NFTs began missing one frigid January day. However, despite having clear records of ownership, MetaMask as well as Twitter found unexpectedly unable to show photos connected with freshly submitted tokens. Something had gone horribly wrong in the distributed, decentralized technological stack.
What Is The Main Issue?
OpenSea, an NFT marketplace, was experiencing a database outage and was unable to process transactions. OpenSea’s image-loading API was unavailable as a result of the outage, which slowed down any service that used it to submit tokens. A single corporation has made its way to the heart of practically every product in a setting full of staunch decentralizers. At the centre of this mayhem, according to Vice, one user altered the company’s logo to say “ClosedSea.”
A difficult scenario, but also a revealing one. After a year of the NFT craze, it’s impossible to mint or offer a token for sale without some kind of OpenSea interaction. De facto enforcing community norms is now in the hands of the corporation.
Rightful owners’ phone OpenSea when their apes are taken, and the platform has become a crucial chokepoint in stopping the sale. Whenever a token is listed, it is also the biggest single market. Even if they aren’t created on OpenSea, tokens will ultimately end up there due to the laws of physics. As the outage demonstrated, even Web3 applications not explicitly linked to OpenSea are often reliant on the infrastructure of the corporation.
What’s With The NFT?
The NFT industry is in an unusual position. A decentralized blockchain that is significantly more chaotic than the one used by OpenSea provides the foundation for a centralised service (the ability to see and trade tokens on the blockchain). While Coinbase (another major Andreessen Crypto investment) achieved a $85 billion IPO, it isn’t obvious whether the same tactics would be successful in the wilds of Web3.0.
Representative Abram Smith, who was sought for comment after OpenSea’s refusal to make officials available for interview, stressed the company’s high aspirations. When practically everything we possess is recorded on a blockchain, “OpenSea’s potential is to become a primary location for these new economies to grow,” Smith added.
Despite this, many investors and experts consider the company’s situation as more vulnerable than you would expect. Since its inception during last year’s NFT craze, it has grown to handle hundreds of millions in daily transactions. It’s impossible to avoid at a technological level, as the outage clearly demonstrated. Many aren’t confident that Web3’s decentralised future will have place for an intermediate platform like OpenSea, which is far removed from the scrappy token-drop mentality that has powered the current digital art explosion.
Is OpenSea just similar as AOL or Netscape or are they expecting to be ready to keep their grip on the industry?” Brian Krogsgard, who runs a crypto series named UpOnly, said. As far as I know, that’s a matter of debate.
When Does NFTs Starts?
As with practically every other tokenized blockchain enterprise, the genesis of OpenSea was in a cat game. Blockchain-encrypted cat photos known as CryptoKitties were the first significant non-fungible tokens (NFTs) when they were launched in 2017.
In only a few months after its launch, the project had generated over $10 million in sales because to the rising interest in blockchain technology. KittyHats and KittyExplorer (both developed by the same developer) were two of the many third-party developments that followed the success of the original game. It was easy to scoff at, but for real believers, the potential was exhilarating.
As a means of realising such promise, OpenSea was established in December of 2017. In order to compete with CryptoKitties, OpenSea cut its commission rate from 3.5 percent down to 2.5 percent and began constructing a more comprehensive platform.
The two co-founders, who were both in their early twenties, were well-seasoned: A millennial-focused polling business hired CTO Alex Atallah, and CEO Devin Finzer had developed and sold a claim-searching startup to Credit Karma.
However, it was their timing that drew people in. Smart contracts on the Ethereum blockchain, which has been lauded for its capacity to be programmed into the blockchain, were to be based on a new standard. As a result of this new standard, the blockchain now has a new kind of object: the ERC-721 token, which can be bought and swapped like Bitcoin while still preserving the uniqueness of each token. When CryptoKitties launched, ERC-721 was only a few months away from being released from beta. For this new market, Finzer and Atallah set out to create tools, such as a marketplace where people could purchase and sell these tokens in bulk. In Y Combinator’s winter 2018 accelerator programme, they were referred as “eBay for crypto assets” because of the quality of their concept.
According to Finzer, “the concept for OpenSea was born out of our enthusiasm in CryptoKitties.” Digital products marketplaces have existed for some time, but they tend to be isolated ecosystems: particular markets for games, domain names, tickets, etc…. a broader approach is needed.” The development of ERC721 made it feasible for the first time to consider such a concept.”
$423M Raised in a Year by OpenSea
The Beeple and Bored Ape sales would not begin the current NFT boom for OpenSea for three years, and they were long, cold years for the company. For this new generation of blockchain assets, the internal credo was to become “the Amazon of Web3,” which required developing capabilities like purchasing, selling, and making offers.
NFT supporters were left searching for uses of the technology as the CryptoKitties craze faded away. As an active member of Reddit’s NFT communities, Finzer often promoted OpenSea as an alternative trading system for Gods Unchained (an early NFT-based card game) and as a method to modernise software licencing. Over time, though, his invitation went unanswered.
As a result, OpenSea was able to gain a significant advantage over its competitors in the NFT industry during those years. Opening a brand-new online marketplace was a bold move by OpenSea, which was building on a platform that had been operational for decades.
An NFT transaction involves a complex chain of smart contracts to handle offers, proof of ownership, and safe exchange, while an eBay transaction is quite straightforward to do. Not only does OpenSea implement these contracts, but they also have the greatest mechanism for doing so (and this is important since most of the systems are open source).
At the same time, venture capital companies, such as Andreessen Horowitz, began exhibiting renewed interest in blockchain projects. One of the leads in Dapper Labs’ $12.9 million Series A investment in February 2018 was Andreessen, a co-founder of CryptoKitties. Investors in the VC group said in June of that year that they would be launching a new cryptocurrency fund. Katie Haun, a former prosecutor on the Silk Road task force, has joined Coinbase as a board member in order to expand the company’s knowledge of the cryptocurrency market. OpenSea was busy producing tools as the rest of the market grew.