Non-fungible token (NFT) marketplace OpenSea has paused its new XP reward system following criticism from users.
On February 13, OpenSea introduced the beta version of its upgraded platform, OS2, calling it “a fully reimagined product built entirely from the ground up.” The update included a new points system that would determine eligibility for an upcoming airdrop of the platform’s native token, $SEA.
However, many users criticized the system, arguing it could encourage wash trading and was designed primarily to generate fees.
In response, OpenSea CEO Devin Finzer addressed the backlash on X (formerly Twitter). He wrote, “we’ve heard the feedback on the current XP system, and we’re putting a pause on XP given directly for listing and bidding.”
He added, “I appreciate the feedback. we’ll continue to work closely with those who have helpful ideas. but some of the vitriol I saw on X this weekend appeared to be primarily motivated by extraction / attempts to bring OS down.”
Talks of a “revamped” platform had been circulating since last year, when Finzer stated the team would “reimagine everything” and rebuild OpenSea “from the ground up” to improve security and deliver a more personalized experience.
To support the overhaul, OpenSea restructured its operations in 2023, cutting its workforce by up to 50%. It was the second round of major layoffs after a previous one in 2022.
The platform has faced growing challenges. In May 2024, OpenSea’s trading volume dropped to levels last seen in April 2021, signaling a decline in NFT market activity.
Regulatory pressure has also increased. In August 2024, the SEC issued OpenSea a Wells notice, suggesting that NFTs sold on the platform might be classified as securities.
Legal issues followed. In September 2024, two users filed a class-action lawsuit accusing OpenSea of selling unregistered securities. However, the lawsuit ended when both users withdrew their claims after OpenSea invoked binding arbitration.