Crypto Mobile Apps, Governance Tokens and The Future of NFTs

OpenSea's Co-Founder and CEO Devin Finzer on the rise of crypto consumer apps, weighing the pros and cons of a governance token and more.

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Listen on: Spotify | Apple Music | Google Podcast

Background

Mint Season 3 episode 3 welcomes OpenSea’s CEO and Founder, Devin Finzer.  

In this episode, we talk about:

  • 0:00 – Intro
  • 1:07 – Devin’s Startup Background
  • 2:35 – NFTs in 2021
  • 3:31 – The Explosion at OpenSea
  • 9:57 – The Future of Web 3.0
  • 13:44 – Governance Tokens and the Gatekeepers
  • 16:48 – Valuing Community
  • 18:42 – What Will Eat Web 3.0?
  • 20:37 – Advice to Newcomers 
  • 21:21 – Outro

…and so much more.


Thank you to Season 3’s NFT sponsors!

1. Coinvise – https://coinvise.co/

2. POAP – https://poap.xyz/

3. Socialstack – https://socialstack.co/

Interested in becoming an NFT sponsor? Get in touch here!


Intro

Let’s jump right into it. You guys had one of the craziest years, specifically in August. $3 billion in total volume. How was that period for you? What was going through your head? How was your team dealing with that? Walk me through that. 

That was a really exciting time, but also a very chaotic time for the team. We went through this sort of hyper-growth phase as a company. We were really, hands-on; all hands on deck. Really proud of the team that really stepped up and filled in the gaps. We brought on more members of the team. We have really great people joining. We’ve really shored up the operations and the product development at OpenSea, but we know we also have a long way to go in terms of building really great products for users, and it’s been pretty amazing just to see how much excitement there has been in the NFT industry. I think it’s a testament to all the hard work that the whole ecosystem has then been putting in over the last four years and really building out the core NFT experiences that, you know, delight the users of today. So, it’s really fun to see this.

Devin’s Startup Background

So walk me through a little bit of your startup background. Obviously OpenSea, I feel like, is that one thing that really snowballed to be this insane startup that has a lot of exciting potential. Around when you guys were going through this phase of the month before August, we went through August now. It’s September, and we’re approaching October, right? Even September is what over $2 billion right now? Did you ever imagine you’d be running a company at this scale with this much excitement? Like how did that come to fruition? Talk to me about your thoughts. 

No, I actually never quite envisioned that. I mean, I didn’t not envision it as something that could happen, but it was more just, you know, starting with following our curiosity. So yeah, great question. I did not envision this exact outcome for OpenSea, but also just didn’t really have specific expectations when we started. It was more kind of following our curiosity and just doing things that we were excited about, and building a space that we thought was early, but had really incredible long-term potential. Yeah, the excitement and enthusiasm around NFTs was just so remarkable that we just kind of had to keep on building. But it is definitely a bit surreal to be in a position where we’re able to drive so much volume and have such a big impact on people. I do think at the same time, despite these sort of crazy growth numbers, we’re still at day zero for the NFT space. It’s really just kind of the wild west days, comparable to the early internet. So it’s really exciting to be in this position, but we have a long way to go.

What’s Exciting about NFTs?

So as the craziness kind of spun out, what are some of the more exciting use cases you’ve seen come to fruition around NFTs? Whether it’d be like profile pictures or individual drops, it could be anything.

Yeah. I mean, I think gaming is really exciting as a use case it’s been in the works for a really long time. There’s a lot of really cool projects like Axie Infinity that run these sorts of things, virtual worlds. So, I’m really excited to see what comes out of gaming in the next while. The other areas that people have been talking about for a while are music, event tickets, even physical items represented as NFTs and traded around and then redeemed for the actual physical. Those sorts of use cases I think are really cool and really interesting. So, for people who are kind of looking to build new projects in this space, I would look to some of the early experiments of late 2017, early 2018, where people tried things out, but the market maybe wasn’t ready for them. I think we’ll see a lot of those experiments come back and really start to resonate with people as there’s a little bit more mind share around NFTs. 

