Coinbase NFT Marketplace Has Sluggish Start, but Experts Say Space is not ‘Collapsing’
Coinbase opened its long-awaited NFT marketplace — which had been in beta mode since April 20 — to everyone on May 4, but failed to attract many users in the first few hours. While this caused some commentators to say the NFT market was collapsing, several experts have a more positive view, saying that the early fate of the marketplace represents a consolidation of the industry.
The Coinbase marketplace had a waitlist of more than four million users as of April 21, as GOBankingRates previously reported, but the site recorded fewer than 110 transactions in the first few hours of May 4 — representing less than $60,000 in sales, according to Bloomberg (citing Dune Analytics data). This comes against the backdrop of NFT sales drastically slowing down in the past few months following an explosion in popularity and sales in 2021, and prompted The Wall Street Journal to say that “NFT sales are flatlining.” But several experts don’t agree with this premise.
Garry Krugljakow, founder and CEO of GOGO Protocol, told GOBankingRates he thinks The Wall Street Journal got it wrong.
“Volumes on the big NFT platforms, like OpenSea and Magic Eden, are soaring — also thanks to integrations with layer-2 chains, such as Polygon, which have drastically brought down transaction fees. We are still in the early innings of this technology, and it’s clear that more people are buying from a wide variety of NFT collections and in greater numbers,” he said.
He added, however, that there might be something of a consolidation happening now in the NFT market — a consolidation in which users are buying so-called blue-chip projects, such as Bored Ape Yacht Club, Okay Bears and DeGods.
“So they might be receiving the bulk of the volume. I just don’t think the apparent flop of the Coinbase NFT platform is a good example of gauging the health of the NFT market. Its competitors already have a huge advantage in being first movers, after all,” he said.
NFT Market Not Collapsing, Analysts Suggest
With nearly $8 billion traded in the first quarter of 2022, the market cannot really be considered to have collapsed, according to NonFungible, which qualifies the phenomenon as “more of a form of stabilization, in line with the last quarter of 2021. Conversely, the volume of sales fell by nearly 50%, with a very marked slowdown in the volume of buyers and sellers.”
Coinbase’s slow start is due to several factors, according to experts, including the fact that it’s viewed more as a traditional platform which, in turn, “requires a whole lot of personal data being handed over, which is not popular in the crypto world,” Krugljakow explained.
Toni Caradonna, CTO of Cross the Ages, agrees, telling GOBankingRates that many other platforms operate in a way in which you don’t have to disclose all your personal data, which is attractive to a lot of crypto users, “many of whom worry about encroaching surveillance.”
“When you use Coinbase, all your data is captured,” he said.
Caradonna added that one of the most important reasons Coinbase’s platform hasn’t worked as hoped (so far), is that platforms such as OpenSea and Magic Eden already have such a tremendous head start.
“I should also note that FTX launched an NFT platform a while back, and it also did not do well. This adds further evidence to this notion of users preferring more Web3 platforms with which to conduct their crypto transactions,” he said, adding that this has nothing to do with the alleged waning interest in NFTs.
“If you look at, say, Magic Eden — the most popular NFT marketplace on Solana — volumes are exploding. More and more people seem to be entering the space and trying out new marketplaces beyond OpenSea. If anything, we might be in somewhat of a consolidation phase where users are buying into higher-value projects and in turn avoiding the lesser-known ones,” he said. “All in all, NFTs are only getting started and will increase in popularity and use cases in the coming years.”
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