The Curious Case Of OpenSea, Flow, and True Decentralization
Addressing The Elephant In The Room
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
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.
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.
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.
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:
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.