OpenSea & Magic Eden — Terminators of the NFT SaaS Market?

The share of OpenSea on Ethereum chain and Magic Eden on Solana chain, are still absolute monopolies. According to Dune Analytics, despite the fact that NFT trading volume on both chains continues to stagnate or even shrink, these two centralized NFT exchanges are still ahead in all data metrics.

For Solana, Magic Eden has basically dominated the entire NFT market. But for Ethereum, the rising star X2Y2 seems to have caught up in terms of trading volume. But is that really the case? For this topic, @punk9059, Proof’s current Director of Research, has conducted a study on wash trading on OpenSea and X2Y2. Wash trading is usually when a project or market maker buys or sells with their own funds, inflating the project’s trading volume and creating a false sense of prosperity. According to his research, OpenSea still accounts for 85% of the Ethereum market volume after removing wash trading, while X2Y2 only accounts for 6.5% of the volume in the same situation. If we look at the royalties paid to creators, OpenSea’s share is even higher than 96.5%, while X2Y2’s share is only 1.7%, even lower than LooksRare’s share.

Whether it’s DeFi or NFT, wash trading has never been a new topic, and this false prosperity will still be accompanied with the industry for a long time in the future. Therefore, the cleaning and analysis of data of on-chain is likely to become a necessity, whether for institutional investors or retail investors. That’s why there are so many centralized and decentralized NFT exchanges, OpenSea still remains the absolute monopoly on Ethereum.

So how do these two exchanges, which have absolute monopolies in their respective markets, stack up their products in this long bear market? What are the development opportunities and trends in the industry in the eyes of the leading exchanges? To answer this question, we have compiled a list of recent updates at OpenSea and Magic Eden.

UI Updates of OpenSea Project Webpage

OpenSea has been criticized by the public for the speed of its product iteration, but the new layout of its webpage of individual projects, which went live this week, is a breath of fresh air. We are pleased to see that OpenSea is still firmly committed to supporting and protecting the royalty rights of creators. In the new layout, the creator fee is placed at the top of the project information page. In addition, two new indicators have been added: listed % & unique Owners %. The public may think that these three simple metrics are available on any third-party platform or plugin, so why did it take OpenSea so long to iterate them? We also have the same question. However, it is certain that this kind of complementary functionality shows that OpenSea is starting to pay attention to user-friendliness, and it also means that third-party SaaS products are under some strategic pressure.

Magic Eden Pro Trade Dashboard Went Online

Magic Eden, as the light of Asia-based NFT infra projects, is naturally much faster and more flexible in application development. The newly launched Pro Trade professional trading dashboard is a perfect example of this advantage. As a matter of fact, Magic Eden already has a basic analysis board for secondary market trading of projects, which is the main reason why the related third-party SaaS products on Solana chain are not well-developed, as Magic Eden have already won the recognition of users. Their Pro Trade even provides the functionality of NFTFlip and NFTNerds, the best trading analytics tools in the Ethereum NFT market. Not only does it have real-time point-and-click trading charts, but it also offers buy and sell order tracking and fast trading capabilities. The board is still in beta, but because of its mature background of being an exchange, it is likely to be free for a long time or for a very low fee. It can be expected that with the inherent advantage of having a traffic source, this feature will further strengthen Magic Eden’s user stickiness, and the room of third-party analysis tools market is almost eliminated.

OpenRarity — The Official Rarity Ranking Tool

OpenRarity, a new protocol developed by OpenSea, icy.tools, Curio, and Proof, will be available on all major exchanges simultaneously. The launch of this rarity protocol will cause other third-party rarity ranking tools to lose a huge market share, as OpenRarity will be embedded directly into the exchanges. So what problem is OpenRarity trying to solve?

According to the official explanation of OpenRarity, there are three problems:

• Besides the rarity of traits calculated by pure statistics, sometimes creators assign special values to some traits that are not correlated with rarity, especially for artistic projects. These acquired human-induced differences should be separated from the rarity calculation.
• Today’s rarity rankings are securely generated by closed-source code, so different third-party institutions such as NFT exchanges and tool-based SaaS will have differences in their calculations. This variation is difficult to attribute by using unique truths.
• Creators are often charged by rarity ranking service providers, which makes it very difficult for project parties with tight budgets.

The most direct reason for this phenomenon is that “meta-features” do not come from the metadata on the chain. Instead they are created by different rarity ranking providers. For example, the “number of features” affects the rarity ranking, but this concept is not adopted by all rarity ranking tools. There are also more complex “meta-features” that would not allow a third party to calculate an accurate rarity ranking without specially tuned code.

