[Dive #179] Can We Beat Goliath at its Own Game? By Kairon
Where are NFTs and the marketplaces for them headed in the future?
TPan here! I’m en route to ETH Denver at the moment, so I won’t be writing my usual pieces. However, I do have some great content for you from someone else in the space.
Today we have Kairon with a dive and his opinions on the current state of NFTs and the marketplaces for them. I’ve been friends with Kairon since the early days of my web3 journey and connected through our mutual interest in creating written content in the space. Kairon is a professional DAO contributor with stints at Rabbithole, RADAR, and Developer DAO. He’s also a member of the Lens Creator Program. Fun fact: We haven’t met in person (yet), a true online friend!
Though the industry is still in its infancy, some of the original intentions of the NFT space have been challenged, led by the gradual decline of creator royalty payouts.
If you want to check out more of Kairon’s work, check out his Mirror and follow him on Twitter.
TPan and I have a shared love for NFT communities, and even if I may have typecast myself as more of a DAO guy, you can bet I’m staying updated on the ins and outs of the more *unhinged* side of web3, even since I stopped doing RabbitHole’s weekly newsletter.
We’ve lately been chatting a lot about the ongoing marketplace wars. Blur v Opensea v Manifold and Zora. On one front, we have the apparent race to the bottom for creator royalties and marketplace cuts. On the other there’s the platforms looking for a way to bring our overpriced JPEGs formally into the fold of DAO life and offer the full autonomy these tokens promised from the get go.
NFT’s entire value prop has been brought into question in recent times thanks to this ongoing drama. What’s the point of having these collectibles if minting them on Opensea means they can be censored, their IP is being copied often by malicious actors, and now you can’t even enforce royalties to maintain a community project? We truly are at a turning point for NFTs. One that I’m confident we’ll come out on top of, but still I’m left to question how Opensea will react to this latest challenge to their reign. As mentioned by TPan himself in a previous post: “What if NFT Marketplaces started doing ads?” And more importantly, should we even consider having NFT ads in the first place?
Before jumping in, let’s set the scene on creator royalties, Blur, and why our current moment in time has gotten us spiraling into a creator existential crisis.
As you may know, Blur did an airdrop recently. This brought on a lot of attention to the “zero royalties” marketplace, but most importantly, it put Opensea right on the NFT community’s crosshairs. “No new features (that they want), no airdrop, nothing of note for the past year. Why should we allow you to lead this space?”
You know. Greed aside, I kinda agree with that point. Opensea may have done some really valuable stuff for our ecosystem, but listening to people’s requests isn’t one of them. You’d expect the market leader of NFT marketplaces to have a bigger voice when it comes to leading innovation and offering a launchpad for creator opportunities.
So far, Opensea has launched the following innovations to the NFT space since the 2021 bull run:
The Good:
It’s the first (and pretty much only) NFT marketplace to break through into pop culture, allowing for easy access even for the non-crypto native
The Seaport and Wyvern protocols paved the way for easy and hassle-free NFT minting and transacting
Acquiring Gem.xyz opened up a new layer of dynamism for NFT traders (even if it’s overly focused on the financial side to NFTs)
Integrating several chains into the same marketplace to offer as close to an “Amazon for NFTs” as we’ve gotten so far
The Not-so-Good:
Including a marketplace blocker in their contract. “If you want to enforce royalties, better list your pieces exclusively with us!”
Riding the Tezos hype in the lamest way possible, and then unceremoniously removing Tezos NFT support
Widescale censorship of Cuban, Iranian, and other international or controversial artists. Not only removing them from their platform, but using their proprietary contract to make their “NFTs'' unusable
Redesigning their landing page to include more diverse collections, and yet most of the times it just shows us the NFTs that are already popular
Yeah, yeah. That last point speaks more to NFT collectors’ behavior than it does Opensea’s. But my overall point is, people (myself included) are sorely disappointed at how our leading platform has focused so heavily on the speculatory side of what we’re creating, while offering very little in comparison on the “Non-Fungible”, “Creator-owned” and “Immutable” aspect of NFTs.
To drive that point home, and to show you the kind of stuff they could be doing if they wanted to. Let’s see what Manifold (a community launched product that offers you full ownership of your NFT contract) has done in the same timespan:
Introduced Claim pages following the wave pioneered by Zora
Experimented with burn/redeemed mechanics straight from the contract for all to use
Opened up a community app gallery where you can share your own homegrown NFT apps with everybody
Led a huge effort to standardize NFT creator royalties and launched a way for them to be enforced at the contract level (which btw, Opensea pretty much stopped on its tracks with their marketplace blocker)
Allow you to host your own NFTs in a custom page you can share around with your audience. Marketplace free, creator owned.
See where I’m getting at? If web3 stands for showing your favorite finger to middlemen, it’s pretty ironic how we’re all having this huge drama on the whims of two marketplaces vying for the bigger slice of the pie.
So, where do we go from here? Is there such a thing as an NFT space where Opensea, Blur, and the other Ebenezer Scrooge’s of our space play a role in pushing this space forward in meaningful ways beyond just looking to make bank?
