Alchemy Facilitating $1 Billion NFT Market

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In Brief
  • Alchemy facilitates payments transaction on Ethereum, enabling a $1 billion NFT market.

  • NFT marketplace OpenSea’s volume in March surpassed $100 million.

  • Ethereum browser wallet MetaMask has over two million users.

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San Francisco-based startup Alchemy is behind the explosion in the non-fungible token (NFT) marketplace over the past few months. The company facilitates transactions on Ethereum for most NFT platforms, as well as for decentralized finance (DeFi).



The company was founded by Nikil Viswanathan and Joe Lau in 2017. Since opening to the public in August 2020, NFT transactions using Alchemy technology have grown 54-fold to enable $25 billion worth of Ethereum projects.

Alchemy’s Early Days

Alchemy’s first customer was Larva Labs, the creators of the popular NFT collection, CryptoPunks. Larva Labs consists of Matt Hall and John Watkinson. They had envisioned creating exclusive digital goods, but lacked a conceivable way to do it. “Once we read about Ethereum, we thought, ‘oh, this might be how we can do that,’” Hall said. 



Originally, CryptoPunks was just a fun side project, but they had difficulty managing their connection to Ethereum. This is where Alchemy came into the picture. Since then, CryptoPunks have changed hands to the tune of over $170 million. The most expensive piece sold recently for $7.6 million.

The success of the ‘side-project’, has enabled Alchemy to become the technology behind every significant NFT marketplace, including Makersplace, Nifty Gateway, SuperRare, Cryptokitties, and the largest, OpenSea. Makersplace partnered with Christie’s auction house for the record-breaking sale of digital artists Beeple’s NFT for $69 million.

Viswanathan and Lau met at Stanford University. There they had both served as teaching assistants for a database class. Their company now includes among its investors celebrities such as Jay-Z and Will Smith, as well as financier Charles Schwab.

NFT Records Broken — OpeaSea and MetaMask

Alchemy’s success is also evident in how much the NFT marketplace is growing. According to Ethereum data platform Dune Analytics, the monthly volume of OpenSea surpassed $100 million in March 2020. This, after nearly achieving that feat in February, with $95 million. The speed in which the market has grown is also demonstrated by these numbers. User volume in January 2020 was only a paltry $8 million in comparison.

To use OpenSea, one must own some Ethereum and have it in a wallet that is enabled by the user’s internet browser. OpenSea recommends the MetaMask wallet. The contagious success of the NFT marketplace has also seen the amount of MetaMask users rise above two million.

Disclaimer

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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