The Explosion on OpenSea

Yeah. During that crazy period for you guys, on average, how much sleep did you get? Were you always online, were you buying stuff yourself, were you just trying to burn fires if any arose? What was that time like for you personally?

Well, I wasn’t making a lot of purchases myself just because I do tend to focus on just the company building side of things. I find that I’m not able to multitask super effectively, but yeah, definitely. You know, there were some nights where it was a lot less sleep, but I think it was also really important to be able to function effectively and make good decisions. So, it’s certainly been an extremely busy time for the whole team, but we do try to make sure that we’re lifting our heads up and not being sort of silly about getting that right healthy balance. 

What would you say was one of the most challenging parts in the business when you guys encounter that growth wave? Any things that you expected to happen that happened? Anything that happened that you didn’t expect? What was that like? 

Good question. Well, I think it was sort of expected was everything just started breaking, but I think we didn’t expect it to happen so fast. I do think that our trajectory is pretty unique relative to other companies. You know, when companies get to undergo this type of growth, it is always pretty crazy, but ours was particularly unique in just the amount of transaction volume that was happening on the marketplace. So, things definitely started breaking. In terms of surprising things, I guess it was surprising, or pleasantly surprising, just that the culture was able to kind of hold up pretty well. I think we made some great hires early on, and we continue to have a high bar for our culture when we think about new employees. I think everyone on the team is really there for the right reasons and is really strong and works well together. So it’s been surprising, I guess, that things haven’t broken down more on the cultural side, but I will say that it has not been surprising that things have become kind of chaotic on operations. 

One of the most exciting things for me seeing this entire NFT wave, and I’d love to get your point of view on this, is we had that DeFi summer of August, 2020, where we had like a lot of financial buzz, a lot of all these DEXs, all this yield farming, liquidity pools, a lot of the non-sexy side of crypto, and then NFTs come into the picture; and you have a lot of the creativity coming in. You have artists coming in, musicians coming in. One thing that I love that’s happening for crypto, is that it’s becoming more maintstream, and I think it was important that NFTs had their moment of fame to bring in all these creative minds to make crypto more interesting essentially. As you guys were building OpenSea, and you went through these last three months, and I emphasize these three months because it was a milestone for NFTs, what was some of the biggest feedback you got from newcomers coming into the space? Like artists that jumped in, creators that jumped in, musicians that jumped in that issued stuff on OpenSea, from a talent point of view, from a market point of view, what was some of the feedback that you got from these individuals?

I think the feedback is still just talking to people who are trying to use these sorts of products for the first time. It’s very challenging, right? A brand new space where you have to kind of understand all these things, still a lot of technical overhead and, you have to learn about everything before you can even really try it. So I think that’s an area where the whole space, and especially ourselves, has to improve. But, on the flip side, it’s also impressive that people are just kind of willing to get their hands dirty and try these things out and go through those hoops. So sort of two sides of the same. There’s lots of things that people want to improve the platform, better discovery, better onboarding, you know, better curation, all of these things. We have long lists of feedback that we want to integrate into our roadmap, but overall, the high level, it’s exciting to see people really dig in and kind of experience Web 3.0 in a real way. I think there was a lot of conversation around like, how do we make Web 3.0 seem opaque to users, so that people don’t have to worry about blockchain. Well, the reality is I think people are kind of still worrying about figuring it out and how strong of a pull there is for all this stuff. 

What does a marketplace like OpenSea evolve into as the space matures? Is it more the social side, is it more the DeFi side, is it more the wallet side, or just really dialing on the NFT market? 

I would say that we’ve remained really focused on just building the best possible NFT marketplace. We want to sort of be the one-stop shop to buy, sell, and discover NFT projects, and for now that’s a pretty big undertaking, and there are a lot of challenges surrounding it. So yeah, we’re pretty simple that we’re really investing in our core and just ensuring that we can serve projects, developers, and users effectively. 