Short answer: No.
Before dedicating to work full time with DAOs and web3 projects, I used to work in the online marketplace industry. I even led a marketing team for 4 years on a platform looking to bring the fight to Amazon through hundreds of localized, niche, marketplaces.
And the big learning I had from those four years is that you’ll never be able to topple the Goliath when you’re playing their own game. No matter how big an audience we built, how strong the partnerships we secured, or even how big an IRL presence we had at all the right events. Whenever someone wanted to buy anything, they’d stop by Amazon first.
Opensea may not be leaning hard on the NFT creation and actually putting your creations on-chain cause their end goal is strongly biased towards enabling a vibrant economy of digital collectibles. Kinda like how you’re usually not looking for the highest quality items on Amazon, that’s what boutique marketplaces and direct ecomm sites are for.
So, now that we’ve established that parallel between Opensea and Amazon as leaders of their respective industries (Ecommerce, and digital collectibles commerce). Is there anything we can do to make our dream of creator-owned marketplaces, enforceable creator royalties, and censorship free creations a reality? Or is that dream all of us bought back in 2021 just that, a pipe dream?
Not necessarily, but it’s gonna cost us.
You see, the possible future I see for us at this point is sort of a combination of all the theories we’re seeing thrown around. A little bit of tip-shaming here, a little bit of NFT boutiques and community family trees there, and a lot of ads if the big marketplaces actually take a hit to their bottom line at some point along the way.
Let’s take it point by point before we tie it all together:
NFT royalties will very likely not be enforceable at any point for PFP collections, collectibles will keep on incentivizing flippers and floor price pumps. And the creators behind them will keep on releasing side-collections and community owned projects to varying degrees of success to make up for the lost revenue source.
And yet, we shouldn’t expect that to be the case for art NFTs. I see a further break in these categories looming in the horizon, where the token loses relevance when compared to its intended use-case. Flippers are left to flip at whichever marketplace rewards them best, artists get a community of patrons to tip them without speculatory baggage, and access NFTs are treated as more transactional tokens with no attached speculatory baggage.Creator and Project-specific marketplaces will 100% be a thing, but they’ll soon realize just how hard it is to drive traffic to a website when you don’t have any kind of marketing efforts beyond just hype.
I could see a world where NFTs take a page from the DAO playbook and band together to form Collection families (à la Seedclub), but there’s seriously no way for them to sustainably drive business unless they start thinking of stuff like SEO, PPC campaigns and leveraging their community in a way that actually goes beyond vibes. I know, yuck, but just see how Larva Labs (the original creators of Cryptopunks, which have been sold to Yuga Labs) fared to get an idea of how that will turn out if we don’t take it seriously.
The second they start noticing a sentiment shift with the whales and top buyers, Opensea and the big marketplaces will go on the offensive. First through strong partnerships and activations, then through more benefits (this is where the OS token would come out, if it ever will), and finally by acquiring, monetizing and overall flexing their power over this space. It wouldn’t surprise me to see the first marketplace-owned blue chip project happen sometime this year.
But at the end of the day, all roads lead to NFT marketplaces getting filled with ads. It’s just the easiest, quickest, and least resource intensive way to monetize their platforms. And most people will not care as long as they can keep on flipping. Let’s just hope these ads are more akin to website banners (even Etherscan does them) and sponsored collections than actual NFTs promoting stuff airdropped into your wallet (as plenty of us already see on a daily basis).
Does the idea of getting a brand logo tattooed on your forehead without your consent sound enticing to you? What if they offered you $1000 cash? NFT ads would be potentially one of web3’s breaking points if we let it happen without question. An ad you can’t delete, not to speak of the fears of sending these to a burn address for the risk it just might have a malicious contract attached to it. We’d have to be changing wallets once a month just to keep our collections safe.
On that final note, what I worry about the most for these coming months in the NFT space isn’t whether or not creator royalties will be enforceable, not even which marketplace wins the race to the bottom that we’re setting on. I worry about what happens when the NFT world just keeps trodding along into that new reality with no blockchain-backed rights, just for the sake of getting a couple ETH more from each purchase, or getting some pocket change in an airdrop.
There’s still people pushing in the opposite direction, and NFTs are here to stay. But the power platforms like Opensea and Blur now hold over this ecosystem could sway the public opinion the same way scammers have. We need to keep them more accountable on the functionalities and builds they push out, because the entire NFT space will follow.
Will they come for our wallets once they realize we didn’t care about the tokens and the contracts?
An gut punch and reality check for the space? Or a necessary speed bump that will lead to more creator-led innovation? Time will tell.
My hope is that the large players in the space will continue to work with creators to build win-win-win solutions – For the creators, consumers, and the marketplace businesses. This will not happen overnight, but will take time and some goodwill from all sides.
If you enjoyed this piece from Kairon, check out his Mirror and follow him on Twitter.
See you next week!
Great read!
Ethereum Denver has been a blast so far.