The FTX crash exposed several problems in the cryptocurrency sector. Currently, users cannot see their FTX-hosted nonfungible tokens (NFTs) due to the FTX scandal.
The metadata of FTX-hosted NFTs now links to a restructuring website that disseminates information on bankruptcy procedures, Solana engineer jac0xb.sol noted in a tweet.
The NFTs created on FTX, according to jac0xb.sol, was hosted via a Web2 application programming interface (API), which prevented graphics from appearing.
Immediately following the FTX exchange’s bankruptcy filing, the whole FTX.US domain was redirected to the bankruptcy procedure website.
As a result, NFT owners may still recognise the existence of their NFTs. Images, however, can no longer be viewed, not even when they are listed on NFT trading platforms or viewed within wallets.
Jac0xb.sol said that there is a “lesson to be learned” from how FTX hosted their NFTs utilising a Web2 API service, calling out collections that are still storing information on Amazon Web Services.
Because the FTX exchange kept its NFT information on FTX US Web2 servers that have since been terminated, the NFTs no longer refer to their original pictures. This problem is not specific to FTX and highlights the demand for long-term decentralised storage options.
NFTs may store their smart contracts on the blockchain, but their media or information is typically off-chain, meaning they are not always “on-chain” in the strictest sense.
The InterPlanetary File System (IPFS), a peer-to-peer system for storing multimedia files, is frequently used to maintain the metadata, including the name, description, and author information. The actual picture, often a jpeg file, is subsequently connected to the NFT’s information.
When a user searches for NFTs from the Coachella collection on an NFT marketplace like magiceden.io, micro-images of the compilation’s artwork are displayed on the listings page. The NFT’s graphics are not visible when a user toggles to view the item’s specifics.
Similarly to this, some of the information on FTX US-based NFTs offered on Opensea still displays the photographs on the main sale page. And even some other NFTs listed separately still display the images, while many do not or display problems.
Coachella NFTs offered on magiceden.io are listed for values between 1 and 100 SOL per unit, whereas NFTs published on Opensea have a floor value of about 100 Ethereum (ETH).
The usage of centralised services by Web3 businesses, such as AWS or the Google Cloud Platform, has also been criticised, according to several users who remarked on the matter.
NFT executives raised the issue of NFTs not being on the blockchain on August 5. Technically, the tokens are held someplace else, according to Jonathan Victor, the Web3 storage head at Protocol Labs, and Alex Salnikov, the co-founder of Rarible, in an interview.
The pair emphasised that primary chains frequently have relatively little storage capacities, so storing data on a blockchain is more expensive.
On the main selling page of OpenSea, advertisements for FTX US-based NFTs include photos. Some information on individually listed NFTs also contains photographs. However, many people do not show signs of trouble.