OpenSea vs. Foundation

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It’s no secret that the NFT space is booming. With Coinbase’s NFT marketplace still yet to be released, OpenSea is by far the biggest and most well-known NFT marketplace. But NFT fans shouldn’t limit themselves to just one marketplace. Foundation offers some incredible art collections by famous NFT artists, and other cool features too. Either marketplace has its own drawbacks- which we’ll go over.

NFTs? WTF?

NFTs are like art- they are one of a limited number (often just one), they have some aesthetic value, and they can appreciate, lose, or hold value, and they can provide some form of daily utility. Think of an NFT you own as a deed on a house you own- it’s a thing recognized by others as being yours. You get the benefits that come with that, whatever they may be: access to an exclusive discord, owning an NFT from a collection that Tom Brady & Snoop Dogg own, etc.

This ‘deed’ in the crypto space is most likely an ERC-271 token or smart contract on the Ethereum blockchain that says you’re the owner of a specific NFT (when you buy one). Ethereum is the blockchain right now for NFTs, although that could change in the future. Likewise, OpenSea is the NFT marketplace- but is it really the best one? Why would someone choose another exchange (like Foundation) over OpenSea?

Foundation is exclusive

Exclusivity is a big reason why humans do a lot of the things we do. We like status. People drive Teslas and Ferraris because it signals to other people they’re rich or sexy. It sounds dumb when I type it- but it’s true. How is Foundation exclusive, then? On Foundation, you cannot sell or mint NFTs on the platform unless you’re invited by one of Foundation’s existing artists. Compare this to OpenSea, where just about anyone can mint and sell NFTs.

There are thousands upon thousands of NFT collections on OpenSea- and most of them will go to zero. This is because NFT supply greatly outstrips demand.

Since OpenSea allows anyone onto the platform to create, they’ve got some huge problems with copycat collections and fraud.

Art is just as much about the artist who created it as it is the piece itself (if not more). Foundation prides itself on being a platform that only auctions NFTs from legit artists. Since only a select number of artists are considered ‘legit’ and let onto the platform, this creates scarcity- a key element in the art world. Scarcity ensures that pieces can hold their value.

Fees on OpenSea vs. Foundation

OpenSea has a pretty standard fee structure: sellers pay a 2.5 percent commission on sales, and buyers are not charged any fees. Foundation, on the other hand, charges some super-high fees. At Foundation, there’s a whopping 15% fee baked into the sale price of the NFT. This means the buyer will pay the fee via the sale price, and the seller will get less than what they wanted or not be able to find a buyer because the price is so high with the fee baked in. Combine this with the same Ethereum gas fees you have to pay on OpenSea and you’re talking about lighting some money on fire every time you transact with Foundation.

The caveat here with Foundation is that the original NFT creator will earn a 10% commission on all future sales of the NFT. This is great news for artists if they can manage to secure a spot as a seller on the platform. If you create a piece that people love, you could make plenty of money to sustain your art practice as you rake in royalties indefinitely from your art.

I hate fees, and you should too

I consider astronomical fees like this a danger to the crypto and NFT space since they make it less inclusive. I also consider it part of the many risks associated with NFTs. Foundation and other NFT marketplaces consider these fees ‘low’ when compared to traditional art commissions on paintings and the like. NFTs aren’t like traditional art, though- it’s comparing apples and oranges.

For the space to grow, fees need to be low, fraud needs to be less pervasive, and there need to be real-world use cases for NFTs. Although I’ve been very open about how much I hate Robinhood, one great thing they did was introduce commission-free trading. Their introduction of free trading forced their competitors (E*Trade, Schwab, etc.) to drop their fees to zero.

The positive note here is that if you find a great NFT collection early, you can earn several times your initial investment. I have some rules for making money on NFTs, some of the most important of which are a) don’t get into NFTs to make money and b) be patient. These are things I didn’t abide by (and still don’t). And I haven’t made money in NFTs!

User Experiences

To summarize:

Foundation has a simple, cool user interface.

OpenSea has a great interface too, one that more closely resembles an online marketplace like eBay or Amazon.

Foundation is geared toward art auctions, the same way that most art in the ‘real world’ sells at auctions. Since Foundation only sells from a limited number of artists, the number of available NFTs you can bid on is far smaller. That’s not to say there isn’t a selection on Foundation- the platform still has over 25,000 creators. Both OpenSea and Foundation allow users to sign in by connecting a wallet, meaning that there’s only an allowance of one wallet per account. This frustrating fact has led me to write a piece about how to change your wallet on OpenSea on your account.

Both sites have areas where users can view the collections with the highest volume of sales, while Foundation has a section exclusively devoted to the top creators. Foundation has more of a focus on these all-star artists and is more about the “who made it” rather than the “what collection” that OpenSea focuses on.

Conclusion

Although I think we’re well past prime on the NFT hype curve, it’s clear that both OpenSea and Foundation have carved out spaces and have bright futures. NFTs are still an incredibly small niche space, so explosive growth is still highly likely. Foundation seems to be a little artsier and a little more expensive and exclusive. In the art world, this is generally seen as a good thing. If I had to guess, I’d say pieces on Foundation will have a higher likelihood of holding or increasing their value.

In the future I see both marketplaces coming under regulatory scrutiny- which isn’t necessarily a bad thing. Unlike what many believe, regulation could actually bring a lot more investment into the crypto and NFT space. As always, trade with caution!

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