The collapse of FTX highlighted many flaws in the crypto industry. Now, the effects of the FTX disaster have been thrust into the non-fungible token (NFT) space with users unable to view NFT hosted on FTX.
In a tweet, engineer Solana jac0xb.sol explained how the metadata of NFTs hosted by FTX now points to a restructuring site that provides information about bankruptcy proceedings. According to jac0xb.sol, the minted NFTs were hosted on FTX using the Web2 Application Programming Interface (API), which resulted in the images not showing up.
An example of an NFT hosted by FTX. Source: Magiceden.io
After the FTX exchange declared bankruptcy, the entire FTX.us domain was redirected to the Bankruptcy Proceedings page. Because of this, NFT owners are still able to see the existence of the NFT. However, the images cannot be seen anymore, even when viewed within wallets or listed on NFT trading platforms.
With this said, jac0xb.sol also called out groups still hosting metadata on Amazon Web Services, suggesting that there is a “lesson to be learned” about how FTX hosts NFTs using the Web2 API service. Additionally, some users have commented that this highlights problems for Web3 companies that rely on centralized services such as AWS or the Google Cloud Platform.
Related: FTX Contagion: Which Companies Have Been Affected by the FTX Crash?
On August 5, NFT executives brought up the topic of NFTs not living on the blockchain. In an interview with Cointelegraph, Jonathan Victor, Web3 storage lead at Protocol Labs, and Alex Salnikov, co-founder of Rarible, explained that technically, the tokens are stored elsewhere. The duo highlighted that mainchains are often limited in size and storing data on the blockchain costs more.
Despite the issues brought about by the FTX crash, the NFT industry remains confident in the future of the space. On November 22, various players in the NFT space spoke with Cointelegraph and expressed confidence that the space will eventually recover. The executives highlighted that it is important for the NFT community to focus on increasing the benefit for their groups.
