2021 Guide to OpenSea NFT Marketplace

About OpenSea

The OpenSea platform is owned and operated by Ozone Networks, Inc. – a company that is regulated by the U.S. Security and Exchange Commission and incorporated in the state of Delaware. OpenSea was co-founded by Devin Finzer and Alex Atallah. Before OpenSea, Finzer worked at Pinterest as a software engineer and started a company that was acquired by Credit Karma. Atallah, worked at Palantir and sold his previous company to Beatport before co-founding OpenSea. 

What is OpenSea?

OpenSea is a peer-to-peer marketplace for digital goods. This includes items such as digital art, collectibles, gaming items, and other digital assets that are backed by a blockchain like Ethereum. On OpenSea, users are able to buy, sell, and trade any of these items with anyone, anywhere in the world. According to OpenSea, they are currently the largest general marketplace for user-owned digital goods, with the broadest set of categories, the most items, and the best prices for new categories of items. 

OpenSea is also a decentralized NFT marketplace. Trading on OpenSea happens through a smart contract. This means that there’s no central authority acting as a digital asset custodian. Instead, users store items in their wallet of choice – whether that’s a mobile wallet like Coinbase or a Web3 wallet or in-browser extension such as MetaMask

How does the OpenSea platform work?

OpenSea is an administrative platform that facilitates trade among a diverse community of buyers and sellers. You can find hundreds of different projects on the platform, including trading card games like Gods Unchained, to collectible games like Axie Infinity and CryptoKitties, to digital art projects like SuperRare and Makersplace, to name systems like ENS (Ethereum Name Service)

What’s great about OpenSea is that it democratizes access. So if you’re not a developer but you’d still like to mint some items, no need to stress. Simply use the item minting tool. Utilizing this user-friendly tool, users can create collections and NFTs for free – without needing to write a single line of code. Users only need to fill out the details like names and descriptions and OpenSea handles the rest. 

In addition, there are no fees for minting NFTs which is great considering the high gas prices on popular blockchain networks such as Ethereum. Users can sell without paying gas as well if they have initialized an OpenSea account.

To get started, make sure you connect your wallet to the OpenSea platform e.g. using Metamask through your web browser.

Select the wallet you wish to connect to the platform.

Read then if you want to proceed, accept the Terms & Conditions.

Once connected you can sign in.

You can then create your own collections. 

You can also browse other collections. 

From there you can go to your account page to view all of your items. 

Creating Listings

OpenSea allows users to create a few different types of listings. Each one serves a different purpose and has a different behavior.

English auction –  A seller offers an item for sale at a minimum price and awaits bids. After a duration, the seller accepts the highest bid. It’s the type of auction made popular by eBay.  It’s commonly associated with speed-talking, hammer-wielding auctioneers. 

Dutch auction – The Dutch auction was born as a solution to the problem of chaotic 17th century Dutch flower auctions. Ethereum’s limitations gave it an unexpected renaissance in the non-fungible token market. A seller starts by offering the item for sale at an improbably high price and gradually lowers the price as time passes. When the price reaches a level equal to a buyer’s valuation of the goods, the buyer can purchase the item and receive it almost instantly. 

Why Use OpenSea?

Trading on platforms like OpenSea is a trustless process so users don’t have to trust OpenSea or counterparties to behave appropriately. They can easily buy and sell without the threat of third party interference. The technology OpenSea utilizes allows users to buy and sell digital assets directly with their peers, all without relying on escrow or trusted third party payment processors.

Deals on the OpenSea platform are atomic. This means that either the whole deal happens or none of it does. In essence, p2p exchanges on OpenSea allow strangers to say to one another, “if you do that, I’ll do this” without worrying about who should go first.  

On traditional exchange platforms such as eBay, you have to pay the seller before they ship the goods. On OpenSea however, the seller makes a binding promise to sell goods for a certain price, the buyer makes a binding promise to pay the price, and when those two promises are paired up with one another, the deal happens in a single transaction. Things almost always go well, but when they don’t, it’s like the deal never started. No one’s left empty handed.

To make these features possible, each user must do a little bit of initial setup before making their first listing. The first transaction creates the user’s proxy account, which is a tiny little smart contract that only they can use. It allows them to interact with the Wyvern Protocol.

According to OpenSea, the Wyvern Protocol is an audited and secure suite of smart contracts that enables its users to swap state changes on the Ethereum network. At OpenSea, they use it to help users trade NFT ownership state for cryptocurrency ownership state. In simple terms, they use it to facilitate NFT sales.

The second setup transaction authorizes the user’s proxy account to move a given type of NFT on their behalf, so when the NFT sells, it can be transferred to the buyer instantly. Both of these transactions are free, except for the gas that the Ethereum network requires. 

Depending on the currency the user chooses to use, they may need to do a third transaction that authorizes the Wyvern Token Transfer Proxy to move ERC20 tokens on their behalf but unless they sign an order, Wyvern can’t move any assets.  

Apparently, Wyvern has moved tens of millions of dollars worth of value and no one has yet found a vulnerability that would allow hackers to confiscate tokens that don’t belong to them. After a user completes these two or three initial steps, they’ll only need to sign a message with their wallet to create a new listing. And it won’t cost any gas at all. 

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