Here at CoinGecko, we’ve talked about non-fungible tokens (“NFTs”) and ERC721 tokens, which are also sometimes simply referred to as ‘collectibles’ due to their unique individual natures. In this brief guide, we will be looking at trading such collectibles on OpenSea, which is the first and probably the largest decentralized NFT marketplace out there today.
A Quick History of OpenSea
Despite being the first decentralized NFT marketplace, OpenSea was only founded in January 2018 (which shows just how new NFTs are) by Alex Atallah and Devin Finzer. According to various interviews, after doing some Ethereum-related crypto hackathons and seeing the success of CryptoKitties, they decided that the ecosystem was ready for a generic marketplace for trading NFTs.
Since then, OpenSea has experienced significant organic growth and as of August 2018, one of the creators shared that there had been over 1,000 ETH (~$2+ million) exchanged over the marketplace, which currently supports over 1 million assets across over 50 categories.
Prerequisites for Trading Collectibles on OpenSea
Since OpenSea is for tokens implementing the ERC721 standard, it is intrinsically connected to the Ethereum network, meaning smart contracts. As a decentralized marketplace, OpenSea does not hold on to any assets; much like decentralized exchanges, all transactions are conducted through a smart contract, which you can view on Etherscan here.
The prerequisite to start trading on OpenSea is either a MetaMask account (on desktop), or a mobile wallet like Cipher or Trust. For the purposes of this guide, I’ll be using MetaMask. Once you sign in to your MetaMask account, it will automatically be linked to OpenSea when you visit the site and you should be able to view all your transactions and the balance in your MetaMask wallet.
The prices quoted on each asset is in ETH, and as you can see this can be a very expensive game with some characters going from 50 to over 100 ETH, which is USD10k to USD20k! So don’t think that just because it’s a ‘game’ that there isn’t some serious money involved. Let’s look at CryptoKitties which although has their fair share of extremely expensive kitties, has plenty of cheap ones as well.
Before you can start trading however, you’ll also need to convert your ETH into W-ETH (wrapped ETH) by going to the ‘W-ETH Station’ from the My Account drop down. Note that you’ll have to confirm this conversion on MetaMask and you’ll also be charged a gas fee.
Buying and Making Offers
Let’s say I want to buy CryptoKitty ‘Ora’ which is currently listed for 0.01 ETH. I can choose to either buy it at the listed price, or try to bargain by making an offer.
Here I can see that although the price is low, no one has made an offer on Ora yet. Further, it was last sold at 0.0018 ETH So I will try to get a lower price by making an offer at 0.002 ETH instead. Note that if the owner accepts your offer, the amount will automatically be deducted from your wallet.
Once again, you will have to confirm your offer on MetaMask and pay a gas fee. Once your offer is submitted you have the option of giving OpenSea your email address which they will use to inform you in the event your offer does get accepted.
However, let’s say I am impatient and just want to buy Ora outright at the listed price of 0.01 ETH. First, let’s see how I can cancel my earlier offer of 0.002 ETH. This can be done by clicking on ‘My Offers’ from the ‘My Account’ dropdown and then simply clicking ‘Cancel’. Note that even cancelling orders need to be confirmed on MetaMask and will yet again incur a gas fee.
Now that I’ve cancelled my offer, I’m just going to buy ‘Ora’ outright. However, note that while making an offer uses W-ETH, buying an item outright just uses straight up ETH. This means that I had to unwrap my W-ETH back to ETH (again paying a gas fee) before buying. The reason for this, according to OpenSea’s blog, is technical; W-ETH allows the same pool of Ether to be used to bid on many different items.
IMPORTANT NOTE: Making an offer requires W-ETH but buying an item at the listed price requires ETH. Make sure you’re aware of this distinction so as not to waste money on gas fees from wrapping and unwrapping your ETH.
Here you can see that I now own the CryptoKitty Ora, under the ‘My Activity section as well as the ‘In Wallet’ section.
If you want to see your crypto collectibles on MetaMask you’ll have to add the token through the ‘Add Token’ function. Do note that although MetaMask does support ERC721 tokens, the graphical user interface is currently unable to show the specific details about each collectible. So in my case, for example, it merely shows ‘1 CryptoKitty’.
Listing an Item for Sale
Let’s see now how to sell an item on OpenSea. To do so, go into your wallet from the ‘My Account’ section and click on the asset which you wish to sell. The following screen will popup.
Once you click Sell you will see various options, from a basic fixed price, to a declining price auction, or to group it as part of a bundle.
To keep things simple, I’m just going to list a basic fixed price, and at a discount rate of 0.007 ETH. Since this is my first sale, OpenSea needs to initialize my account by performing a free transaction (with gas). Subsequently, all future sales can be done without paying any gas fees. You do still have to sign the transaction on MetaMask however.
The listing should also be viewable on the ‘Activity’ tab in the ‘My Account’ section. If someone agrees to buy the asset at your listed price, the sale will be automatically executed.
And that’s it, using OpenSea is actually pretty straightforward; the interface is user-friendly, and even a crypto beginner shouldn’t have too much of a problem figuring it out.
What About the Fees?
As stated on their FAQ, OpenSea takes a 2.5% fee on the price of each successful sale. This fee may be split with the with the original creator of an item if they have an official partnership with him or her. Of course, as OpenSea is run on the Ethereum network, the standard gas fees also apply in most cases.
Conclusion: OpenSea is an Easy to Use Marketplace that Benefits the NFT Community
NFTs are still new, and their more ‘real world’ use cases have yet to go into application. Their current uses may still be limited to ‘games’, but the more the crypto community gets involved in NFTs, the higher the chance that we will see more relevant use cases sooner rather than later. In that sense, OpenSea is playing a valuable role by providing an easy to use marketplace that allows the NFT ecosystem to thrive.