The FTX saga is one of those rare industry collapses that is the stuff of Oscar-winning movies; an exchange that seemed almost too big to fail, a sudden collapse that led to the loss of billions, endless accusations of fraud and mismanagement, and an industry that is left to deal with the aftermath.
But according to Devin Finzer, the CEO and co-founder of OpenSea, this whole event, while tragic represents a unique opportunity to grow trust among customers in blockchain spaces. This was said in a recent statement to Decrypt.
How We Can Grow Trust
Speaking to Decrypt, Finzer was quick to acknowledge that the incident has been a devastating one for the crypto industry and crypto-adjacent businesses.
“We’re still feeling the collateral damage across the space. There’s no doubt that it’s a setback for crypto,” he said.
And this is certainly true. Besides the loss to FTX itself, several businesses that had exposure to the exchange have suffered. BlockFi, for example, suspended user withdrawals and has now filed for chapter 11 bankruptcy after some of its funds have been stuck in limbo following the collapse. And they are not the only ones.
In total, FTX is estimated to have around 1 million creditors, with the top 50 being owed a collective $3.1 billion. And then there is the emotional cost of the collapse; crypto critics have taken this as a ‘gotcha’ moment and there is an overall sense of pessimism among some users who speculate on which crypto project will be the next FTX.
But amidst all this, Finzer says, is a chance to build trust among customers.
“I think for the broader crypto ecosystem, and for NFTs in particular. This is really an opportunity to invest in strong, continual trust with users,” he says.
How OpenSea has done this so far is first by reiterating its commitment to protecting creator royalties. After initially revising its royalties policy, OpenSea has reinstated it amidst industry debate about how they should be handled. On top of this, OpenSea has reiterated its decentralized custody practices. In this sense, the marketplace does not actually have custody of its users’ NFTs.
Instead, Finzer explains, a system of decentralized smart contracts is used.
“We actually operate through a system of decentralized smart contracts. We do not custody users’ funds or users’ NFTs“And so there’s a lot of benefits to that type of system, over a central authority where things are a lot more opaque,” Finzer says.
Given that during the FTX collapse, NFTs associated with this year’s Coachella music festival have also been stuck in limbo, there is some merit to this practice.
And in the last few weeks, digital asset buyers have been demanding more evidence of asset security from the platforms they use, with several exchanges releasing proof of reserves and CoinMarketCap releasing a tool to confirm this.
Finally, Finzer notes that the industry is a resilient one and just like with the Mt Gox collapse years ago, it can recover.