OpenSea to Modify Points Program Amid Community Backlash

OpenSea, the largest NFT marketplace by all-time volume, publicly launched its OpenSea 2.0 (OS2) beta on Feb 13 but is changing its points distribution method just five days later.

Devin Finzer, the CEO of OpenSea, acknowledged the NFT space’s strong feelings towards point systems, especially the widespread belief that the Blur NFT marketplace’s incentive mechanism contributed to the downfall of the market.

Finzer stated, “We've heard the feedback on the current XP system, and we're putting a pause on XP given directly for listing and bidding.”

So far, OS2’s effect on the NFT market has been similar to Blur’s in the sense that NFT prices are dropping despite a significant increase in volumes. This is a result of artificial demand and incentivized selling.

Over the last week, collections such as Pudgy Penguins, Azuki, and Bored Ape Yacht Club are all down between 4% and 16%, according to Blur, while the collections’ weekly volumes surged between 75% and 188%, according to DappRadar.

In addition to the “price down, volume up” trend that was associated with Blur farming, the Doodles NFT collection appears to have been a primary target for farming bots, and while the collection’s price is down just 1% on the week, its weekly volume is up an astounding 1,140%. It is worth noting that Doodles also announced an upcoming token release on Feb. 13, which contributed to the initial volume spike.

According to his statement, listing and bidding XP will likely return with a different incentive structure. “In the meantime, we'll focus the rewards program on XP shipments -- which were designed as a flexible way to reward broad participation in OS2, such as buying and holding,” said Finzer.

XP shipments have been distributed to beta users who shared feedback with the team via Discord, as well as users who have purchased NFTs through OS2 with multipliers based on previous wallet behavior.

OpenSea volume has skyrocketed since the beginning of its incentive period, processing $26 million in volume on Feb 17, compared to $5.8 million on Feb 12, the day before XP farming began, according to Dune Analytics.