OpenSea Upgrades its Smart Contracts — But Has the Damage Already Been Done?

On February 27th, it was reported that OpenSea had completed its smart contract upgrade, switching to a modified architecture that accommodates more user content. New features include more descriptive signatures, bulk cancellation, and much more. This is all made possible by a new Wyvern smart contract that also helps prevent fraud – including phishing scams. 

But has the damage already been done?

Hackers Used Simple Phishing Scams to Steal $2 million in NFTs

OpenSea has certainly been dealing with its fair share of controversy over the past few days and weeks.

The biggest talking point was an NFT heist that saw $2 million stolen from OpenSea’s platform. Hackers used a relatively straightforward phishing scheme.

The irony is that in trying to upgrade and protect from phishing scams, OpenSea actually created an opportunity for hackers to carry out these attacks. Some users who were trying to migrate their listings opened phishing emails that redirected them to a fake website. This allowed hackers to steal the NFTs. Users believed that they were simply following OpenSea’s directions. Over the past few days, OpenSea has been constantly warning users about suspicious emails via its official Twitter account. 

OpenSea is by far the most popular NFT marketplace, with over 50,000 daily users and over $3.7 billion in trading volumes – just within the past month. However, things look a little shaky for the Ethereum-based platform these days, as global interest in NFTs is clearly waning. 

The most obvious question is simple: did these phishing attacks affect OpenSea’s credibility? Are investors now reluctant to purchase NFTs, knowing that these digital assets could simply be snatched away by a hacker if they’re not careful? Remember, some of these NFTs are worth millions of dollars.

If non-fungible tokens aren’t quite as secure as we initially thought, investors might be worried about putting these vast sums of money at risk. 

The Writing is on the Wall

It’s not clear whether the phishing attack and OpenSea’s decline are related. But one thing’s for sure, activity on this platform is diminishing. On February 24th, Tron Weekly reported that trading activity had dropped by a massive 37%, down to about $660 million. At the same time, the total number of active traders also dropped by about 20%, down to 220,000. 

OpenSea disputes these numbers. They say that more accurate statistics can be found elsewhere, and that the phishing attack has had virtually no effect on their bottom line. It’s what you would expect from a company that thrives on the continuing popularity of NFTs. 

Rivals Are Stepping In

Of course, NFTs themselves aren’t necessarily declining in popularity. In fact, the NFT market has risen tremendously over the past few months, and it is now worth well over $40 billion.

OpenSea’s decline might be a reflection of its own problems rather than lack of enthusiasm for NFTs as a whole. Users might simply migrate to other platforms, like LooksRare, BloctoBay, and others.

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