Chief of OpenSea seeks to distance NFTs from crypto crisis

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The head of a major marketplace comments on the decline in digital assets following the FTX affair.

The CEO of OpenSea, the world’s leading non-fungible token marketplace, is trying to steer NFTs away from cryptocurrencies as they suffer in the aftermath of a string of scandals.

Devin Finzer, 32, said the crypto industry has seen “some setbacks recently,” citing the case of FTX, a cryptocurrency exchange that went bankrupt in November, causing a plunge in the value of digital assets. He told the Financial Times that he is.

OpenSea, online collectibles and digital art based on the same blockchain technology as cryptocurrencies, has risen in value as NFTs have become a hype-driven market over the past two years.

NFT
Photos: Alamy; Getty Images

But the head of the New York-based company believes consumers will continue to spend real money to acquire digital images and display them in virtual spaces at home and online, so NFTs have a bright future. claimed to be.

“NFTs will not always be bought and sold in cryptocurrencies like they are today,” he said. “There are a variety of reasons why this makes sense in the current ecosystem, but as we become more widely accessible, there is no reason NFTs can’t at least be denominated in US dollars.”

According to data from a user named “rchen” on Dune Analytics, Information, pointed to by OpenSea, OpenSea’s cryptocurrency Ether monthly trading volume has increased from its peak of $4.9 billion in January last year to $4.9 billion in November. decreased 95% to $253 million. FT Private Company does not disclose its financial figures. His daily number of NFTs sold on the platform in Ether fell 68% from a peak of 2.3 million in January to 740,000 last month.

“NFTs do not exist in isolation. There is an overall macro environment that has changed dramatically, impacting consumer spending and the broader crypto environment that is experiencing winter,” said Finzer. said.

The company cut 20% of its workforce in July, with Finzer forecasting a “protracted recession” and leaving OpenSea with about 300 employees.

Finzer claims the company has a “healthy runway,” and from 2021 onwards, his venture capitalist will invest him in multiple funding rounds from Coatue and his Andreessen Horowitz. has raised $423 million. Angel, including Reddit founder Alex Ohanian, actor Ashton Kutcher, and singer Shawn Mendes, also participated in the previous round.

OpenSea raised the majority of its $300 million in the capital in its latest funding round announced in January of this year, bringing the company’s valuation to $13.3 billion. A commission of 2.5% of the sale price is charged for each transaction. NFTs use blockchain technology to prove ownership of digital assets recorded in an immutable ledger. They use the same technology underlying cryptocurrencies and are typically bought and sold in cryptocurrencies such as Ether.

Several scandals have rocked the cryptocurrency market this year, including the demise of stablecoin terraUSD and a general meltdown that sent the value of well-known tokens like bitcoin plummeting. A slew of laws, like the EU’s Markets in Crypto-Assets Regulation and the UK’s Financial Services and Markets bill, are being proposed to control the volatile sector.

Governments and law enforcement agencies around the world are also making decisions on whether to register and disclose NFTs as financial collateral.

“It is very important for regulators and government officials to understand that this is not the same as the broader crypto industry, which is focused on financial use cases,” Finser said.

He said the value of NFTs is determined by how people engage with them, such as using their tokens to participate in exclusive events, playing games, or exhibiting digital art in their homes. said it should.

“It’s already happening that people are using Instagram to share [NFTs] with their friends,” Finzer said. It may be digital rather than a physical art.”.It may be an early adopter who is exhibiting NFTs at home right now, but that may be happening more and more.”

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