Categories: Ethereum

‘Ebay for CryptoKitties’ Raises $2 Million from All-Star VCs

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More money is being poured into crypto cats.

Well, cats, and the slew of other non-fungible digital items made possible by new token standards, such as ethereum's ERC-721. And these crypto collectibles now have a home in OpenSea, a marketplace for allowing users to buy and sell these items - an Ebay for CryptoKitties if you will.

Coming out of Y-Combinator last winter, OpenSea today announced a $2 million seed equity round led by 1confirmation, with participation from a series of other high-profile crypto investors, including Founders Fund, Foundation Capital, Blockchain Capital, Coinbase Ventures, Chernin Group, Stable Fund and Blockstack.

"When CryptoKitties came out, it was this exciting, mainstream, fun use case for blockchain," Devin Finzer, co-founder of OpenSea, told CoinDesk.

Indeed, the ethereum-based decentralized application for buying, selling and breeding digital cats was a quick hit within the community, launching in November last year and peaking in December, when the game nearly brought the ethereum blockchain to a halt as it tried to deal with a significant increase in transactions.

Many concluded that the game helped push blockchain technology and cryptocurrency into the mainstream, and others argued that the game displayed a blockchain use case that could expand away from silly cats and into serious business (such as real estate). For instance, Union Square Ventures and Andreessen Horowitz led a $12 million investment round to spin CrypoKitties out of its parent company so that the team could really dig deeper into future applications for the concept of non-fungible digital items.

And while those serious applications have yet to be realized, a spate of similar games were created after CryptoKitties success, including the more general CryptoPets, CryptoCelebrities and Crypto All-Stars.

But according to OpenSea, users need a place to more easily buy and sell those items.

It turns out OpenSea wasn't alone: the decentralized online marketplace for physical items OpenBazaar has plans to open up its platform for digital items such as CryptoKitties as well, plus OPSkins recently created Wax, a platform for spinning up decentralized exchange services for these items.

So far, it looks like a fine idea, according to Finzer, who said:

"We've so far had about half a million [dollars] in volume pass through our marketplace."

The go-to marketplace

One of the keys to OpenSea's success, according to Finzer, is the team's relationship with crypto game developers.

As to be expected, OpenSea has done best in offering a "store" for games that don't already have built-in marketplaces (many game developers want to focus on the game and so aren't keen to building a marketplace on top). As those game developers hear about OpenSea, they've typically just made OpenSea the game's official digital shop.

"We've kind of developed a synergistic relationship with game developers," Finzer said, adding that OpenSea offers a revenue share model depending on what marketplace duties are handled by what party (although Finzer declined to discuss this in more detail).

Yet, OpenSea is available for more than just games, although that's the company's main stream of business. For instance, one art project used OpenSea and Finzer said it could also work as a marketplace for software licenses.

We've barely scratched the surface on what these crypto collectibles and a marketplace for them could offer.

One thing that's interesting about these programs, for instance, is that because a CryptoKitty, for example, is just a piece of code, different interfaces will create completely different visualizations of that cat (as recently displayed by a viral art image made purely from code).

These different visualizations could be shared between users and might make the games even more fun.

Zombies for kitties?

Plus, Finzer wants to facilitate the trade of items that aren't even part of the same game.

This would go above and beyond digital games today, where items that are part of a centralized game must stay within that universe, he said, adding:

"I could be breeding zombies and you could be breeding kitties. I think what that results in is, these items having a lot more value than they would in the existing digital world."

In fact, this kind of cross-collaboration has already happened - a new game called KittyRace allows users to race their CryptoKitties.

This kind of thing, Finzer said, has garnered quite a bit of interest from other crypto gaming companies.

This interest in digital items isn't new only to the world of cryptocurrency, though. In fact, the market for gold within the massively multiplayer online role-playing game World of Warcraft is so lucrative that prisoners in China are made to mine the stuff for sale to gamers in the developed world.

Yet, Finzer said, he plans to stay out of the world of trading digital items for physical cash, namely because it's a business that's somewhat frowned upon, but also because he doesn't see a lot of opportunity in enticing more traditional gaming companies to move to a blockchain.

"The technological benefits of moving an existing game to a blockchain are actually negative now," he said.

That doesn't get Finzer down, though. He sees tremendous opportunity focused on crypto.

He concluded:

"Our thesis is that the most interesting use cases for blockchain-based games will come from new games rather than existing games."

CryptoKitties image via CoinDesk archive

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Well, cats, and the slew of other non-fungible digital items made possible by new token standards, such as ethereum’s ERC-721. And these […]

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