Something Fishy is Happening on OpenSea as Bots Upset NFT Auctions
The NFT marketplace OpenSea has been on a tear — at 14.61%, its primary smart contract has consumed more gas than any other on Ethereum in the last 24 hours, according to block explorer Etherscan. But there’s something strange going on in OpenSea’s waters. Ethereum wallets appear to be canceling orders at a surprising rate on…
By: Owen Fernau •DeFi News
But there’s something strange going on in OpenSea’s waters.
Ethereum wallets appear to be canceling orders at a surprising rate on the NFT marketplace. More than a quarter of the last 1,000 transactions using the OpenSea contract were canceled as we went to press. Most other transactions involve matching NFT buyers and sellers.
Mike Dudas, the founder of digital asset research firm, The Block, suggested a possible explanation for the mysterious cancellations: bots.
“Bots are beating opensea at the moment,” Dudas tweeted. “Bidding below floor on pieces, then cancelling bids once accepted but prior to executing.” The Block’s founder said. The gambit allows the bots’ creators to lower the price and then scoop up assets at lower prices.
Bots watch to see if anyone is going to accept their bid and then frontrun by canceling so the acceptance fails, said foobar, a well-known Solidity developer. “That makes users frustrated and desperate and they try again but this time at a lower price,” the developer told The Defiant.
Dudas said the bots can pull the same stunt on the way up — bots can make offers, see who’s willing to buy, then retract the offer and reoffer at a higher price.
A bot invasion on OpenSea might be a buzzkill for an NFT community that’s been riding high of late. The NFT space is cast as a means for creators to monetize their digital works for avid collectors, not a place where artless bots manipulate value. With the cheapest CryptoPunk going for $152K at the time of writing though, the stakes keep getting higher.
Some users on OpenSea’s Discord are confused about the auction process. One of them, gCAN, claimed to have been the highest bidder in an NFT auction, yet didn’t receive a token. “Do I have to do something, isn’t it automatic? Is it possible that the seller cancelled last second?” they asked.
Many users are also reporting an “execution reverted” error which OpenSea says is typically due to an item being locked or non-transferrable.
Cancelling a bid isn’t free. The transactions were going for above $10 yesterday. Still Dudas tweeted that the strategy “must be profitable based on how many cancelled bids i’ve heard about over the past few days across numerous collectors and series.”
There are other reasons OpenSea users would want to list and then cancel their NFT offering. A crypto influencer who goes by davis on Twitter said someone put a rare Yat, a string of emojis meant to serve as a digital identity, up just to see what they could get for it. The bid: 21 ETH for the triple sunglasses face emoji, according to davis.
21 ETH were bid for this emoji string.
More generally, OpenSea’s traffic has been causing problems, with users talking on the project’s Discord of waiting hours for minted NFTs to appear. “If opensea had a token we could buy more servers,” quipped an influential trader who goes by Jebus on Twitter.
OpenSea doesn’t have a token yet. And with the marketplace taking up almost 15% of all Ethereum gas, OpenSea doesn’t appear to need one to stimulate growth.
With the rumors of bots swirling, users complaining of slow rendering NFTs and slow responses to support tickets, as well as eight engineering positions to fill, OpenSea has plenty of issues to address.
Still, analytics provider Glassnode says the marketplace is on pace to $1B in volume in August, a month after its previous record of $325M.
There could be worse problems than struggling to keep up with crushing demand.
[CORRECTED on 8/18 to remove sentence implying Ethereum user altsanonymous.eth is a bot; they are not]