How do you feel about all these new NFT decentralized exchanges slowly coming to market. While there aren’t really like main ones yet, but there’s a lot of talk across crypto Twitter, do you think it can be done efficiently in a decentralized way? 

Well, it depends what your definition of decentralized. I mean, we’re a decentralized marketplace in the sense that we facilitate transactions through a set of smart contracts. So yeah, it depends on what you mean by that. But you know, I would say I think the critique of OpenSea is that there are these centralized components to it. Which items show up in the feed, which items are promoted, which items are verified, and those sorts of things. I think there are definitely interesting solutions where you can try to decentralize more and more, but I think you also have to balance that with being practical around like, you know, some things do make sense to sort of have managed by one single entity or company. So we try to take a practical approach. You know, we obviously want to be contributors to the ecosystem. We want to embrace these ideals of decentralization, but then we also want to build a great product that people will use. 

Give me an example of some of these critiques, right? I know you talked about curation as being one of them. What are some other critiques that could be fixed through decentralization or that should be centralized to begin with? What are some things that come to mind? 

I think, for example, we do as the best we can to ensure that there’s strong trust and safety on the platform so that the item that you see is actually the item that you want to purchase, not a knockoff. And so we have a lot of measures in place to have warnings if the collection hasn’t been reviewed, indicate that this is a collection with low volume, give the buyers more education about NFTs or about what NFTs are buying. So, I actually think building out a core competency around trust and safety is something that a entity like ourselves really add a lot of value in. There’s certainly approaches where you try to kind of decentralize that, but for now, we’re sort of starting as kind of the lowest hanging fruit. So that’s probably a good example. 

The Future of Web 3.0

I want to pick your brain more on the keyword that you brought up Web 3.0. I guess nobody really imagined NFTs being a cornerstone in onboarding a lot of normies into crypto. What do you imagine Web 3.0 looking like as the next billion users usher in? 

I think there’s going to be lots of different applications. Some of them you can kind of predict today, and then some of them are impossible to predict honestly. I mean, NFTs are one of those applications where you have these unique digital items. You can kind of move between different applications, where you can connect your Metamask to one site or OpenSea and buy and sell. Then you can connect your Metamask to the Decentraland and use your NFTs inside of that virtual world. So sort of this identity layer. I’m not sure if it’ll be a specific company or specific project that sort of manages identity, but I think those will emerge from your wallet and the things that are inside your wallet. So that’s a really interesting thing, to have this identity that’s not tethered to any specific application provider, but rather has sort of this third-party blockchain platform. So that’s kind of how I see it as a sort of a new online identity that really works across many different platforms.

As Web 3.0 matures and evolves, do you think it’s going to be more of the composable point of view where protocols are building on top of each other and there’s an application layer that integrates all these protocols? Or do you think it’s going to be more of the Google approach where they can speed up production and software development by centralizing a lot of core components of their services? How do you kind of imagine that evolving? Let’s say there’s social application layers that use different crypto protocols, NFT protocols, DeFi protocols to build on top of. Do you imagine it being more in-house, a centralized entity building trusted tools and services for crypto? Do you imagine it being more spread out from a decentralized point of view or is it in between? What do you think?

It’s a good question. I think there’s services that will provide certain things, right? We provide a marketplace, and we kind of bundle it with other things. You can bundle it with maybe the ability to display your items in certain ways, like connect a social profile or something like that. But ultimately, I think lots of applications are going to be messy. I think probably in the short run, where there’s lots of apps that have some way to connect your social media profiles to them, I’m not sure that there’ll be one identity service that emerges. I mean, maybe it’ll sort of emerge from one of the platforms. It’s hard to say, but it’s a good question. I gotta think about it. I don’t know if I have a great answer. I think some of the most successful companies might end up building something like identity solutions. 

Speaking of applications, you guys just came out with your mobile app in the app store. A lot of attention on crypto Twitter. Congratulations. It looks beautiful. I use it. I look to see the explore tab and all the cool features that you guys rolled out. What do you imagine the future of mobile applications looking like specifically in crypto? We can take it from like an NFT point of view, and then I guess from a broad point of view. 

