Sequoia Capital is set to exploit certain things they consider to be weaknesses associated with OpenSea’s NFT marketplace dominance
OpenSea: Google or Yahoo
When it comes to NFTs, OpenSea is the gold standard for NFT marketplaces; this platform currently controls over 43% of the NFT trading market. If you want to buy or sell an NFT, odds are, you’ll trade on OpenSea, and with over $23.3 billion in sales, OpenSea is genuinely the most successful NFT marketplace – so far.
One thing about being at the top is that everyone wants your position; being number 1 means everyone else is vying to dethrone you. Seasoned venture capitalists are ready to challenge for the number 1 spot, and a consortium of venture capitalists, including Sequoia Capital, believe they have identified exploitable gaps in the OpenSea kingdom.
According to Shaun Maguire, a partner at Sequoia Capital, OpenSea is overly reliant on Ethereum, a blockchain with its fair share of problems. One of the most reliable tactics companies employ in this space is misinformation by planting a seed of doubt in the public’s consciousness.
OpenSea is currently the largest NFT marketplace, but the people behind this service understand that it doesn’t mean much if they fail to grow continually. There was a time when Yahoo was the undisputed champion of search, now they no longer compete in the space. One question on everyone’s lips is, will OpenSea keep growing and end up like Google, or unfortunately stall and end up like Yahoo?
Magic Eden: Giant Killer?
Sequoia is putting all their chips on a new startup built around what they consider to be “more efficient” NFT blockchains. Magic Eden is the startup Sequoia Capital, and others are backing to make extraordinary things happen in the NFT space. Magic Eden uses the Solana blockchain to authenticate its NFTs.
A few of the pros of Solana is that it can facilitate transactions at market-beating costs while facilitating more transactions simultaneously compared to Ethereum. On 14 March 2022, Magic Eden announced the closing of its new funding round; it raised $27 million from a group of investors led by Sequoia.
Unfortunately, the valuation after this funding round wasn’t disclosed, which leaves room for many people to engage in guessing games. One thing is for sure, whatever the valuation is, it doesn’t come close to the $13 billion OpenSea is currently valued at.
Magic Eden: Is this a gamble?
The decision to back Magic Eden produces a considerable amount of unanswered questions. Why did Sequoia and other seasoned venture capitalists choose to support Magic Eden rather than a more robust NFT marketplace like Rarible, KnownOrigin, and the likes?
To many people, this seems like a gamble, a hail-mary to try to salvage anything from the NFT marketplace space. As Magic Eden grows in the NFT space, it’ll need to keep an eye out for other established NFT marketplaces and OpenSea’s inevitable Solana adoption.