OpenSea acquires DeFi onramp wallet Dharma Labs

OpenSea, the leading NFT marketplace, is acquiring Dharma Labs, developers of a smart contract wallet that, for U.S. citizens, doubles as a mobile fiat onramp to decentralized finance, DeFi services through integrations with traditional bank accounts.

According to an OpenSea blog post announcing the acquisition, OpenSea’s interest in Dharma Labs comes from Dharma’s “experiences for seamlessly onboarding fiat currency to blockchains.” Dharma Labs brings to the table experience in developing a popular mobile app that functions as a user-friendly onramp to crypto and DeFi. OpenSea, on the other hand, is mainly a desktop experience in need of a mobile app.

NFT space in need of better UX

In a similar blog post announcement, Dharma Labs explains the value Dharma brings to OpenSea.

“Over the past 2 years, Dharma has built some of the most seamless experiences for converting fiat to crypto, making it easy for anyone in the US to go from dollars to DeFi. We’ll be bringing this expertise to OpenSea in order to power a mainstream-friendly way to buy, sell, and mint NFTs.”

“NFTs are the focal point of crypto’s entrance into mainstream culture; making buying NFTs as easy as possible on OpenSea will be a force multiplier on this trend. Our objective is to improve the experience of buying, selling, or minting an NFT on OpenSea for all users,” the post reads.

In a tweet thread by Dharma Labs COO Brendan Forster, who will join the OpenSea team as Head of Strategy, explains that Dharma Labs basically pivots from traditional crypto and DeFi to the new “tip of the spear” of NFTs, and in that process chooses to shut down the popular Dharma app.

“We chose to accept OpenSea’s offer because our mission has always been to accelerate mainstream adoption of cryptocurrency and web3, and it has become clear that NFTs are the “tip of the spear” in terms of mainstream interest in crypto. Over the course of 2021, this trend emerged and accelerated, and it is now obvious that NFTs are the crypto use-case that most resonates with the mainstream,” Forster tweets.

“Buying NFTs is still really hard”

However NFTs may for many beginners act as the “gateway drug” into crypto, the user experience in the NFT space has much to improve on, according to Brendan Forster.

“Let’s face it, unless you’re a crypto-nerd, buying NFTs is still really hard [Forster’s emphasis]. Buy ETH with USD, wait 5 days, download MetaMask chrome extension, backup a “seed phrase”, figure out transaction submission and nonces, convert ETH to WETH, approve-then-submit, etc. etc. These aren’t insurmountable barriers to the motivated buyer, but cumulatively they create enormous friction for a newcomer,” Forster tweets.

To Brendan Forster, the reason behind Dharma Labs joining forces with OpenSea is pretty clear, but he also dismisses any ideas that OpenSea will integrate the Dharma app.

“Because NFTs are a massive opportunity for crypto, and we saw an opportunity to further our mission by working at OpenSea, the market leader for buying, selling, and enjoying NFTs. While Dharma has a ton of expertise, infrastructure, and knowledge that will complement OpenSea’s product and org, the Dharma application isn’t a perfect fit for what OpenSea needs today,” Brendan tweets.

Dharma shuts down the mobile app

Because of this, the Dharma team has decided to “wind down” the Dharma mobile app. The winding down will take place during a 30-day “sunset period,” under which users are offered to transfer all remaining funds for free, including network fees.

As per Dharma’s blog post, users who have not completed off-boarding will still be able to access funds in their wallet through an open-source DApp that will be permanently hosted through IPFS in a wholly non-custodial experience. However, accessing funds through the DApp will be a relatively technical experience, and users will have to pay their own gas fees.

The Dharma team will renounce any remaining control of the Dharma Smart Wallet, and all swaps and purchases of crypto will be disabled.

With the acquisition, as announced by OpenSea, Dharma Labs co-founder and CEO Nadav Hollander will join the OpenSea team as their new Chief Technology Officer CTO.

“Nadav is a seasoned leader from the early Ethereum community, having built, launched, and evangelized some of the most influential protocols and products in the DeFi space. He brings fresh crypto-native expertise to OpenSea’s leadership, having spent his career building systems that adeptly mask the complexities of smart contracts and blockchains for use by mainstream consumers.”

“Nadav’s impact will be wide-reaching, but his initial mandate will be two core priorities: improving the technical reliability and uptime of our products, and building web3-native mechanisms for engaging with and rewarding our early and loyal community.  We’re thrilled to bring his deep crypto expertise into the OpenSea leadership team,” OpenSea’s blog post reads.