OpenSea, one of the largest NFT marketplaces, has suspended its XP reward system for listing and bidding following backlash from the community. The system, part of OpenSea’s new OS2 beta marketplace, was meant to incentivize activity in anticipation of the upcoming SEA token airdrop.
However, it quickly became a focal point of controversy, with critics arguing that it encouraged wash trading and disproportionately benefited high-frequency traders over genuine NFT collectors and creators.
Criticism Over Wash Trading and Fee-Driven Mechanics
Launched on January 28, OpenSea’s XP system awarded points to users based on their trading activity. The higher the activity, the greater the eligibility for SEA token rewards. However, community members soon flagged issues with how traders were exploiting the system.
NFT traders, including influencer Wale, described the XP farming strategy as a cycle of placing bids and immediately selling assets to the next highest bidder. This repetitive process allowed traders to accumulate XP without financial risk. Unlike competitor Blur, which introduced a cooldown period between sales, OpenSea had no such restrictions, facilitating an environment where XP scores were artificially inflated through high-volume trading loops.
Additionally, OpenSea’s zero-royalty policy meant that creators did not benefit from the increased activity. Unlike Blur, which enforces a minimum royalty fee, OpenSea’s structure funneled all transaction fees back to the platform rather than to NFT artists and project founders. Reports surfaced that top XP farmers were spending tens of thousands of dollars in fees while exploiting the system, raising concerns that the marketplace was prioritizing revenue generation over fair engagement.
OpenSea Adjusts XP System After Backlash
In response to the mounting criticism, OpenSea co-founder and CEO Devin Finzer announced that XP rewards for listing and bidding would be paused. Instead, the company is shifting its focus to XP shipments, a new mechanic introduced on February 14, which aims to distribute rewards more equitably. However, OpenSea has yet to release detailed information on how XP shipments will function.
To mitigate the wash trading issue, OpenSea is now encouraging users to earn XP through buying and holding NFTs rather than engaging in rapid, repetitive transactions. This move aligns the platform more closely with strategies used by other NFT marketplaces to foster long-term engagement rather than speculative trading.
Mixed Community Reactions and Future Uncertainty
The decision to pause XP rewards has sparked mixed reactions within the NFT community. Some users welcomed OpenSea’s responsiveness to feedback, while others criticized the platform for not foreseeing the exploitative nature of the XP system from the start.
NFT holder Langerius acknowledged the update as a positive step but expressed surprise that OpenSea initially designed the system in a way that favored traders over artists and collectors. Longtime traders also voiced frustration, particularly those with high trading volumes who found themselves excluded from key incentives despite their past engagement on the platform.
