EXCLUSIVE: SuperRare Is Leading A Movement In Fine Art And Web3 - Coinbase Global (NASDAQ:COIN)

Interview with two of the co-founders of Top 10 NFT Marketplace especially for artists, SuperRare

It’s been an interesting time for NFTs in the arts and collectibles space.

On May 3, Wall Street Journal tech journalist Christopher Mims published an article provocatively titled “NFTs Sales are Flatlining." Mims caused outrage among Twitter-native NFT supporters by using data from market tracker, Nonfungible.com, which shows a precipitous drop of 92% in the number of NFT sales from a high of nearly 225,000 sales/day in September 2021 to under 22,000 sales at the start of April 2022. The site also showed a steep drop in active wallets buying NFTs, hitting 14,000 in early April 2022 vs. 119,000 in November 2021.

NFT stalwarts were quick to challenge the article’s assertions and claim Mims is citing secondary, off-chain data. Chainalysis responded with a report that showed 2022 is well on track to beat 2021 sales and that “NFT growth hasn’t been consistent” but is leveling off.

While it’s true Nonfungible.com’s interface is a little wonky and the actual sales amount data is not as problematic, making the data used in the article seem “cherry-picked." However, if we are being honest, this is not an entirely unexpected pie. NFT sales were definitely at a fevered pitch in September 2022 and since that much hype cannot be maintained forever, the NFT market is softening nearly across the board, with a few exceptions.

Of course, the actual market movements have done little to quell the enthusiasm of those entering the NFT space...and those who would like to run the NFT marketplaces and earn commissions on all those sales.

It’s hard to find a definitive list of NFT marketplaces, but there seems to be conservatively over 200 at the time of writing. The incentive is clear, the market is still making significant sales and there remain some success stories, both in the bluechip category and among new projects. However, differentiating an exchange is becoming increasingly hard in a crowded space.

Coinbase (NYSE:COIN), a very popular crypto exchange with a strong U.S. brand, would seem ideally positioned to launch a successful NFT Marketplace, but more than two weeks after its April 20 launch, they seem stalled at just over 1,200 accounts and roughly 50 to 150 transactions/day according to Dune Analytics.

In order to appeal to micro-niches in the NFT community, most new marketplaces launch with a definite identity – from BlockBar which deals in collectible spirits to platforms like OneOf, KickFlip, and Curio which offer NFTs from famous personalities and performing artists.

SuperRare is one of the OG’s in the NFT space. Launched in 2018, they were onto the NFT phenomenon well before most average buyers. Four years is an epoch in blockchain, after all. But since apparently no one is going to challenge OpenSea’s dominance (except perhaps incentivized marketplaces like LooksRare), what is the path for a comparatively large exchange like SuperRare?

SuperRare has addressed the issue with “Spaces," independent galleries which showcase specific themes in NFTs. The SuperRare DAO had more than 28.4 million votes cast by $RARE token holders to choose the Spaces they would support. There are 20 Spaces launched so far and each has its own URL and brand separate from SuperRare but connected by the backend. In other words, SuperRare has manufactured competition to meet the needs and wishes of its micro-niche audiences.

We spoke with John Crain, co-founder and CEO @SuperRareJohn, and Jonathan Perkins, co-founder and CPO @SuperRarePerks, about their new spaces and the secret to their position as a leading NFT marketplace and their continuing focus on the art itself as a guiding principle.

BZ: How does SuperRare distinguish itself in a crowded space as a marketplace of choice for NFTs?

Crain: It's extremely competitive. I think a lot of the people who are entering the space see the big numbers and are really just trying to get a piece of the pie versus entering thoughtfully with a long-term opinion about how this plays out. A core part of our philosophy is that an NFT is just a piece of technology. You're not going to be able to have one NFT marketplace service, arguably extremely different asset classes. Virtual land requires a different shopping experience then what collectible music requires. Digital art is also going to have a different user experience.

I think ultimately the market is going to unbundle and verticalize. So I think you'll have a leading Zillow for NFTs. For SuperRare, our brand position, and the community that we're a part of are very much art (focused). And so I think, long term, anyone who's trying to be the next OpenSea hasn't really thought long and hard about why that's going to be useful for customers.

So you are looking at your growth in terms of working around OpenSea not in terms of unseating OpenSea?

Perkins: If you think about the early days of the Internet, the website was a new technology and there were only a few websites, and it was like, oh,Toyota.com isn't getting as much traffic as Shoes.com.These sites were seen as very similar things because they're both websites. And I think we're kind of in that era now with NFTs… but if you look at the product, the interface, the community, the inspiration and the use cases of OpenSea vs. SuperRare are extremely different.

SuperRare is an art-focused place. We've been building the space as a primary and secondary marketplace for artists specifically with royalties baked. OpenSea is more like eBay, it's The Everything Store, you can go there and buy a domain name and an insurance contract. And those have nothing to do with art and culture.

