OpenSea, the popular NFT marketplace which hit a $13 billion valuation at the height of NFT mania last year, is now being valued at just $3 billion by one of its biggest investors.
The markdown represents the latest setback for OpenSea, which has been grappling with plummeting NFT sales on its platform and a surge in competition from rival platform Blur.
DL News’ estimation of OpenSea’s valuation is based on a December report from Tiger Global, first published by The Information on April 20.
The report shows the venture firm, which focuses on tech, has marked down its OpenSea equity from $126.8 million to $30.2 million — a 76% drawdown. Tiger Global invested in OpenSea’s $300 million Series C round announced in January 2022.
“Tiger Global is not the only fund doing it,” Santiago R Santos, a crypto angel investor, told DL News. Santos said that the lower valuation is likely driven by the NFT sales on OpenSea falling well below the levels they were at during the 2022 funding round.
According to data from crypto analytics platform Nansen, OpenSea weekly trading volumes on Ethereum, the most popular blockchain for trading NFTs, hit $1 billion shortly after the Series C raise. However, one year later, weekly volumes have dropped to just $91 million.
While NFT trading volumes are down across the board from their early 2022 highs, the data shows a large portion of overall volume has moved from OpenSea to rival NFT marketplace Blur. Over the past week, Blur volumes topped $174 million compared to OpenSea’s $44 million.
“Opensea is in big trouble,” a private crypto fund manager who goes by the pseudonym nooman.eth told DL News. “Alongside the emergence of Blur, these financial write-downs bring into question whether Opensea will even be in this industry in the long run.”
“It’s also a sign of how frothy the market was when Tiger invested,” he said.
Blur, which officially launched in February after an initial token airdrop to early users, offers traders a lower commission fee of 0.5% and a host of advanced trading features. It successfully attracted swathes of high-volume NFT traders, leaving OpenSea struggling to compete.
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However, sceptics point to Blur’s ongoing token airdrop campaign as a major factor in its success. Some argue that once these token incentives stop, mercenary traders will look elsewhere to buy and sell NFTs — or even stop trading them altogether.
In response, OpenSea has launched OpenSea Pro, a rebranded version of the Gem NFT marketplace aggregator, to compete directly with Blur. Taking a leaf out of its rival’s book, OpenSea Pro gave out commemorative NFTs to early Gem users on its launch, and has hinted that more rewards for frequent users are in the works.
Tiger Global and OpenSea did not immediately respond to DL News’ request for comment.