open sea announces that users who buy and sell non-fungible tokens (NFTs) on its platform can see costs drop by about 35 percent. This is due to the company upgrading the protocol underpinning its market and migrating to a platform called Seaport to handle its trades. Offering lower gas rates can be a way for OpenSea to differentiate itself from the other NFT marketplaces that compete with it (though not always successfully). However, the change comes at a difficult time in the crypto market in general.
Seaport is an open source project that OpenSea announced last month, and the company says it is significantly more efficient than its old system when it comes to handling the blockchain. (The Seaport Announcement includes a few technical details about why that is, if you’re interested.) According to OpenSea, new merchants no longer have to pay the initialization fee, which I believe ranges from $50 to $450. That’s in addition to the reduction in transaction fees.
The fees that are eliminated or reduced are called gas costs, which OpenSea does not control or profit from. Instead, they are a cost on blockchains like Ethereum or Polygon. The crypto that you pay in gas money goes to the miners who have to ensure that your data ends up on the blockchain. The more data you want to write or the more actions you want to take, the more gasoline you have to pay. How much that gas costs depends mainly on how busy the blockchain is; the more people try to pay for transactions, the more you have to offer to ensure your transaction is executed.
What that looks like for NFT marketplaces is that users end up paying more for an NFT than just the selling price. While that is still the case, those fees should at least be less expensive. As I write this, the gas fee to buy an NFT on the Ethereum blockchain using OpenSea is about $10, according to The Functor Labs math site†But again, that number varies from a number of factors, including the price of Ethereum (which has fallen all week – more on that later).
OpenSea does say that the lower gas costs will not immediately be universal. It notes that sellers must pay a one-time fee for each pool they approve to use the new protocol if they want less costs when selling or transferring NFTs within that pool. (Collections are the way you group the NFTs you sell – for example, the Bored Ape Yacht Club NFTs are all in one collection.) For the sellers who have all their NFTs in one collection, that may not be much of a problem ; but for those with dozens of collections, it can get expensive.
OpenSea also promises that the migration will bring new features in addition to the reduced rates. Buyers will now be able to make offers on a whole collection of NFTs, and the marketplace will have something called ‘property offers’ that will allow you to bid on any NFT in a collection with a certain characteristic. For example, I could make a property offer for any bored monkey with pink fur. OpenSea says this will only be available for “the top 100 collections” that use static attributes for now.
The company hopes the upgrade to Seaport will allow it to introduce other features at a faster pace. The big question now is whether the new features it offers or the lower cost will be enough to generate more interest in NFTs. As the crypto market generally loses value, NFT sales on OpenSea and other markets have collapsed. While gas costs probably didn’t help, it’s hard to imagine they’re the cause of people starting to lose interest in NFTs.