What does SuperRare provide for artists that is different from other marketplaces?

Crain: The idea behind SuperRare and SuperRare Spaces is curation. When we started this, there was a lot of (sentiment) like burn down the gatekeepers, the middleman is useless. It's all peer to peer. But a pattern that has evolved from the art space is that like, actually, artists don't necessarily want to be auctioneers on Twitter and manage their sales pipeline.

So I think Spaces are different. There's like a layer of abstraction built into the smart contract. So like, Space operators run their own mini Auction House… you're managing a pipeline of artists and art through a toolset. OpenSea doesn’t have tools that facilitate you being a gallerist and moving the pipeline along yourself. You still have the pristine artists' provenance and these artists are minting the tokens but then space operators take custody of them and configure auctions like galleries storefront. Soon it will no longer be exciting or novel to have a space that has NFTs for sale. For us, it's thinking about why people collect art and it doesn't really matter if it's NFT art or physical art or whatever. There are certain dynamics in the marketplace, and we're building tools that facilitate and then amplify existing patterns.

Perkins: Ours is one of the longest standing NFT platforms. We were around for about two and a half years before almost anyone heard about NFTs and have been focused on art and culture.

There are a bajillion things going on in NFTs. And there are a lot of opportunities that we've said no to as product builders and as community members that would have deviated us from that laser focus, the multi-decade view that art deserves its own space. In some ways, from a positioning standpoint, we're the opposite of a lot of these hype-fueled PFP drops. Everyone's giving in to all that stuff, we're building a community that has a very long-term view. We're tuning out the noise of all this other stuff that's going on. And artists and art lovers really respond to that. If you look at the depth of the SuperRare community and sub-communities in the form of Spaces, they are really a different kind of cultural landscape than what you just see if you'd like Google NFTs.

The community is really building with the idea that art deserves a special place.

Has SuperRare experienced a drop in sales from a weakening NFT market?

Crain: We've definitely seen volumes go down. I think the previous two months were some of the lowest months we've had in over a six-month period. We closed out April with about 10 million in monthly sales volume. But I think critics are looking at the huge hype cycle from last year. In our first year of business, we did a total of $90,000 in volume. In four years, our monthly volume has gone from about $10,000 a month to about $10 million dollars a month. I think if you look at the trend, it's fairly stable, month to month. There are pretty dramatic swings, but it's on a stable trajectory.

Are art and collectible NFTs just a Trojan Horse to onboard users to Web3?

Crain: I think one of the contributions of art and collectibles is absolutely a Trojan horse tricking people into caring about Web3. The majority of people are not going to really care what the Federal Reserve is doing and aren’t interested in algorithmic stablecoins, but people do care about hanging out with their friends and art and collecting is not new at all. It's just we've figured out a way to add it into this new ecosystem.

So, I think on the one hand, it's absolutely a Trojan horse into this space. But I think there's another trend unrelated to crypto which is the art market being digitized... NFTs are sort of a Trojan Horse into the art market, which was a small, obscure market that most people didn't participate in. I think this is also fueling a revolution in art and collecting. And crypto is the footnote that's facilitating this massive explosion.

Conclusion

It’s a strange and wonderful world that has led major blockchain companies to pointedly promote and support fine art as their mission. I’m sure other marketplaces share their enthusiasm since NFTs have created a new world of monetization opportunities, but SuperRare was among the first and is still among the largest NFT exchanges.

SuperRare has the footprint as a market and the longevity to continue to carve out a space in the market and it's delightful to see them building their brand around art. MotleyFool recently listed SuperRare among the top ten NFT marketplaces, and with their new specialty auction houses through DAO-created and led Spaces they have the chance to influence art of all types. For example, theVerseverse is not a metaverse-related Space as I expected, but is focused specifically on original writing in NFTs.

Not all of SuperRare’s new cohort of spaces seem to be equally launched and available with their own websites, but it will be interesting to see if SuperRare’s micro-niche strategy works. By meeting the needs of specific audiences, SuperRare helps to turn potential competitors into partners and brings more users under the umbrella of its organization.

The question remains – is SuperRare ultimately better for artists than other platforms or are they merely focused on art?
We asked Sarah Zucker (@theSarahShow), LA-based artist and writer about her experience with SuperRare and she responded:

“I heard about super rare in early 2019. An artist friend was like hey, I'm selling this gif of mine on SuperRare, check it out. You can purchase it with cryptocurrency…

"The excitement for me was like: oh, my God, I knew this was coming. I think someone finally built it... Because that's what was needed – a space, a marketplace, and an ecosystem. I checked out SuperRare and, and it was it, it was the thing I had been waiting for,” Zucker said.

Cover Image from art by Sarah Zucker

COINCoinbase Global Inc

$159.99-0.06%

Overview

Market News and Data brought to you by Benzinga APIs

To add Benzinga News as your preferred source on Google, click here.