Back to the list

FTX NFTs Are MIA: A Lesson on Centralized Risk

source-logo  blockworks.co 08 December 2022 20:22, UTC

FTX customers just can’t get a break.

In the latest twist from the crypto exchange’s fallout, NFTs minted on the FTX exchange now show a blank image instead of the original art. Any direct links to an NFT redirect to a restructuring page with information on the bankruptcy.

The lesson learned is one of Web3 companies relying on centralized services like Amazon Web Service (AWS) or the Google Cloud Platform, as Solana engineer jac0xb.sol signaled on Twitter. Collectors are unable to view their FTX-hosted NFTs because those collections are still hosting metadata on AWS.

This includes the Coachella NFT collection, a Solana-based collection of lifetime passes to the music festival that generated $1.5 million at launch via the FTX US NFT marketplace. For weeks, holders have been left without the option to withdraw or transfer them while the site has been disabled. Even on Magic Eden, the image displays an empty gray box.

The NFTs no longer point to their original images because the FTX exchange hosted their NFT metadata on FTX US Web2 servers that have since been deactivated. This issue isn’t unique to FTX, and it underscores the need for permanent decentralized storage solutions.

More often than not, NFTs are not actually built “on-chain.” NFTs may host their smart contracts on the blockchain, but their media or metadata is off-chain. The metadata — name, description and author details — is often saved in the InterPlanetary File System (IPFS), a peer-to-peer system for preserving multimedia files. The image itself — usually a jpeg file — is then linked to the NFT’s metadata.

Arweave is the leading Solana-focused alternative, recommended by Solana developers, but it was not used for FTX’s NFT mints. As a result, the URLs that retrieves the smart contract’s storage and links to the ID of the related NFTs are now broken.

Some examples of popular on-chain NFT projects that do ingrain their metadata into the Ethereum blockchain, include Nouns DAO, Chainrunners and OnChainMonkey.