It’s been a little over two weeks since Coinbase launched its highly anticipated NFT marketplace for select waitlisted beta users. Earlier this week, the company opened the service up to the public — and digital collectibles trading has been sluggish.
Coinbase’s exchange has 24-hour volume of $3.2 billion and almost 2.5 million weekly visits, according to CoinMarketCap. Since launching on April 20, Coinbase NFT volume has reached sales worth $668,668 across a small pool of 1,287 users, according to data on Dune Analytics compiled by user hildobby.
So why isn’t a larger part of its exchange’s overall volume and user base flowing into its NFT marketplace?
Although Coinbase’s NFT platform is fairly new, for the second-largest crypto exchange globally, you’d expect better performance.
A source close to Coinbase, who spoke under the condition of anonymity, said that the Dune Analytics data doesn’t provide an overall number of how many people have signed up for the platform.
“There’s that one stat that says Coinbase NFT total users, and it has been misrepresented as the number of people on the platform,” the source said. “That’s not how many people have signed up — that’s how many people have made a transaction.”
In comparison, OpenSea, the largest NFT marketplace globally, had nearly $3.5 billion in NFT volume across roughly 350,000 users since April 20. OpenSea’s volume was over 500,000% higher than Coinbase NFTs during that time frame.
OpenSea also makes up the majority share of NFT marketplace volume, followed by NFT marketplaces LooksRare and Magic Eden, data from The Block showed. But even stacked up against second-place LooksRare, which had $1.5 billion in NFT volume across over 21,000 users since April 20, Coinbase’s NFT marketplace has been fairly stagnant.
Coinbase NFT opened its marketplace to everyone on May 4. Since then, the number of users has fallen every day, hildobby’s data shows.
“The anticipation of where this should be right now has not matched expectations,” Nick O’Neill, CEO and co-founder of The Nifty, said to TechCrunch. “The product is overdeveloped; we see this happen all the time.”
Given the scale of Coinbase, it’s unsurprising to see the current outcome of Coinbase NFT, O’Neill said. “The advantage that a startup has entering this space is that they don’t need to be fully developed.”
For example, when LooksRare launched in January 2022, it provided incentives for participation through rewards and airdrops of tokens for users, driving market activity to become one of the biggest NFT marketplaces in less than six months.
“I think [LooksRare] developed something that’s most comparable for the best way to enter this space at this point and time,” O’Neill said. “I think the disadvantage for Coinbase is the regulatory scrutiny they face (as a public company) so they have to operate within extreme constraints.”
Because Coinbase successfully brought cryptocurrency to both crypto-native audiences and the general public in an “easy-to-use way,” it believed it had a similar opportunity to do so with NFTs, Sanchan Saxena, vice president of product at Coinbase, said during a press conference last month.
But not everyone agrees. Some crypto community members have said that Coinbase is past its prime and its slow volume is the result of a “mediocre” beta launch.
“[Coinbase’s] whole approach to NFTs has been off,” Nick Tomaino, founder and general partner of 1confirmation, wrote in a tweet. “Months of vaporware to drum up hype and then an Instagram-like feed for NFT influencers feels like an approach from an out of touch Silicon Valley company who knows NFTs are hot but doesn’t understand them deeply from user perspective.”
So what can — or will — help Coinbase grow its NFT marketplace? There’s no perfect answer. But making it “dead simple” for users to buy and sell NFTs with U.S. dollars could be a solution, Tomaino wrote.
Its NFT marketplace currently has no fees and consists of Ethereum-based NFTs, showcasing a number of popular collections like Doodles, World of Women and Azuki. While it’s currently limited to one blockchain, Coinbase NFT product lead Alex Plutzer said more blockchains will be available in the future, TechCrunch previously reported.
“They overcomplicated this and it’s hard to build a marketplace like that and the only way to do it is by bootstrapping and incentivizing people in the space to hop in, and no one has an incentive to move over to Coinbase right now,” O’Neill said.
The exchange plans to roll out additional NFT marketplace features at a later date, but did not disclose further details, a spokesperson told TechCrunch. Coinbase declined to comment on May 6 and said it would provide an update on the NFT marketplace during its earnings report.
“There are billions of people on the sidelines waiting to buy their first NFT and Coinbase can still play a major role there,” Tomaino tweeted. “But there needs to be an acknowledgment that this asset class is leading the way moving forward and the fiat buy/sell experience is where to focus.”
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