How OpenSea is Pioneering NFT Marketplace Accounting with Bitwave
Learn how OpenSea uses Bitwave to automatically categorize and reconcile millions of transactions directly Into NetSuite.
OpenSea is the world’s leading peer-to-peer web3 marketplace for NFTs, building the world’s most trusted and inclusive NFT marketplace with the best selection – making minting, purchasing and selling NFTs frictionless and friendly, and offering unmatched selection and multi-chain options for creators and collectors of all kinds.
Users: Stephen Chen, Revenue Lead & Steven Lim, Director of Accounting Operations
General Ledger: NetSuite
Use Case(s): NFT Marketplace, Accounting Workflow Automation
Bitwave Customer Since November 2021
- High-volume transaction recognition and reconciliation
- Accounting workflow automation: hourly roll-ups for millions of transactions & categorization and reconciliation of relevant transactions
- Impairment testing: carrying values
The Problem: Transaction Volume Went From Zero-to-One Hundred Overnight
OpenSea’s finance team was the victim of its success.
In 2021, at the height of the NFT frenzy, transaction volume using the platform increased exponentially. By some estimates, OpenSea users were responsible for up to 5% of transactions on Ethereum. This meant that the team was responsible for tracking and recording tens of millions of data points like gas fees, secondary transaction prices, OpenSea’s fees, and more, seemingly overnight.
Given the surge in demand, it was clear that OpenSea had outgrown block explorers and Excel. “The previous team was taking a manual, fair-market-value approach at the end of each period, and we had plenty of room for improvement,” says Steven Lim, Director of Accounting.
The Solution: A Robust Accounting Platform That Scales
The team began searching for a back-office solution to simplify their complex accounting workflow by ingesting and consolidating on and off-chain activities into their ERP. Eventually, they found Bitwave and went with the platform because of its powerful out-of-the-box functionality and flexibility to adapt to OpenSea’s unique challenges.
“The scope of the project was intense,” says Lim. “There was a lot of learning from both teams and building custom solutions in a condensed period. Bitwave’s implementation team made every effort to meet our needs. It would not have been possible without the company’s engineering expertise,” he finishes.
The Results: Millions of Transactions Automatically Categorized and Reconciled Directly Into NetSuite
Today, OpenSea uses Bitwave’s Rules Engine to record and categorize all relevant transactions and the BI Module to intelligently roll up (or aggregate) thousands of micro-transactions into single summarized transactions on an hourly basis. Another essential feature for OpenSea is Bitwave’s Gain/Loss Report, which helps the company with its tax reporting.
“It’s a game changer,” says Stephen Chen, Revenue Lead. “Just having a solution to automatically categorize all these transactions and output them directly in NetSuite; a single report for all of our wallets, balances, etc.; a tool to help us automatically calculate impairment, is powerful. We could not have done any of it manually,” he continues.
“My job is to ensure OpenSea follows US GAAP standards. Bitwave helps me do just that,” Lim finishes. “Bitwave stands up to the pressure tests of Big 4 auditors going through internal reconciliations,” finishes Chen.