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The Curious Case Of OpenSea, Flow, and True Decentralization 

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The Curious Case Of OpenSea, Flow, and True Decentralization 

Addressing The Elephant In The Room

Daton Pope
Sep 21, 2021
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The Curious Case Of OpenSea, Flow, and True Decentralization 

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Introduction

So, last week a few things went down in the NFT marketplace scene. Google partnered with Dapper Labs to allow Flow to operate nodes using Google cloud services. Also, an OpenSea executive – Nate Chastain – was exposed for frontrunning NFTs that were listed on the front page of the marketplace. Chastain was also asked to resign from his position. We actually covered this topic on the podcast (for those of you that don’t remember, you can watch it here). Though the majority of us aren’t sorry to see Nate ousted, in a true decentralized market, this offense would have never been possible.

There have also been cases of NFT collections being removed from the OpenSea marketplace. Even though the actions and compositions of these marketplaces point more towards centralization than anything else. So beckons the question of: are OpenSea and Flow any more decentralized than Amazon, Apple or Google? Let’s do some digging and see what we come up with. 

Exhibit A: OpenSea 

  • This past year, OpenSea has taken off like wildfire and has worked its way into being the premier marketplace for NFT purchases. This is largely due to the craze that has taken place over the past five or six months with people going cuckoo for NFTs….and Cocoa Puffs.

  • Even in the past seven days, no other NFT marketplace has come anywhere close to contending with OpenSea’s volume

Source: Dapp Radar
  • The way it’s been dominating the charts is absolutely insane. 

  • However, as the age old adage goes, all that glitters damn sure ain’t gold…..and OpenSea has some skeletons in its closet from what I’ve been told (yes, I made that rhyme on purpose #bars).

  • Earlier this month, OpenSea was accused of withholding royalties from artists:

Opensea, the largest NFT platform by volume, has been failing in its responsibility to pay royalties for secondary sales on its platform. Similar reports from many reputable artists have become commonplace, indicating a pattern propagating on a wide scale. Claims from these artists have been verified with evidence. This failure on Opensea’s behalf spotlights a major issue in Opensea’s smart contract not distributing royalties automatically and, as a result, the unnecessary centralization that arises. - NFTs.WTF

  • This is not a good look for a marketplace that claims to uphold principles of decentralization. Another case in point:

Devin Finzer, OpenSea’s CEO, has said that they are not gatekeepers and they do not wish to censor peer-to-peer transactions on their marketplace. Despite this, the marketplace clearly maintains its authority in a centralized manner. Fraudulent Cryptokitties and Cypherpunks will be taken down along with all other copyrighted materials. Finzer has spoken of a Silk Road type of marketplace being a possibility in the future, but it is not a road his team wants to go down. - Phemex

  • OpenSea delisted the Sad Frogs District project back in August. 

Twitter avatar for @IcedCoolyETH
Iced Cooly 🧊 @IcedCoolyETH
@SadFrogsD @opensea @Matt_Furie Left is @Matt_Furie's frog. Right is KGB Chad from the Sad Frogs District. This is a slippery slope.
Image
Image
10:14 PM ∙ Aug 16, 2021
71Likes4Retweets
  • The actions of OpenSea mirror those of two of the biggest centralized platforms in the tech industry.

Apple and Google stand accused of "political censorship" after the companies removed an app created by imprisoned Russian opposition leader Alexei Navalny under pressure from the Kremlin. The app, which encouraged Russians to strategically vote for opposition candidates that were the most likely to defeat members of Putin’s ruling party, disappeared from the companies’ stores on Friday — the same day polls opened in the country’s parliamentary elections. - Fox Business

  • Sounds eerily familiar right?

  • Finally, we have the case of Mr. Chastain front-running other marketplace customers. 

  • Certain people from the NFT community expressed their displeasure about the ordeal as well.

