Is OpenSea an undervalued NFT marketplace?

Without a doubt, 2021 has been a momentous year for nonfungible tokens (NFT). The nascent market has seen unprecedented growth as sales volume from January to date nears $10 billion — a 14,500% surge from 2020. The NFT marketplace OpenSea is responsible for processing a great chunk of that. 

OpenSea controls a majority of NFT sales and has processed more than $10 billion worth of transactions since launching in December 2017. Its 2021 volume alone even topped the revenue earned by Etsy and is comparable to the revenue generated by eBay. But despite this, it appears as though OpenSea and the entire NFT space are just getting started.

In the past 30 days, OpenSea processed more than $1.6 billion in transactions, leading all other marketplaces by a wide margin. NFT game Axie Infinity comes in at a distant second, with $675 million, and CryptoPunks, whose average price per sale is 447 times higher than OpenSea, comes in at third with $165 million. Surprisingly, Rarible, which in 2020 rivaled OpenSea in sales and even headlined a funding round of its own this year, pales in comparison to the transaction volume OpenSea has been posting recently.

OpeanSea’s growth

OpenSea didn’t start the year registering billions of dollars in sales. From January to July, the marketplace processed an average of about $106 million worth of transactions, per DappRadar. It was not until August when the billion-dollar mark was reached, which came amid a resurgence of NFT sales following a cooldown period from a prior peak in activity in May. Sales topped at $3.4 billion that month, marking a 1,025% increase from July.

Demand continuously increased despite rising gas fees that have frustrated a growing number of users. OpenSea has addressed this issue with its integration with layer-two Ethereum side chain Polygon and has provided cheaper and faster transactions since July.

While most of the transactions still take place on the Ethereum blockchain, Polygon-based volumes on OpenSea exhibit decent numbers. Data from Dune Analytics reveal that about $111.5 million worth of transactions has been processed since September — still a cut above the volume generated by other marketplaces in the past month. Active users are also well beyond 200,000.