Sequoia Capital plans to take advantage of many identified weaknesses associated with OpenSea’s NFT market dominance.
For OpenSea, should I use Google or Yahoo?
When it comes to NFT markets, OpenSea is the gold standard; this platform now controls more than 43% of the NFT trading sector. If you want to buy or sell an NFT, you’ll almost certainly do so on OpenSea, and with over $23.3 billion in transactions, OpenSea is the most successful NFT marketplace — so far.
Being at the top suggests that everyone wants to dethrone you; being number one implies that everyone wishes to dethrone you. Seasoned venture capitalists are vying for the top spot, and a group of venture capitalists, including Sequoia Capital, believe they have discovered exploitable holes in the OpenSea enterprise.
According to Shaun Maguire, a Sequoia Capital partner, OpenSea is too reliant on Ethereum, a blockchain that has its own set of problems. One of the most dependable techniques businesses utilize in this field is misinformation, which sows uncertainty in the public’s mind.
OpenSea is currently the largest NFT marketplace, but the people behind the service understand that this does not mean much if they do not continue to grow. Yahoo was formerly the undisputed champion of search, but they no longer compete in the industry. One question on everyone’s mind is whether OpenSea will continue to grow and become like Google, or whether it will stagnate and become like Yahoo.
Sequoia is banking everything on a new company built on “more efficient” NFT blockchains. Magic Eden, a startup that wants to make wonderful things happen in the NFT market, is receiving funding from Sequoia Capital and others. Magic Eden uses the Solana blockchain to verify its NFTs.
The capacity to perform transactions at market-beating pricing while enabling more transactions simultaneously than Ethereum is one of Solana’s benefits. Magic On March 14, 2022, Eden announced the conclusion of its second fundraising round, receiving $27 million from a consortium of investors led by Sequoia.
Unfortunately, the valuation after this investment round was not disclosed, allowing many people to guess. One thing is certain: whatever the valuation is, it will be far below the $13 billion that OpenSea is now valued at.
The decision to back Magic Eden presents a plethora of unresolved questions. Why did Sequoia and other experienced venture investors choose Magic Eden over a larger NFT marketplace like Rarible, KnownOrigin, and others?
Many analysts perceive this as a gamble, a last-ditch attempt to salvage anything from the NFT economy. As Magic Eden grows its presence in the NFT market, it needs to keep an eye on other current NFT marketplaces as well as OpenSea’s probable Solana adoption.