Twitter avatar for @beaniemaxi
Beanie @beaniemaxi
Months ago, I brought up concerns about OpenSea being centralized. I had a very public battle about the manual verification process. This involved Lil Jon and The Church of Satan. Many people got mad at me. A true decentralized marketplace should not have any non-algo “features”.
7:07 PM ∙ Sep 15, 2021
337Likes18Retweets
Twitter avatar for @rleshner
Robert Leshner @rleshner
Whether or not there is truth to the accusations of insider trading—OpenSea needs to use this as a catalyst to build a more decentralized platform. Centralized systems and their users are vulnerable to bad decisions by humans.
2:09 AM ∙ Sep 15, 2021
483Likes41Retweets
  •   That’s enough about OpenSea. I think we’ve given you all enough information and bread crumbs to make a determination of whether or not OpenSea should qualify as a decentralized platform. Let’s move on to Flow.

Exhibit B: Flow

  • You could credit Flow for being the catalyst that kicked off what we’ve come to know as the Epic NFT Bull Run Of 2021 (I just made that name up, but it’s true. So we’re rolling with it) with NBA TopShot.

  • If you need a quick refresher, check out the article below:

https://www.cnbc.com/2021/02/28/230-million-dollars-spent-on-nba-top-shot.html

  • That’s right. Back in February, people were tearing the hinges off of Flow’s doors to grab a Top Shot NFT, and the rest is history.

  • While we’re certainly thankful for the role that Dapper Labs and the Flow blockchain played in the rise of NFTs, that will not be enough to extricate them from the glaring truth. They too must get this work.

  • 0x Allen has not been shy about calling Flow out for how centralized it is.

Twitter avatar for @RealAllenHena
0xAllen @RealAllenHena
"Through the multi-year partnership, Google Cloud will act as a network operator, offering its infrastructure to help Flow scale." Dapper controls 85% of the nodes and supply for Flow. So centralized supply and nodes running on centralized infrastructure. Remove Web 3 from title
Twitter avatar for @ForbesCrypto
Forbes Crypto @ForbesCrypto
EXCLUSIVE: Google takes giant step to powering Web 3 with Dapper Labs NFT deal: by @DelRayMan @ninabambysheva https://t.co/4yUt8OeO0Y
2:25 PM ∙ Sep 14, 2021
228Likes43Retweets
  • 0xAllen makes a great point with this tweet. How decentralized can Flow be when it's running on Google cloud services? 

  • To be fair, Google did leave the door open for Dapper Labs to use other services (as if that makes it any better).

This multi-year partnership with Google does not mean that node operators on the Flow blockchain must use Google's cloud services. They are still free to use Amazon Web Services or their own hardware and network. - The Street

Conclusion

  • I think we’ve successfully justified our comparison of OpenSea and Flow blockchain to the centralized marketplaces of Google, Amazon, and Apple.

  • Look, I’m not saying that centralization is all bad, there are actually some pros to certain entities being centralized. However, NFT marketplaces need to be more transparent about it.

  • The entire purpose of cryptocurrency is to be decentralized and immutable. Naturally, participants in this industry would like the same from their marketplaces. Maybe it’s too much to ask for at the moment, but it’s not impossible.

  • Granted, you will have a good number of people that don’t care as much about centralized vs decentralized marketplaces as long as they have access to their NFTs. However, for those that do, there needs to be more options.

  • For those that are feeling somewhat discouraged about the current climate, fear not. In the near future, we will see the rise of more decentralized NFT marketplaces….such as Artion (Fantom’s decentralized NFT marketplace).

  • Two days ago, crypto legend Andre Cronje tweeted about Artion:

Twitter avatar for @multifarm_fi
Multifarm.fi @multifarm_fi
3/ We will likely see a Uniswap vs. Sushiswap scenario but this time with OpenSea vs. Artion. The recent insider trading scandal strengthens the centralized vs. decentralized meme even more.
Twitter avatar for @AndreCronjeTech
Andre Cronje @AndreCronjeTech
@Dogetoshi And what if, obviously hypothetically, said marketplace supported multiple chains and had built in cross chain NFT transfer capability, and was open source. Hypothetically ofcourse... #artion
6:17 AM ∙ Sep 19, 2021
30Likes7Retweets
  • We’ll be waiting to see how this plays out.

  • If you want to know about other NFT marketplaces that are in the running to replace OpenSea and Flow, remember to check out last week’s podcast link.

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