Breaking down OpenSea’s Applicable Fees When Minting NFTs
“The Internet of Money shouldn’t cost $0.05 per transaction. It’s kind of absurd.”
Those were the comments of Vitalik Buterin back in 2014 when Bitcoin, fueled by the ICO hysteria, was literally sinking under its own weight.
Funny enough, Buterin has addressed the same tweet and isn’t budging. The co-founder is reiterating his stance, maintaining that transacting should be cheaper than centralized systems.
It is understandable.
Fees may take years to drop since sophisticated systems take even longer to build and refine. Ethereum and Bitcoin are examples where developers are critics’ lenses, pressuring them. The problem is, they are human, and they can cave in and rollout Band-Aid solutions.
Fast forward four years later, and Ethereum is back on the pan. Quite literally, Ethereum, his beloved project, is sinking under the weight of its success. Talk ICOs, DeFi, and now NFTs—the wave keeps changing with the next innovation likely to cause more trouble than the former if history guides.
For now, the talk revolves around NFTs and how they will change the world. Of course, top dollar sales of some collections are already changing the lives of several creative—from Beeples to Larva Labs and many others. And you could be next. All you need is to put your skill to work, and perhaps maybe someone will be interested, pay big money on your scribbling—you just never know.
What we do know for sure is that the majority of ETH burnt is from OpenSea’s activities. Statistics reveal that over 6.6k ETH of the 46.09kETH burned is from NFTs minted on-chain traced back to the marketplace. This is more than twice those generated from simple transfers and thrice from Uniswap v2 swaps.
It begs the question: what the heck is happening at OpenSea to “stress” Ethereum this much?
Well, they say numbers don’t lie.
In the last month alone, the number of users rose 89 percent to over 261k. This spike saw the number of transactions rise 57 percent to 2.41 million, forcing volumes to over $3.2 billion—or just over 1.1 million ETH. This movement was a 140 percent expansion in month-to-date alone.
You might be asking yourself, how does OpenSea manage all this traffic? In fact, the NFT marketplace is a unicorn, employing 37 people tasked with handling 98 percent of all NFT trading volumes. Efficiency is the word. Still, they are getting overwhelmed and are looking to hire more software engineers and designers.
How is this possible?
OpenSea has managed to stay ahead of the game, dwarfing competitors by quite literally maintaining an open-door policy as a marketplace. They aren’t discriminating against artists based on their skills, connections, or other irrelevant “links.”
Doing so keeps “nifties” flowing through their pipe works and all that while charging fees, growing their revenue, and cementing their base as the leader in Ethereum’s on-demand NFT marketplace where expectedly, competition is cut-throat.
The NFT marketplace charges three types of fees—some of which were recently introduced. If you are new and looking to mint an NFT, you won’t escape the One-Time fee—for registering and initializing the account, linking your MetaMask—or any other wallet you might be using—with OpenSea. Call it the Hand Cheque fee. The other fee is for the token or contract approval if the item you want to list wasn’t minted on OpenSea but through a custom contract. In this case, therefore, you will have to pay a one-time approval fee authorizing the transaction.
Jumping over the first hurdle, one will also have to pay a recurring fee in ETH. When the artist, for example, accepts an offer, transfer the item to another user, buy an NFT, cancel a listed NFT or bid, convert wETH to ETH or vice versa, freeze metadata, or bridge/transfer ETH to/from Polygon.
The only time OpenSea spares a user who’s already plugged in and paid the “One-Time Fee” is whenever they say, create a new collection, mint a new NFT, list a new NFT as a fixed price or an auction, or when reducing the price of a listed NFT. That said, this is only applicable to ERC-721 pieces.
Minting NFTs via OpenSea is registered in Ethereum—and that means “work” compensated by ETH. Gas has to be paid as deterrence against spam—otherwise, it would be worse. Depending on the complexity of the smart contract and the state of Gas, a user can pay more or less.
New users drawn by the hype might not factor in Gas fees only to encounter trouble when plugged in. To have a good time, new users should track the state of the network and Gas fees—and even whether the marketplace has adopted layer-2 or Sidechains—of which OpenSea is now active in Polygon.
Interesting article. There is a gas fee to bridge your ETH to Polygon. Once you do, you can buy multiple NFTs on Polygon at zero gas and the purchases are immediate.
We definitely need that $0.05 transaction fee!