OpenSea is undoubtedly one of the most popular and most dominant non-fungible token (NFT) marketplaces right now. Earlier this month, the platform’s value was at $13 billion, solidifying its status as a diamond in the rough. Not only that, Twitter integrated OpenSea into its new NFT verification mechanism, a big success for interested users who aren’t techy.
However, being the one-stop shop for the NFT industry, it comes as no surprise that OpenSea has had its fair share of criticisms. Around the last weeks of January, users have been questioning OpenSea and its seemingly noticeable identity crisis. Is the platform aiming to be a haven for artists, a marketplace, or an unregulated casino?
Strange Listings & Decreased Prices
A few weeks ago, OpenSea traders noticed that valuable NFTs with typically high prices have been selling at pretty low rates. For instance, the lowest price you can get for a Bored Ape Yacht Club NFT is around $200,000. However, one confused trader noticed that their valuable Ape only sold for 0.77 ETH and without their permission to boot. Yikes!
I didn’t list me ape at all…. Now I’m seeing DMs it sold for .77?????? Wtf??????
— TBALLER.eth (@T_BALLER6) January 24, 2022
Some data providers and news outlets claimed that this was some “bug,” but the truth of the matter isn’t that simple. The reason for this mind-boggling situation has to do with OpenSea’s way of processing listings. Namely, you must first “approve” the token for trading if you want to list or sell a non-fungible token on the platform. Of course, you’ll have to pay gas fees for this because it’s an on-chain transaction. Once approval is confirmed, you choose how much you want to sell your NFT and list it for sale.
Now, let’s say that the market value of your NFT drops about an hour or a few hours after you list it. OpenSea will let you re-list the exact NFT but at a lower rate. And while you won’t have to pay gas fees again, OpenSea will create a brand-new listing of your sale rather than reducing the price of your initial listing.
This is the price of dealing with data from the blockchain directly: you get an append-only distributed ledger that doesn’t handle change very well. In other words, the popular NFT marketplace cannot change an on-chain listing because whatever happens on-chain can no longer be altered.
For example, if you list an NFT at 1 ETH and drop its price to 0.8 ETH before finally selling it at 0.6 ETH, this means there are still two other unsold listings out there worth 1 ETH and 0.8 ETH. This explains Twitter user T_BALLER6’s situation: the user minted the NFT about last year when the dollar value of the BAYC collection was almost zero. They moved the token to different wallets over the last couple of months, settling to list it for 250 ETH a few weeks ago.
However, if you look at the Ape’s “Item History” on OpenSea, you’ll find that the NFT has several other old yet unfulfilled listings dating back to when T_BALLER6 first minted the token. And canceling a listing is not that simple either, as you’ll need to pay another set of gas fees for each cancellation.
2/ This is the email that Opensea sent out a few hours ago to users who still had "inactive listings" on their accounts. Basically they are asking you to cancel old listings that you have on your NFTs that are still fulfillable, because they are unable to cancel them for you. pic.twitter.com/Fgd854Dezj
— dingaling (@dingalingts) January 27, 2022
This is the sad reality of on-chain shenanigans: if you’ve ever tried selling an NFT on OpenSea, there’s a significant chance that you have a couple of uncanceled listings hidden away somewhere. So, in the case of the confused Ape trader, the 0.77 ETH sale they made wasn’t due to a “bug.” Instead, it’s because OpenSea is built that way. OpenSea pretty much admitted this in an email to CoinDesk, saying the sale is neither a bug nor an exploit. Instead, it’s “an issue that arises because of the nature of the blockchain.”
OpenSea’s statement reeks of the libertarian security philosophy in the crypto world. The platform implies that the code isn’t the one at fault here. Instead, the user should be blamed for failing to do their research first or not reading OpenSea’s FAQ page.
A few days later, OpenSea sent out an email to all the account holders looking for answers with the subject line “Clarification on Canceling Inactive Listings.” Essentially, the email merely reminded users to cancel their old listings if they don’t want to experience the same issue as T_BALLER6.
Unfortunately, as mentioned, canceling an old listing on-chain isn’t that simple. Even if you do manage to cancel an old listing, it would still exist somewhere in the deepest, darkest parts of the blockchain, merely hidden away.
Rather than changing its guidelines to protect its users better, OpenSea decided to give out refunds to users. According to Bloomberg, OpenSea has already reimbursed a total of $1.8 million to users, if not more.
The Share Storefront
It seems that issues and controversy keep coming for OpenSea, as the company had another issue a few weeks ago, although this time it was about its smart contracts.
OpenSea users can mint NFTs, thanks to a shared smart contract known as the Shared Storefront. Dedicated Ethereum developers typically prefer creating and writing contracts themselves, which offers more control and flexibility. However, newbies turn to the Shared Storefront for the sake of convenience.
However, OpenSea recently announced that it would be capping the number of NFTs a user can create through the Shared Storefront. It claimed that it made this decision in response to user “feedback.”
We know this change may impact our community so please don't hesitate to share how this affects your creative flow.
— OpenSea Support (@opensea_support) January 27, 2022
Unsurprisingly, the announcement received a ton of backlash from users. The company reversed their decision shortly after, but they tried to explain in a Twitter thread as well.
The NFT industry has always been full of plagiarism and spam since it started gaining traction last year, and OpenSea played a significant role in making that happen. As such, we can’t seem to understand how putting a limit on how many NFTs users can mint on the Shared Storefront can somehow prevent this from happening. But more than anything else, OpenSea’s reaction to the entire controversy is what’s worrying many users.
Namely, the NFT marketplace and its investors don’t need to care whether users are minting plagiarized NFTs because it helps their business anyway. The marketplace receives a portion of every NFT sale made on the platform, whether it’s plagiarized or not.
Needless to say that OpenSea’s decisions so far are merely different ways of avoiding responsibility for issues they’ve caused.
