OpenSea and Magic Eden are more similar than different:
- Both are the top dogs on their respective L1s.
- They outrank any other marketplace for volume on Ethereum and Solana respectively. E.g. Magic Eden controls ~90% of all volume for Solana NFTs and Open Sea dominates around ~80% of the volume on Ethereum.
- Many competitors have tried but have not succeeded because of how entrenched OpenSea and Magic Eden are
The strength of these two protocols can be seen from the monthly sales volume charts. At their peak in Jan 2022, these protocols were doing $5B+ in sales volume!
# Shots fired
In the recent bear-market, the sales volume has fallen heavily from the lofty peaks of 2021 but both of these marketplaces have gone in to expansion mode out of their home base. They are hoping to build on their popularity and expand to multiple L1 chains and capture volume from the incumbent.
The first shots were fired by OpenSea in April, when they announced their expansion to Solana.
Very recently, Magic Eden returned the favor by announcing they’ll be expanding to Ethereum — OpenSea’s home turf.
Some say that was Magic Eden’s “MJ” moment.
# What’s happens next?
Now, the question is what happens next. Where do these marketplaces go from here.
Now, this is where we bring in the real jp12.
Well, not a full doxx today but a small one.
You see, in real life answering questions like “what to do next” is part of my day to day. I craft the product strategy and user-experience in my day job. And the rest of this analysis is me putting myself in the shoes of Magic Eden and OpenSea CEO/PM.
# So, Avalanche huh?
Let’s start with TVL which is a good proxy for activity happening on the chain. Avalanche today is the #3 EVM chain behind Ethereum and BSC.
At its peak, Avalanche’s TVL reached ~$12B and was more than Terra 1 (classic) when LUNA and UST were a thing.
But the NFT scene has not taken off so far. When was the last time you heard about popular NFTs on Avalanche? I certainly didn’t until….I looked below the surface.
## Finding signals of life
Even DappRadar, will tell you that the NFT scene on Avalanche is a desolate, barren place. DappRadar shows only 2 marketplaces and the top one’s done about ~$450K of volume in the last 30 days.
## Trader Joe
But, those well versed in the Avalanche ecosystem will know that the most popular DEX on Avalanche —Trader Joe— recently launched an NFT marketplace which has been doing quite well.
The top 10 collections have done around 25,000 AVAX volume which at today’s AVAX price ($25) is around $625K and this is not even visible on DappRadar!
# To the blockchain!
Now, to find the answer about — “How NFT scene on Avalanche is doing?”— we need to go straight to the blockchain and use the data. When I say “straight to the blockchain”, I mean kinda because we have Flipside Crypto offering us free blockchain data for Avalanche and many other L1s. So all we need to do is power up our SQL-fu and write some queries.
Here’s what I found.
## Weekly sales
The overall weekly sales number have increased by 2x and reached a peak of 10K in July.
Denominates in $USD terms, the weekly sales volume reached a peak of ~$1.1M in the week of July 4th.
And denominated in AVAX terms, we broke the 40K AVAX weekly sales in the week of July 4th.
## Total Sales
Now, we look at the total sales since May 15th (that’s as far back as Flipside’s Avalanche data goes atm).
- Looking at the total sales volume, we can see the meteoric rise of JoePegs since the middle of June. In 2 weeks between June 15th and July 1st, it became the marketplace with the most sales volume. Overall, it has quickly risen to 70K AVAX/$1.8M in total sales volume.
- NFTrade and Chikn are the other top marketplaces in top 3 each with more than $1M sales volume since May 15th.
The meteoric rise of JoePegs can be visualized this animated chart. Use the “Ranks” button to visualize the weekly ranks of marketplace.
Looking at the total number of sales, we see that JoePegs only recently overtook the #1 ranked marketplace and about 2 weeks later than it became #1 by sales volume. This means that in the two weeks between 15th June and July 1st, there must have been some NFT collection with a high floor price.
## Weekly sales average
Now, we look at the weekly sale average and we notice that the “Chikn” marketplace stands heads and shoulders above the rest.
NOTE: I’m only including marketplaces with at least 50 weekly sales to make sure low number of sales doesn’t impact the average.
Chikn is doing around 18–22 AVAX/$450-$550 per sale while every other marketplace is averaging at least 2–3x less.
Looking at the Chikn marketplace we can see the weekly average is not an anomaly as the floor price for a “Common” NFT is 30 AVAX.
# Comparison with OpenSea on Polygon
If we look at OpenSea, outside of Ethereum and Solana, they’ve also deployed their marketplace on Polygon. If we look at the NFT scene on Polygon, it’s a bit similar to Avalanche i.e. when was the last time you heard about a hit collection only launching on Polygon?
From a TVL perspective, Polygon is fairly close to Avalanche and is also a direct competitor. The relationship gets quite fiery on Twitter 🔥👀
Therefore, it makes sense we compare Avalanche’s NFT scene to that of Polygon which is much more mature at this point.
We find that in the last 3 months OpenSea on Polygon has done about 3x the volume of all marketplaces on Avalanche.
If a marketplace was to charge the standard 2.5% fee, they would have generated a revenue of around $500K on Polygon and $160K in Avalanche.
# Conclusion: So why deploy on Avalanche next?
If I was the CEO of Magic Eden or OpenSea, here’s why I would deploy on Avalanche next.
- Lack of a recognized player — The NFT marketplace scene on Avalanche is scattered with no strong recognized name. We saw what happens when one of the top DEXes and the most recognized player — Trader Joe— deploys an NFT marketplace. They instantly shot to #1 in sales volume. Now imagine when an even more recognized name like OpenSea or Magic Eden deploys?
- Benefits for OpenSea — Deploying on Avalanche should not be a bigh project for OpenSea as they have quite a bit of history of developing on EVM chains. JoePegs has proven the demand for NFTs is there on the chain and a strong brand like OpenSea stands a chance to dominate marketshare on Avalanche. The additional revenue in the next bull market would be accretive to overall OpenSea revenue.
- Benefits for Magic Eden — The benefits for Magic Eden are even higher if they are able to deploy before OpenSea on Avalanche. Since they recently deployed on Ethereum, building on EVM chains should be easier. If ME is to compete with OpenSea and surpass OpenSea’s sales volume, they need to take advantage of first-mover advantage on nascent NFT scenes for when the next bull market rolls around.