KnownOrigin Shuts Down, Sparking NFT Storage Reliability Debate

KnownOrigin, a major player in the digital art space since its inception in 2018, is closing up shop. The news has raised concerns about the sustainability of the InterPlanetary File System (IPFS) as a storage solution for NFTs.

NFT platform KnownOrigin is shutting down its on-chain marketplaces and minter, redirecting users to secondary marketplaces. This move has sparked discussions about the reliability and longevity of NFT storage solutions.

KnownOrigin, a major player in the digital art space since its inception in 2018, offered artists an avenue to mint, sell, and trade NFTs. The platform's acquisition by eBay in June 2022 for an undisclosed amount was seen by many industry watchers as a strategic move for the e-commerce giant to enter the burgeoning NFT market.

However, signs of trouble emerged on Feb. 20, 2024, when KnownOrigin laid off 30% of its staff, as reported by crypto.news. The layoffs came amid a cooling off of the NFT frenzy that had characterized the crypto space from late 2020 to mid-2022.

On July 17, KnownOrigin announced through a series of posts on X that it would be winding down its on-chain marketplaces and minter, redirecting users to secondary marketplaces, including OpenSea and Magic Eden.

“After careful consideration and evaluation we can confirm KnownOrigin will continue to wind down it’s on-chain marketplaces & minter (and signpost to secondary marketplaces) over the upcoming weeks,” KnownOrigin stated in one of its posts.

The platform also thanked its community for their support and contributions over the years.

“Thank you for being part of our journey and helping us shape the future of digital art and Web3,” KnownOrigin added.

The KnownOrigin shutdown has raised questions regarding the longevity and security of digital assets, sparking concerns about the sustainability of the InterPlanetary File System (IPFS) as a storage solution for NFTs.

In the aftermath of KnownOrigin’s announcement, digital artist Ella, also known as BrightLightArt, took to X to voice her concern.

“Are eBay going to pay the IPFS storage bill, forever? If they stop paying, the art will eventually die,” Ella stated in her post.

“We were sold a lie by the platforms. Art on IPFS is not actually onchain at all. The NFT you minted is only a link to an offchain file.”

Ella's sentiment highlights a critical issue in the NFT ecosystem: the misconception that NFTs and their associated media are entirely on-chain.

According to tech experts, the reality is more complex and less reassuring. Most NFTs are not stored directly on the blockchain. Instead, they contain metadata that points to an off-chain file stored on platforms like IPFS.

While IPFS is a distributed file storage system that aims to be more resilient than traditional web servers, it still has its limitations. For instance, if the entity responsible for hosting the IPFS node goes out of business or stops maintaining the node, the data could become inaccessible, rendering the NFT effectively worthless.

In a past post on X, Jonty Wareing, a vocal critic of the current state of NFT storage, shared the results of an extensive analysis of how NFTs reference the media they represent.

“Out of curiosity I dug into how NFT's actually reference the media you're "buying" and my eyebrows are now orbiting the moon,” Wareing stated in his post.

His findings revealed that when you purchase an NFT, you are essentially buying a token that points to a URL on the internet or an IPFS hash. In many cases, this URL points to a JSON metadata file that includes information about the media. This file, in turn, links to the actual media hosted on a server controlled by the NFT platform.

Jonty used the example of a Beeple artwork that sold on Nifty Gateway for $66,666. The NFT points to a JSON file hosted on Nifty’s servers. According to Jonty, if Nifty Gateway were to shut down, the token would point to a non-existent file.

“This is the NFT you're actually buying,” Jonty explained.

“If Nifty Gateway goes down, this token will point to a non-existent file. Beeple's art will be bricked.”

Jonty also highlighted that even NFTs that use IPFS hashes for storage are only partially secure. While IPFS is a distributed file system, it only serves files as long as there is a node in the network that intentionally keeps hosting the file.

If the startup or the entity responsible for pinning the file to IPFS goes bust, as is the case with KnownOrigin, the file could vanish from the network, similarly leaving the NFT pointing to an inaccessible file.

This dependency on third-party platforms for the longevity of NFT data is a significant vulnerability that needs to be addressed.

“Right now, NFTs are built on an absolute house of cards constructed by the people selling them,” the digital researcher stated.

“Every NFT sold so far will likely be bricked in the next ten years. I'm being serious.