OpenRarity solves this problem by taking a purely statistical approach to only analyze the on-chain metadata to arrive at the most accurate and uniform rarity ranking.

For more technical details about the OpenRarity rarity ranking protocol, please refer to the official article.

MetaShield — Project Royalty Protection Platform MetaShield launched by Magic Eden & Coral Cube

With the full upgrade of SudoSwap and the growth of other decentralized exchanges, the question of whether NFT secondary market trading should protect creators’ royalty rights has become a controversial topic. What is clear is that centralized exchanges have tacitly chosen to take the side of protecting creators’ rights on this issue, not only because it encourages more creators to actively promote their use for secondary market transactions, but also to justify the high transaction fees charged by the exchanges themselves.

Through MetaShield, creators can track the royalty settings of NFTs being sold and protect their interests by taking action against pending listings that have privately adjusted their royalty rates. MetaShield automatically identifies when there is bypassing of royalty revenue and helps creators to upgrade metadata, tag the NFT, or even obscure the NFT content.

What’s more interesting is that MetaShield even has a debt collection function. Suppose a buyer has purchased an NFT that has bypassed the royalty rules, and the creator changes his mind after taking measures against the NFT, he can use MetaShield to pay the royalty and restore the original value of the NFT he purchased.

This series of features makes it easy for NFT creators to monitor and recover their royalty income throughout the process, while protecting the creative environment. The controversy over whether or not high royalties should be paid is that while royalty revenue is the driving force behind continued creativity, high royalties also exacerbate the poor liquidity of NFTs in the secondary market. But there is no doubt that this product will quickly threaten the competitiveness of decentralized exchanges, most of which are known for their zero royalties policy and low transaction fees, as well as their ability to reduce wash trading, after all decentralized exchanges have always been the best place for insider trading.

For more information about MetaShield, please refer to the official article.

New Drops — OpenSea NFT Projects Launchpad

Unlike Magic Eden, which launched its project launchpad early on, and recently launched EZU, the first dual-chain (Ethereum and Solana) project, OpenSea’s project launch platform has not yet been launched. Although EZU’s secondary market performance is not impressive, it is believed that this innovation has made OpenSea feel a huge threat. According to the first project launched on New Drops, omgkirby x Channel Tres, the new project will not only have a dedicated homepage with better project descriptions, pictures and videos, but also an official and exclusive minting contract SeaDrop. What makes NFT creators even happier is that by selling their projects through OpenSea, they not only have exclusive access to the official OpenSea homepage, but can also use OpenSea’s email subscription feature to notify all OpenSea verified users in advance. This opens up a new traffic portal for project owners, which is a great help in promoting their projects.

For more information about the platform, please refer to the official article.

These are just five of the latest features of the two major NFT exchanges. From the sale of projects to NFT rarity ranking tools and secondary market trading analysis tools, and then to the creators of project tracking management tools, you can see that OpenSea and Magic Eden are very ambitious, they seems to want to hold NFT players firmly within their own ecosystem. The consequence is that other NFT SaaS products and decentralized exchanges have less and less room to survive. The market is never short of innovation, but it is surprising that the NFT market has just finished its first cycle, and the leading companies already seem to have built up a very high threshold to entry. Are user needs too easily to meet, or is the industry still too early for more innovative products to be noticed by the market? If centralized exchanges can hold on to the horse-trading effect, how can the spirit of decentralization be realized? We always seem to be trying to replicate the trend of the NFT market from the prosperity of the DeFi market, but is it possible that itself is a false proposition? The industry is still far from Matthew Effect, so if you are developing a SaaS product that you think will work well and can compete with OpenSea or Magic Eden in the future, you are welcome to contact SACTE.

References

• NFT Landscape by Chains https://dune.com/21shares_research/nft-landscape-by-chains
• NFT Marketplaces by shares https://twitter.com/punk9059/status/1568349921887277057
• NFT On-chain Analysis https://app.flipsidecrypto.com/velocity/queries/dae81889-752a-43b3-a00c-b1977cc950ed
• OpenRarity Official Introduction https://mirror.xyz/openrarity.eth/-R8ZA5KCMgqtsueySlruAhB77YBX6fSnS_dT-8clZPQ
• MetaShield Official Introduction https://help.magiceden.io/en/articles/6529410-how-do-i-protect-royalties-from-my-nft-collection

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