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NFT Marketplace Competition Heats Up

Part of our special research report

State of the NFT Market | Q1 2022

In partnership with CryptoSlam

Opensea, an NFT marketplace on the Ethereum blockchain founded in 2017, currently dominates the NFT landscape with a market share of over 80% as of February 2022.

OpenSea’s monthly trading volume on Ethereum soared to a new record high of US$5 billion in January 2022, surpassing its previous peak of US$3 billion reached in August 2021. OpenSea is well funded, having raised US$300 million in Series C funding in January 2022 at a US$13.3 billion valuation.

But competition is heating up as rivals and newcomers try to grab a slice of the pie through aggressive marketing tactics. 

Randy Wasinger, founder and CEO at CryptoSlam, said he expected to see more NFT marketplaces, both on and off Ethereum. 

“As NFT adoption continues to grow, those marketplaces that are already there are going to have success. And there’s going to be copycats that come out and do the exact same thing, but maybe with a twist,” he said.

On Jan 13, 2022, upstart NFT marketplace LooksRare launched a “vampire attack” to entice OpenSea users to switch to the new platform. LooksRare airdropped $LOOKS tokens as trading rewards and achieved sales volumes that were more than five times OpenSea’s.

The high volumes were, however, partly due to wash trading, which involves the buying and selling of NFTs between two wallets controlled by one individual or group so as to claim the $LOOKS. 

In a Jan. 29, 2022 tweet, CryptoSlam said it had removed over US$8 billion in wash sales from its January sales volume figures. The avatar NFT collection Meebits bore the brunt of wash trading, with US$4.4 billion in wash sales, followed by Terraforms (US$2.9 billion), Loot (US$705 million) and Cryptophunksv2 (US$251 million). 

Mintable, a Singapore-based NFT marketplace backed by billionaire Mark Cuban, recently launched its version of a vampire attack by holding a fire sale of nine Mutant Ape Yacht Club NFTs below the collection’s floor price. The offer was almost immediately sold out because of the significant discount.

Zach Burks, Mintable’s founder and CEO, likened the move to the various sales promotions offered by e-commerce giants such as Amazon and Alibaba.

There is now a long list of marketplaces vying for a slice of the NFT pie including Nifty Gateway, Rarible and SuperRare. Smaller players targeting niche segments, such as Fractal, a marketplace for gaming NFTs, and native marketplaces for specific collections such as Axie Infinity and Larva Labs are also on the rise.

Cryptocurrency exchanges including Binance, and Coinbase are gunning for a piece of the action. Coinbase, the largest cryptocurrency exchange in the United States, is expected to launch its NFT marketplace in collaboration with payments company Mastercard soon. 

Yohann Calpu, CryptoSlam’s chief marketing officer, welcomed the mushrooming of new marketplaces for NFTs and said niche players would bring variety and choice. 

“It’s like a new person who just wants to go to a huge supermarket like Walmart to see everything,” he said. “But somebody who knows exactly what he wants will go to the marketplace where they may get a better deal.” he added.