That’s a great question. I think what ‘s cool is that the infrastructure around mobile for crypto has evolved quite a lot, right? Like when you rewind to 2017, you couldn’t even use anything on mobile. It didn’t exist. There was a wallet called Toshi, which was Coinbase’s first iteration of Coinbase Wallet, and that was the only place, and I think you could barely even do anything on it. It was just so basic. Now you have so many different wallets. You have metamask obviously, and then you have rainbow wallet, which is more geared around NFTs. And interoperability is starting to emerge too. For example, with the OpenSea app, which is still really in its infancy, you can go connect to your Metamask and link your NFTs in in, and then you come back. It’s not not necessarily the smoothest thing, but you can actually have a mobile experience, which is awesome. So I think like it’s hard to say exactly how it plays out. I mean, there’s a world where a lot of stuff still happens on mobile, but I do think the OpenSea app is kind of a cool example of us going native, and you can still bring your own wallet. Which I think is actually, right now, really important for users to be able to connect their Metamask with their existing stuff without having to kind of have an OpenSea specific wallet.

Governance Tokens & The Gatekeepers

How do you feel about the whole Apple monopoly, and more specifically, when it comes to in-app transactions, how do you guys think about that at OpenSea? Cause it’s not just an OpenSea problem. It’s an entire industry problem, right? With more and more transactions obviously being on chain, using Ethereum, crypto, whatever it may be, and Apple sticking to traditional Web 2.0 type of payments, how do you guys plan to overcome that? How are you guys thinking about that?

Well, I think it’s exciting because, you know, there was recent news that is driving apple to be a little more lenient on what kind of payment applications that we are allowed to use. And I do think that the 30% has just been so problematic. Having these like gatekeepers for mobile payments, and I think that really needs to change. Finally, they’re getting some pushback on it. And so it’s hard to say the exact timeline around these things, but I think eventually there will be other ways of purchasing digital items that don’t go through these kinds of more centralized gatekeepers, and that’s really ultimately very, very important. So excited to see that space move forward. 

Speaking of gatekeepers, obviously a lot of the ethos of crypto, a lot of the ethos of decentralization, is removing those gatekeepers, pushing down the boundaries, making users owners of the protocol and the products they use and consume. The next thing I want to talk to you about is how you’ve been building OpenSea for four years. You’ve seen a lot of successful token launches, a lot of failed tokens, and I would think that you guys explored this idea of what does a fully decentralized marketplace look and feel like. What do you think are the pros and cons of shifting towards a token route, specifically for an NFT marketplace? 

So, what I’d say is I think we’re still in the early days of understanding how token models work more generally, right? If you asked me to kind of point to the most successful token models today, like Bitcoin, Ethereum, and other layer ones, I think that it makes total sense to have a token baked into the layer one. But if you look beyond that, if you look at DeFi, if you look at other projects, obviously the ICO wave, if you look and you try to point to kind of one that has really nailed it, I think it’s hard. To use an example, you can point to tokens that have really high market caps, but one that has nailed the sort of incentive structure and like it’s actually working from like an adoption perspective, I don’t think you can really say that there’s one that stands out. And it’s just because we’re such early days. I do think if you’re a company, you have to decide where you’re going to innovate. Are you gonna innovate on the product and the core user experience? I do think this is sort of uncharted waters and that’s the decision, right? You can certainly sort of dive down the path of unchartered waters, but you may find that you get into areas that maybe you didn’t expect to be in if you’re thinking long term. It can be great to have these short-term growth hacks around distributing tokens, or maybe you’re both competitors and use it for that reason. I think if you look at these DeFi projects, they’re in a sticky situation when it comes to how to actually build the protocol, how to get the right governance. And I think there’s a lot of merit to focusing on product and product marketing.

