priority just yet. There there's a lot to do with marketplace liquidity that we and marketplace functionality that we still want to build out, but certainly there is some value in understanding like the buying decisions that happened as a result of the network that you're in are not something that we're discounting. So if you belong to a community being able to identify what members of that community are purchasing on, on OpenSea, that certainly is a factor that influences your own purchasing decisions. So we were thinking about going social that way and that we want to expose to users what's happening on OpenSea that might be relevant to them.
CR: Oh so having a chat function that is dedicated to people who bought the same type of NFT,
NC: Well, that may translate to some sort of like a recommendation engine where if we can identify your taste profile and it is similar to my taste profile, if you favorite something on open seat, that's likely something that we would want to show to, to me or another user that taste profile, and that you've already indicated that you find value in it. And someone with your case for a while may also find value in that.
CR: Mmm. Interesting. Okay. So the NFT space more broadly, what are you seeing that's kind of like on the cutting edge, that's exciting to you, and you think will start picking up steam in the coming weeks or months.
NC: Sure. So I can talk about one project with the disclaimer that it's not a use case that we yet have regulatory guidance to support. So this is not something that we are considering with an OpenSea, but I've been really interested in Andy's fractional project where he's enabling users to put items up for sale in a fractionalized form. So like a zombie punk can be represented as a million tokens and users can purchase some proportional stake in that, in that item. And I've seen more high-value NFTs moving to that marketplace and that there's more liquidity around selling lists and, and small parcels rather than waiting for the coordination of wants to line up on a seven-figure NFT.
CR: Hm. That's interesting for providing more access through fractionalization for those big-ticket NFTs.
NC: Yeah. Even for punks today are something that is that many NFT purchases are many users in the space are priced out now of floor punks. And I think this will become an increasingly attractive way for someone to participate in a community. I, as I said, this isn't something that OpenSea is in the position to support, but it's just something that's that started to happen in this ecosystem. That's been exciting to me.
CR: To wrap up, your view on the NFT space in the longterm, like where do you see this thing going? How will people be using this technology 10 years from now?
NC: Sure. So in the same way that users have, have previously personalized their record collection or their wardrobe, I think that the someone's wallet is just going to be another reflection of their identity and really any decision that you make related to purchasing that is creating entities. That will be a window into how you present yourself in form of your, in the form of your digital identity. I think that in the near future NFTs will come to represent like artifacts of the communities that you belong to or the causes that you care about. So I do think that right now people describe this as wallets stipend or looking into what someone's buying. And that use case is not really being used to, just to discern like that person's identity as much as other purchasing decisions that you should make.
CR: Yeah. So, so just like representation or an expression of your personality and yeah. In the same way that you like pick out your outfit you'd have like your NFT wallet collection online.
NC: It's non-trivial that there's like monetary value behind some of these decisions that you're making as well. So the fact that you were that, that you value an asset at a certain price point is also a reflection of who you are. Someone who cares deeply about environmental causes may be purchasing very high ticket items related to that. Cause there, there may be someone else who is very, is invested in a community like Axie and seeing their wallet. This will be on Ronan, so not supported on OpenSea right now, but I'm seeing their wallet. It would give you insight into their commitment to that game. So I think there's a lot that can be extrapolated from the, the holdings in someone's wallet and the decisions that they've made on chain.
CR: The idea is that all of these assets will be traded on an OpenSea.
NC: Some day. Yeah. It's been a heavy lift to get some of these changes supported, but we are intending to go as multi chain as possible.
CR: Final question. I was meaning to ask this before, which chains are you thinking of going to next?
NC: Sure. So I'll give you my sense of the shortlist that we're, that we're lining up here. I think Flow and Tezos, certainly near the top of that list, we are interested in supporting Binance Smart Chain, Immutablex possibly Palm, which is a newer chain. I have to think more about other ones that we've looked at, but those are the ones that we're having regular conversations about supporting and trying to line up resources to support in the near future.
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