What is a? real monkey? On OpenSea, the internet’s most popular NFT marketplace, it can cost a lot of money to get that question wrong. Last year, Bored Apes — cartoon primates linked to unique cryptocurrency tokens — skyrocketed in popularity. Now the cheapest costs $309,000, and OpenSea is crawling with imitations and scams. Two projects featuring inverted versions of original Bored Apes, named Phunky Apes Yacht Club (PAYC) and PHAYC, competed for the title of authentic knock-off of the coveted monkeys; other monkeys, of which there are many, were just pure copy pastes.
In December, OpenSea banned PAYC and PHAYC, a move that sparked grumbles from the crypto mob whose splurge has fueled the recent NFT craze. The move went against OpenSea’s self-proclaimed image of championing Web3, a decentralized version of the Internet free of censorship or gatekeepers. A few days later, a blog post by former Signal CEO Moxie Marlinspike, whose experimental NFTs had been removed by OpenSea, suggested that OpenSea was at risk of becoming another traditional technology platform, the “How are you, fellow kids?” to the edgy Web3 uprising.
OpenSea is caught between a rock and a hard place: Its phenomenal growth has brought it more revenue, partnerships with tech giants like Twitter and funding, but also a cartload of headaches as the company struggles to keep up with emerging security incidents and endless copycat. NFTs. If OpenSea manages to address these issues, it could receive a scornful response from cryptocurrency hardliners, which has already led to the launch of a rival NFT marketplace openly designed to poach its customers.
On the other hand, digital art makers, for whom the rise of NFTs has repeatedly been described as a blessing, believe OpenSea doesn’t go far enough in eradicating plagiarism and bad behavior. The person behind @NFTDeft, a Twitter account dedicated to exposing plagiarism on OpenSea and other NFT stores is damning. “When I first heard the word ‘OpenSea’, I thought from the start that piracy was the target,” they say, requesting anonymity for fear of being intimidated by plagiarism. “This is now the main place for piracy.”
In the same breath, one can pinpoint the exact decisions that made OpenSea a success story and a huge problem. In December 2020, the company announced that everyone would have his or her NFTs on the platform for free; three months later, that was compounded by the announcement that NFT collections would no longer need OpenSea’s prior approval To be mentioned. That model contrasted sharply with that of high-brow NFT platforms such as Nifty Gateway or Superrare – with very well curated art collections – and ultimately made OpenSea the largest NFT marketplace on the web. In August 2021, it reported monthly transaction volume of $3.4 billion, which equates to $85 million in revenue as OpenSea extracts a 2.5 percent transaction fee. A large venture capital risk followed from major players such as investment houses Andreessen Horowitz and Paradigm, and Hollywood actor Ashton Kutcher, giving the company a valuation of $13.3 billion. In January, Twitter announced it would use OpenSea’s API to let people create hexagonal NFT-based profile pictures. (Twitter declined to comment on the wisdom of partnering with OpenSea in light of the recent incidents.)
Then, on January 26, OpenSea tried to curtail the number of fake NFTs on the site. It announced the end of free, unlimited minting: each user would be limited to a maximum of five collections, each containing no more than 50 NFTs. There was a backlash, and the decision was reversed within 24 hours† In a declining Twitter thread, OpenSea stated that more than 80 percent of NFTs minted that way were “plagiarised works, fake collections, and spam.” A day later, another PR disaster. OpenSea users started complaining that bots were chasing abuse an outdated listing mechanism that would allow them to buy NFTs at prices below the market price. The design flaw led OpenSea to spend “more than 2K ETH” [$6.2 million] in compensation to community members who were affected,” said company spokesman Allie Mack. That came on top of reports of NFT thefts, market manipulation and security vulnerabilities that dogged the platform in 2021.
