OpenSea.io is the biggest non-fungible token (NFT) marketplace on the web. This peer-to-peer platform powered by the Ethereum blockchain network is the first of its kind and home to over 100K collectibles.
OpenSea also rakes in a lot of money. The exchange saw over $1 billion in trading volume in August, according to a tweet by OpenSea co-founder and CEO Devin Finzer.
The NFT space is growing faster than any old-school trading card junkie or collector of game items would have imagined. This begs the question: how does OpenSea make money?
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How The NFT Marketplace Works
NFTs of all sorts are bought, sold, and exchanged, including digital collectibles, artwork, memes, GIFs, music, avatars, real estate for your virtual worlds, and many other digital items.
Connecting your MetaMask, Formatic, Coinbase, Bitski, or other wallets to OpenSea, you can store your NFTs on or off-chain. OpenSea is the most successful NFT marketplace to trade blockchain-based digital assets online. That has put them at the pinnacle of this expanding online market.
ERC20 has become the standard for trading NFTs using the Ethereum blockchain. This standard allows users to trade with other tokens of the same standard.
Most NFTs use ERC20, trading them using WETH (Wrapped Ethereum) rather than using ERC721, which requires new smart contracts for every one-of-a-kind token.
Blockchain paved the way with the cryptocurrency market and popular cryptos like Bitcoin and ETH. Now, the Ethereum blockchain, OpenSea, and DeFi ecosystem have become like the new eBay for NFTs, a brilliant encryption-based platform for the NFT market.
OpenSea Marketplace NFT Fees
How does OpenSea make money as a platform of exchange? That’s simple; you pay fees.
From the first time you pass through that nifty gateway into the NFT market and make a purchase, you’re contributing a percentage to OpenSea.
When someone claims a million-dollar bid on a CryptoPunk NFT, they also have to pay a hefty 2.5% tax added to the sale price. This 2.5% charge is how OpenSea makes its money.
People using OpenSea may also have to pay Ethereum gas fees for creating an account and minting NFTs. This crypto fee is separate and goes to mining operators. The cost of gas fees isn’t set and varies widely depending on network traffic.
People are willing to pay to play here, whether on exchanges like OpenSea or Rarible or games like CryptoKitties.
How OpenSea Sells so Many NFTs
Digital artists, new beginners, and other NFT marketers can sell their NFTs to the highest bidder using the “buy now” strategy. Or, they can sell for a fixed price. These fast pace market options make money every time an NFT sells.
There are also secondary sales. Secondary sales expand the market, allowing people to play NFT arbitrage, buying and selling digital goods for a profit.
They might market or find the best information on NFTs through social media or create their domain names and have a site to share their NFTs on OpenSea.
Digital artists often put out whole projects, encouraging price demand for a project that reflects their specific niche.
These strategies keep the NFT market thriving, and a percentage of every one of those sales goes back into the pockets of the exchange.
The NFT Market Is Profitable
How does OpenSea make so much money? That’s easy; they are the leader in one of the fastest-growing digital markets in the world.
OpenSea has the advantage of marketing some of the most high-priced digital goods around, with functionality and real use cases, and collectible value.
It doesn’t hurt that investors have an incentive to pay top dollar for their NFT bragging rights.