Curve to save the country? Detailed explanation of how Opensea’s new Deals feature solves the liquidity problem of NFTs.
Opensea's new Deals feature solves NFT liquidity problem Detailed explanation.
Today, Opensea released a new NFT bundle exchange feature called Deals, allowing users to exchange their NFT bundles with other users’ NFT bundles.
According to Odaily Star Daily, Opensea actually introduced this peer-to-peer “NFT bundle trading mode” when it launched the Seaport protocol in May this year, but the feature has not been made available on the Opensea frontend.
In the bear market, NFTs have been criticized for their lack of liquidity, and NFTs held by collectors (especially non-blue-chip and non-utility NFTs) have little use other than self-appreciation (or self-regret). As a result, various platforms have emerged to address the liquidity problem of NFTs, either by using lending or leasing models to release liquidity, or by further “FT-izing” them using financial derivatives. However, fundamentally, non-fungible NFTs still have a single trading mode.
Opensea, as the former dominant NFT trading platform and today’s second only to Blur, ignited hopes of “solving the liquidity problem of NFTs” when it launched the Seaport protocol. Now, the related feature, Deals, is finally live. Odaily Star Daily will verify its working principle and effectiveness through experience, introduction, and analysis, and also share some thoughts on the competition in the NFT market.
Introduction to Deals Feature
The Deals feature is derived from the Seaport protocol, which is a decentralized smart contract protocol used to create and fulfill orders for ERC721 and ERC1155 tokens. Each order contains a token combination provided by the supplier and a token combination required by the recipient.
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The Deals feature allows buyers to apply to purchase a certain number of NFTs from sellers by bundling a certain number of NFTs and tokens of equivalent value on the same chain.
For example, User A wants to exchange two Azuki NFTs, currently valued at 5 ETH, for a Bored Ape NFT held by User B, currently valued at 30 ETH. User A needs to search for User B’s address through the Deals interface, select the Bored Ape in User B’s wallet to generate a purchase order, and then select their own two Azuki NFTs. They will use WETH to make up the price difference according to the current market value, and initiate the transaction request to User B. Once User B agrees, the transaction is completed.
As you can see from the example, this peer-to-peer bundling trading mode is more suitable for the exchange of NFTs of equal value, such as Doodles and Azuki during the bull market phase. Of course, Opensea has also considered this and introduced WETH to make up the price difference, increasing the flexibility of “non-equivalent exchange transactions” and further enhancing the possibility of NFT liquidity.
In the face of strong competition, Opensea seeks change
Opensea has significantly accelerated its pace of updates, from launching the new Seaport protocol in May this year to introducing the Deals feature today, compared to its previous slow progress. The reason behind this is not hard to understand:
The above chart shows the weekly trading volume of the major NFT trading platforms in the past two years, as seen in the Dune panel. It can be seen that from the end of last year to now, Opensea has gone from being the former dominant player to being eroded by Blur, prompting Opensea to innovate and regain market share.
In addition to the token economy, Blur’s success also depends on its product model and supporting operations. Blur focuses on the model of bulk selling and bulk buying, supplemented by the newly launched NFT lending platform Blend, forming an NFT trading matrix to increase the liquidity of NFTs.
In comparison, Opensea’s previous functionality was relatively single, only allowing single purchases through tokens, which is not conducive to bulk purchases by large holders. This has led to a significant loss of market share. Can Opensea’s new feature, Deals, reverse the situation and regain its previous position?
Deals is a trading model that differentiates it from other platforms. It uses an interactive combination trading model to solve the liquidity problem of NFTs by facilitating barter-like transactions, reducing the transaction process. What are the advantages of this model?
Taking Blur as an example, its trading model involves bulk selling and bulk buying. Essentially, it follows the steps of traditional transactions, where the buyer pays and receives the goods. The only difference is that it improves convenience from the user’s perspective, but it does not increase the liquidity of NFTs. In contrast, Opensea’s Deals allows buyers to exchange their NFTs with sellers’ NFTs by packaging them with tokens, eliminating the need for buyers to sell their own NFTs separately.
However, the Deals model also has its drawbacks, such as the inefficiency caused by delayed interaction. After the buyer applies, there are no further steps to facilitate the transaction, and they can only wait for the seller’s acceptance or rejection. This process also increases the time cost.
Both Blur’s bulk mode and Deals have different applications. Blur is more suitable for periods of high NFT liquidity during a bull market, as its usage is relatively user-friendly. Deals, on the other hand, are more suitable for bear market phases, where it increases the possibility of transactions in a market with low liquidity.
(By the way, I would like to give a suggestion to Opensea. If they can add a chat window plugin for buyers and sellers, it may increase the possibility of successful Deals transactions.)
NFT Projects Are Cooling Down, NFT Platforms Are Warming Up
As many NFTs become dust, platforms that primarily focus on NFT trading are also facing challenges. Compared to 2021, the overall trading volume has significantly declined this year. The disadvantages of insufficient NFT liquidity have become more apparent.
However, there is hope as ERC6551, Blur’s Blend lending, and Opensea’s Deals feature emerge one after another, providing new vitality to NFTs in different dimensions:
ERC6551, as a new smart contract protocol, can enhance new combinations of NFT gameplay, improving the operability and utility of NFTs at the underlying level (NFT as wallets, NFT as identity). It is suitable for multiple fields, which makes me think of the possibility of combining NFTs and FTs as a whole for sale, such as airdrops for new projects.
There are many NFT lending protocols, and Blend, directly integrated with Blur, which currently holds the largest market share, can stimulate the release of NFT liquidity and increase market activity.
Opensea’s Deals feature changes the existing NFT trading process by omitting transaction steps. It may be a powerful tool to stimulate the improvement of NFT liquidity, but further observation is still needed.
It is gratifying that practitioners in the industry are still committed to innovation and have not been idle. These small iterations during the bear market may become powerful weapons in the future bull market.