NFTs began to vanish on a chilly January day. Even though users had clear records of ownership, major platforms like MetaMask and Twitter were suddenly unable to display photos connected with newly submitted tokens. Something had gone horribly wrong with the distributed, decentralized technology stack.
The issue stemmed from a database outage on the NFT marketplace OpenSea. The outage rendered OpenSea’s image-loading API unavailable, causing any service that relied on it to upload tokens to get clogged. A single corporation has found its way to the center of practically every product in a scene full of staunch decentralizers. Vice saw one user who had modified the company’s emblem to read “ClosedSea” while reporting on the mayhem.
OpenSea’s take on the NFT world
It’s a peculiar scenario for an NFT company to be in. OpenSea’s core offering is a centralized, basic service placed on top of a decentralized blockchain that is significantly more chaotic. Coinbase (another prominent Andreessen Crypto investment) followed a similar path to an $85 billion IPO, but it’s unclear whether the same tactics would work in the Web3 wilderness.
OpenSea executives declined to be interviewed for this article, but when contacted for comment, company representative Abram Smith stressed the organization’s lofty goals. “Nearly everything we own could be accounted for on the blockchain one day,” Smith said, “and OpenSea’s opportunity is to become a primary destination for these new economies to develop.”
Nectar of timing
Their timing, however, was the main draw. The Ethereum blockchain, which has long been lauded for its ability to program smart contracts into the blockchain, has launched a new standard that will serve as the foundation for NFTs. It was known as ERC-721, and it enabled a new type of item to be created on the blockchain: something that could be sold and swapped like Bitcoin while maintaining the uniqueness of each token. ERC-721 was only a few months away from being released from beta, and CryptoKitties showed that it could be turned into a real marketplace. Finzer and Atallah sought to create instruments for that market, such as a platform for large-scale purchasing and selling of these tokens. The concept was good enough for them to be accepted into Y Combinator’s winter 2018 accelerator program, where they were described as “like eBay for crypto assets.”
OpenSea’s boon to the NFT market
Those years, in retrospect, provided OpenSea a significant advantage over other NFT marketplaces. Basic online marketplace systems had existed for decades, but OpenSea was bringing the same functionality to a new platform. Offering anything for sale to a top bidder on eBay is simple, but doing so with an NFT necessitates a complex chain of smart contracts that handle offers, proof of ownership, and secure exchange. Although OpenSea isn’t the only organization utilizing these contracts (and, more importantly, the majority of the systems are open source), they still have the best system.
At the same time, venture capital firms, particularly Andreessen Horowitz, were exhibiting a renewed interest in blockchain startups. Andreessen participated in a $12.9 million Series A investment for Dapper Labs, a new company founded by the CryptoKitties founders, in February 2018. In June of that year, the VC firm announced the launch of a new cryptocurrency-only fund. Katie Haun, a board member at Coinbase and a former Silk Road task force prosecutor, has joined the company to expand its experience in the field. While OpenSea was developing tools, the market as a whole was expanding.
To sum up
With so much momentum, it’s impossible to resist making outrageous predictions. Currently, NFTs are primarily utilized for collectible art — think of the inescapable monkeys — however, unlike curated platforms like Rarible or Foundation, OpenSea has no special ties to the digital art scene. Concert tickets, real estate, and post-graduate certificates might all benefit from the same blockchain technology. The company’s CEO imagines a world where everything becomes an NFT, with no limitations to where OpenSea’s 2.5 percent commission can go in the high-flying jargon of venture capital.