The Non-Fungible Token (NFT) marketplace of OpenSea has been a hive of activity lately, with auctions and sales pushing up gas prices. However, something suspicious seems to be going on.
OpenSea has now overtaken Uniswap as the largest user of transactions on the ethereum network, and Etherscan reports that the NFT market has generated $2.5 million in fees in the last 24 hours.
OpenSea and other NFT platforms have overtaken DeFi in terms of Etherscan usage and fee burn, knocking Uniswap off its perch.
OpenSea has burned through nearly 1,900 ETH, or $6 million in transaction fees, in the past week since EIP-1559 went live.
Bots run NFT’s show
OpenSea is a marketplace where NFT can resell at auction for investors on the secondary market. According to recent research by The Defiant, it appears that the auction system is being exploited by bots.
It observed that ethereum wallets appear to be cancelling orders at an alarming rate, with more than a quarter of the last thousand or so transactions using OpenSea contracts being cancelled.
Industry researcher Mike Dudas blamed the bots in an Aug. 10 tweet.
“The bots are currently beating Opensea by bidding below the reserve price, then cancelling the bid after acceptance but before execution. The effect is to drive the price of the series+ version lower and lower until they strike, then reverse the operation after the buy-in to induce a price increase.”
According to one prominent Solidity developer, these bots watch to see if anyone is going to accept their bid and then advance it by canceling the bid so that the acceptance will fail.” This leaves users frustrated and desperate, and they try again, but this time at a lower price.” The developer told us.
Issues that need to be addressed
The report adds that many users have also reported “perform recovery” errors, which OpenSea claims is usually due to items being locked or non-transferable. Cancellation bids are not free, and escalating gasoline prices could render the entire auction system futile if bots are running ahead of them.
The NFT space is portrayed as a decentralized channel for creators to monetize their digital works for avid collectors, “rather than a place for artless bots to manipulate value,” the report says.
“With bot rumors swirling, users complaining about slow rendering of NFT, slow responses to support tickets, and eight engineering positions to fill, OpenSea has a lot of issues to address.”
Average gasoline prices have spiked to around $20, the highest level since late May.