OpenSea was founded in 2017 by Devin Finzer and Alex Atallah. Since then, it has grown into a multi-billion dollar business. OpenSea is an online marketplace that allows users to purchase, sell, and trade NFTs via its website. Earlier this year, on January 14th, OpenSea was valued at more than $13 billion, meaning that it is the dominant player in selling NFTs. This figure has probably left you wondering how you can get involved?
In short, OpenSea makes its money by charging a service fee, which is paid every time a digital asset is successfully sold on its platform. For every transaction, OpenSea takes a 2.5% service fee, meaning that a transaction of $1,000 generates OpenSea a revenue of $25. Additionally, to initialize a user’s account, OpenSea charges a one-time fee between $70 and $300. OpenSea also charges a fee of approximately $10 to $30 to gain access to a user’s NFTs.
While a 2.5% service fee may not sound like a lot, when we consider the scale of some transactions, then it can equate to a ton of money. For example, three months ago, BAYC 7537 was sold for 1,024 ETH. At the current value of ETH, that is $13,506,96.00. 2.5% of that figure is $33,767.00 for that single transaction which probably took no longer than a few minutes. This example may be on the extreme side, but when we consider how many transactions are happening on a daily basis, it becomes quite evident how OpenSea has made its fortunes.
So how can you get involved and make money? There are a few options, but the most realistic and accessible ones are to either trade NFTs, or launch your own NFT collection. For this article, we’ll focus on launching your own NFT collection. The revenue generating business model the OpenSea have, and the business model that project founders have, aren’t too dissimilar.
If you launch your own collection, you raise a certain amount at launch. Then, the way that you keep the cash flowing is through royalties, which essentially is the same as OpenSea’s service fee. You can choose a percentage (usually between 2 – 10%) which goes back to your pocket per NFT traded from your collection. It might seem like a distant dream to make billions like OpenSea, but if you start now, your chances of success are going to be higher.