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How One Company took over the NFT Trade

On a cold day in January, NFTs started disappearing. Major services like MetaMask and Twitter were suddenly unable to display images associated with newly uploaded tokens, even though the users had clear records of ownership. Something in the distributed, decentralized technology stack had gone terribly wrong.

The problem was the NFT marketplace OpenSea, which was suffering a database outage. The outage brought down OpenSea’s image-loading API, jamming up any service that relied on it to upload tokens. In a scene full of militant decentralizers, a single company had found its way to the center of nearly every product. Reporting on the chaos, Vice spotted one user who had photoshopped the company’s logo to read “ClosedSea.”

It was an awkward moment but a revealing one. A year into the NFT boom, it’s hard to mint a collection or list a token for sale without somehow interacting with OpenSea. The company has become the central broker and the de facto enforcer of community rules. When an ape gets stolen, the rightful owner calls on OpenSea for help — and the platform has become the single most important chokepoint for blocking a sale. It’s also the largest single market any time a token is listed. Even tokens that aren’t minted on OpenSea eventually find their way there by simple gravity. And as the outage showed, even Web3 projects with no explicit connection to OpenSea are often deeply dependent on the company’s infrastructure.

It’s a strange situation for a company in the NFT business. At its heart, OpenSea is providing a simple, centralized service (the ability to view and trade tokens on the blockchain) that’s built on top of a decentralized blockchain that is far more chaotic. The cryptocurrency service Coinbase (another prominent Andreessen Crypto investment) followed a similar playbook to an $85 billion IPO — but it’s not clear the same tricks will work in the wilderness of Web3.

OpenSea declined to make executives available for interview for this piece, but when reached for comment, company representative Abram Smith emphasized the company’s lofty ambitions. “It’s possible that one day, nearly everything we own will be accounted for on the blockchain,” Smith said, “and OpenSea’s opportunity is to become a core destination for these new economies to thrive.”

Still, many investors and analysts see the company’s position as more precarious than you might think. It’s easily the most successful company to emerge from the NFT boom of the past year, processing hundreds of millions of dollars in transactions on a daily basis. At a technical level, it’s inescapable, as the outage dramatically showed. But it’s remarkably distant from the scrappy token-drop culture that has fueled the recent digital art boom — and many aren’t sure that Web3’s decentralized future will have room for an intermediary platform like OpenSea.

“I think the question is, is OpenSea like an AOL or a Netscape, or are they going to be able to maintain their hold on the market,” said Brian Krogsgard, who hosts a crypto podcast called UpOnly. “And I think that’s a very open question.”

Source: TheVerge - Online NFT News

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