Valuing Community

I agree with you. I think there are many different types of models and there’s not one yet that kind of proves to be the one, right? A lot of people, they go and start centralized. They build a product, they find a product market fit, they build a network effect, right. And then they issue the token, rather than with others based off of these centralized platforms, moving to decentralized after that, forming a DAO, issuing a token and building decentralized. My next question to you. There’s a lot of commentary online of super users of OpenSea, fans of OpenSea, people who buy and sell or whatever category they are in as a user, who want to see OpenSea launch a token. They want to see the open sourcing of smart contracts. What is your response to that? Like how do you feel about the community ushering in their voices and their opinions and trying to push more towards traditional decentralization? 

Well, I think some of the criticism was specifically a contract that has not yet been open sourced, but our core marketplace is open source fully. I think there’s maybe some kind of like misinterpretation or just confusion because it’s a new space. If you look at OpenSea, the way that we operate is we’re a peer to peer decentralized marketplace for digital items, and the facilitation of the the buying and selling is all done through a single smart contract that is open-source. So, whether or not we have a token is a sort of governance decision. I think it comes down to that math equation that we did before, but generally, I would say I think that OpenSea can do a lot better when it comes to really fostering the ecosystem and fostering the community. A lot of the ways that we’ve been behind there are really just resourcing. We’re a small team. The number one priority is keep the website running and keep things operating effectively and investing in areas where we can do more outreach and do more ecosystem work, but it has taken us a little time to catch up because of this crazy growth. We know that we can do better there, and we definitely want to.

What Will Eat Web 3.0?

I want to kind of pivot and end off with this final question here. I’m a big fan of watching the growth of the internet, specifically learning about the history of Web 1.0 and how that transition to Web 2.0, and how Web 2.0 ate Web 1.0, and now Web 3.0 is supposedly gonna eat Web 2.0. What do you think is going to eat Web 3.0? 

Oh, man. I have no idea. I mean, Web 3.0 basically doesn’t exist. I mean, it exists, but it’s infantile. Gosh. Oh man. 

Let’s take this from the point of super extreme. The whole concept of Web 3.0 is like ownership, right? All data is public on-chain, right? So I guess a follow-up question is, what happens when all data is on chain? What’s the downside?

Okay. Well, I don’t know if I necessarily agree with the exact description of Web 3.0. I think you said that all data would be public. I don’t think that’s actually the case.

On-chain I meant. There’s going to be privacy, but all like technically on a blockchain, right?

Yeah. What happens after that? I mean, maybe humanity turns into like this giant hive mind, where we’re like, all like coordinating across the blockchain. I don’t know. Like AI maybe emerges. Or actually, here’s a good one. Imagine an autonomous agent, running on this thing, where it’s sort of plugged into all the humans and it sort of emerges as this kind of smart intelligent being and sort of takes on a mind of its own, and then I don’t know if humanity gets replaced or something. I think that’s kind of possible. Because if you think about these things, they are unstoppable, right? They’re unsolvable programs. And so what happens when you create an unstopppable program that happened to tap into everything, and has intelligence associated with it? I think that’s pretty interesting to think about, I’m not saying that’s going to happen anytime soon. 

Would you like to see that happening?

I don’t know.

Advice to Newcomers

No, this is great. I’ll leave you with this final question. For all the new creators, all the new artists, all the new graphic designers, wanting to enter the NFT space, make a career; give them some words of wisdom. What can you recommend to them starting off in the space?

I think just sink your teeth in and try everything out or go down all the discords, go through all of the Twitter accounts, go use all the applications. If you’re not doing that, it’s really hard to just get involved. And then, if you’re up for it, be public and interact with people and make friends. I think what’s underrated, especially now that things are opening up again, an underrated opportunity is to go to meetups and things and just meet people. Get all the information you can from them and then make friends with them, and learn from there. I did that in 2017 when I was first learning about crypto, it was really helpful.

Outro

That’s a perfect place to end off. Devin, really quick, where can we find you on Twitter? Where can people follow you? 

@Dfinzer is my Twitter handle and then@opensea is the company.

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