One of the top cryptocurrency exchanges is launching an NFT marketplace in the hopes of gaining ground in a space dominated by just a few major players.
Coinbasefirst announced its plan for “Coinbase NFT” in October, leading to millions of people signing up for the wait list to gain access. Today it released the beta version of its non-fungible token marketplace, which will support the trading of Ethereum-based NFTs.
Similar to social media platforms like Instagram and TikTok, Coinbase’s marketplace allows users to set up a profile, follow other accounts, and view NFTs in a “Discover” feed that serves personalized recommendations based on their buying and browsing history, according to a blog post by Coinbase.
Coinbase doesn’t have a specific timeline for the launch of the full version of its NFT marketplace, a company spokesperson told Fortune. But it’s a major move for the exchange, which appears to be betting big on a social-media-style model of NFT trading to lure new customers.
It’s unclear whether Coinbase NFT will be able to break into a monopolized market that’s mainly dominated by OpenSea, a marketplace that saw $2.4 billion in transaction volume in the last month alone, according to data aggregator DappRadar.
Here’s what Coinbase is up against, and what people are saying about it.
A ‘Web3 social marketplace’
Coinbase’s new marketplace is trying to distinguish itself by creating the look and culture of a social media platform.
“We’re building a place that’s for more than just buying and selling. We want Coinbase NFT to be a place that helps creators and collectors build and engage their communities,” the company wrote in a blog post introducing the new marketplace today.
As with mainstream social media platforms like TikTok or Instagram, users can “heart” NFTs listed, post comments, and up- or downvote comments as they’re posted.
This feature in particular has been the focus of many early online reviews from members of the NFT community.
“Whoever at Coinbase came up with the idea to comment on people’s NFTs for sale deserves the biggest raise,” one Twitter user wrote.
Another added that they “can’t wait to use” the platform after hearing about its comment section.
“Comments about to be wild 💀,” one enthusiast wrote.
It’s no secret that community is a huge aspect of success for NFT projects. Top-grossing collections have cultlike followings and support. Playing on this aspect by providing users with the ability to interact on the platform, along with its familiar Instagram-like appearance, might help Coinbase’s marketplace gain traction.
But it has strong competition.
The industry dominance of OpenSea
OpenSea, which launched in 2017, is the go-to NFT marketplace for most in the space.
It has seen $23 billion in total volume of sales since it opened, according to DappRadar. In January alone, OpenSea saw more than $5 billion in total trading volume, according to data collected by Dune Analytics.
Other NFT marketplaces, such as LooksRare, have emerged to try and gain market share. LooksRare, with $18 billion in total volume, isn’t far behind OpenSea.
It attempted to win over users from OpenSea after dropping them a so-called free token representing ownership of its platform. But many critics have said that LooksRare seems to be primarily used for “wash trading,” where a seller is frequently on both sides of a transaction, so as to create an artificially high value for an asset.
Coinbase isn’t worried about breaking through, though.
A spokesperson for Coinbase told Fortune that its social-media-like platform will be enough to succeed..
“Unlike other NFT marketplaces, Coinbase NFT is about much more than a transaction,” the spokesperson told Fortune. “We’ve created a Web3 social marketplace to empower people to create, collect, and connect.”
