Expansionary moves could help both platforms recover from June downturn
In the past 24 hours, OpenSea and Magic Eden both announced moves planned to capture larger portions of the NFT marketplace. Users of OpenSea can now purchase non-fungible tokens built on the Layer2 Arbitrum network. And Magic Eden’s community can now access NFTs on Ethereum.
- OpenSea will add Arbitrum NFTs to its listings while Magic Eden will start to offer Ethereum NFTs to its customers.
- OpenSea and Magic Eden are the two biggest NFT marketplaces. They currently process around $100 million of trades per week. This is well down from their highest combined trading week of $1.2 billion.
News that the two biggest platforms for secondary NFT sales are opening up their marketplaces to new blockchains is significant. It shows intent to gain control of the lucrative sector.
But, taken in the context of a greatly diminished market, it also shows that both OpenSea and Magic Eden need to take action now, if they are to survive the ongoing bear market.
OpenSea and Magic Eden add networks
The two biggest NFT secondary marketplaces have both announced that they’ll be supporting OpenSea is launching with Arbitrum today. Some Ethereum NFTs are already available to purchase on Magic Eden. Buyers can find Bored Apes, Pudgy Penguins and Otherside land parcels on the platform today.
Magic Eden began life in September 2021, solely as a marketplace for Solana NFTs. Since then, it’s grown to become the all-time fourth-biggest trading platform for non-fungible tokens. It has processed more than $1.73 billion with an average item sale price of $136.64.
Despite these impressive figures, Magic Eden still lags some way behind OpenSea, the undisputed king of NFT marketplaces. OpenSea launched in December 2017 and only featured Ethereum tokens. In the past few years, they’ve added NFTs built on Solana, Polygon and Klaytn. Today, they’re introducing Arbitrum.
The move towards ever-greater cross-chain aggregation is part of both platform’s attempts to rescue the ailing NFT industry from its continued slump. Although 2022 has been a great year overall for sales of non-fungible tokens, the second half has seen a definite downturn.
DappRadar reported last month that NFT sales are down across the board. OpenSea saw a 9% MoM and cut 20% of its workforce. Magic Eden had a 13% decline in trading from July to August.
Moves come in the wake of NFT downturn
2021 was the year of the NFT. When the bull run took off in Q4, it seemed that any project with an ERC-721 token would sell out and rise in price. But all good things must come to an end and with the bumpy macroeconomic picture we have today, it was inevitable that investors would divest themselves of speculative assets.
That derisking eventually came in June this year. This chart shows the steep trading drop-off, measured in both sales count and dollar value. So it wasn’t just that the price of ETH declined following the Terra crisis. People were actually purchasing fewer NFTs as well.
Sara Gherghelas described the situation in DappRadar’s Blockchain Industry Report for July.
The market is facing a historically bearish period. Liquidity is down, prices are heavily influenced by the decline in the value of cryptocurrencies, and the potential profit from reselling is not very high. As a result, many users have decided to liquidate their investments in the NFT market, waiting for better times or moving to positions commonly known as “holding”, the trading blocking until the “crypto winter” has passed.Sara Gherghelas, DappRadar
In such a constricted financial environment, it’s no wonder that both Magic Eden and OpenSea have decided to expand. Presumably best platforms think their best option is to expand and attempt to capture as much of the market as they can.
By adding NFTs from as many blockchains as possible, they hope to lure the competition’s customers to their respective sites. The issue is that if the number of people who want to buy NFTs keeps on dwindling, it may soon be the case that there aren’t enough customers to go round at all.