No VCs Allowed: How NFT.com Aims to Take On OpenSea

Right now in the NFT market, there's OpenSea—and then there's everyone else. Far, far behind.

OpenSea currently dominates the NFT marketplace space, racking up billions of dollars worth of trading volume each month. While there are noteworthy rivals on the horizon, including crypto industry powerhouses like Coinbase, none have made a significant dent in the NFT trading world just yet.

NFT.com hopes to change that. Led by CEO Jordan Fried, former senior vice president of Hedera Hashgraph, the startup aims to leverage that valuable domain name (which Fried said cost his company $2 million) and branding to onboard mainstream users into the maturing NFT market.

But as Fried and advisor Kevin O’Leary—investor and star of "Shark Tank"—recently told Decrypt, the plan isn’t simply to slap an easy-to-remember dot-com onto OpenSea’s familiar model. NFT.com’s creators take issue with the idea of a marketplace backed by venture capital firms, and they want to create something that is governed by their community of users.

“A lot of the other NFT marketplaces are Web2 companies putting lipstick on and calling themselves Web3 platforms,” Fried told Decrypt.

An NFT is effectively a blockchain-backed receipt that proves ownership of an item. It’s typically used for digital items, such as illustrations, profile pictures, sports collectibles, and video game items. The market ballooned to $25 billion worth of trading volume in 2021, with another $12 billion added in Q1 2022, per data from DappRadar.

In terms of how NFT.com plans to differentiate itself from its many competitors, the company's website clearly states: no VCs and no limited partners. Instead, NFT.com will launch 10,000 Genesis Key NFTs—to be auctioned and sold—that serve as governance tokens to the marketplace, which will be overseen by a DAO, or decentralized autonomous organization. Holders can also mint an NFT to represent their personal profile on the platform, which will showcase their owned collectibles.

Fried said that the marketplace’s model is built on the idea that users and NFT creators will accrue value as the marketplace grows. “Our users are the CEO of NFT.com,” he said, adding that he considers himself more of a “steward and evangelist” than a proper CEO.

The idea of a token-driven, community-owned NFT marketplace without VC backing isn’t new, but it has yet to be executed at significant scale. Fried also said that previous attempts haven’t had “fully doxxed teams,” or creators that use their real names and backgrounds rather than pseudonyms.

He also suggested that creators—like Yuga Labs, the team behind the Bored Ape Yacht Club, or the founders of projects like Doodles or World of Women—should have some measure of control in the NFT.com ecosystem, as well as a relationship with the marketplace’s team.

“They don't have an account manager at OpenSea. They don't have a direct line to Devin [Finzer] and Alex [Atallah], the CEO and CTO. They're not valued,” he said of creators. “OpenSea is valued at $13.3 billion… but the people who helped them get there are not a16z and the investors. It's the creators who are creating NFTs on this platform.”

Starting on Ethereum

NFT.com is due to open up in May, and while Fried is partial to Hedera—and the marketplace’s team has a few other Hedera founding members onboard—he said that the platform will begin life in the Ethereum ecosystem. Ethereum plays host to such projects as the Bored Ape Yacht Club, CryptoPunks, and Art Blocks.

It’s currently the largest network for NFT trading, and DAO members will vote on additional networks to integrate within the marketplace. Fried mentioned the growth of other NFT-hosting blockchains such as Solana, Avalanche, Polkadot, and Algorand, but said that “they pale in comparison to the unbelievable creator economy of Ethereum."

“Our philosophy is to support NFTs wherever NFTs exist. But you have to start on Ethereum,” he explained. “No other protocol even comes close right now. All of our original infrastructure is on Ethereum, but we hope to be multi-protocol as soon as we've got the capabilities and as soon as our DAO enables us to do so.”

NFT.com also sees significant potential in the market for NFTs that represent real-world goods. Avatars and artwork have shown the utility of NFTs, but they can also be tied to physical items—things like real estate, luxury watches, or stock certificates.

“Everything of value in the physical world will be represented in this digital world in the form of a token,” said Fried. “That's what gets me so excited about the opportunity with NFTs. They are better ways to transfer proof of ownership of a particular asset.”

Mr. Wonderful’s take

O’Leary, aka “Mr. Wonderful” from the "Shark Tank" reality TV series, is an advisor to NFT.com and shareholder in Immutable Holdings, the core company that is building the marketplace ahead of its official launch and transition to DAO governance.

The investor and TV personality has said that he holds various cryptocurrencies and took part in Polygon’s $450 million fundraising round in February. He told Decrypt that he likes to bet on infrastructure, and likened his interest in NFT.com as being akin to “owning the picks and shovels” during the gold rush.

O’Leary said that he’s constantly being asked about NFTs by celebrities that are interested in the space, but they don’t really understand it or know where to start. Now he funnels them to Fried and the NFT.com team.

“[Celebrities] don't know what to do. They get approached by a million people, and many of them are rogue actors,” O’Leary said. “You want to go somewhere where you're going to get good advice, where you can get the infrastructure you need, and I just send them to him. That's probably my best value for the company, is to be an advocate for it.”

OpenSea has a considerable first-mover advantage and has dominated the NFT market since last August’s “second boom” following the initial early-year market surge. But O’Leary doesn’t see the market leader as unbeatable. As the NFT space matures and expands, he expects that rivals like NFT.com can claw away at OpenSea’s lead.

“The game hasn't even started for NFTs yet. It's not like we're in the second inning—it hasn't even started,” he told Decrypt. “[OpenSea is] out there, but by no means have they become the standard in any way. There's all kinds of opportunity here.”