Does the closure of Ebay’s NFT marketplace KnownOrigin raise storage concerns?

KnownOrigin has announced its impending shutdown, sparking new debates about the reliability and longevity of NFT storage solutions.

KnownOrigin bows

KnownOrigin has been a major player in the digital art space since its founding in 2018 in Manchester, England. It offered artists the ability to mint, sell, and trade NFTs.

The platform seemed primed for even bigger things when eBay bought it in June 2022 for an undisclosed sum. At the time, many industry watchers saw it as a strategic move for the e-commerce giant to enter the fast-growing NFT market.

The deal was expected to leverage eBay’s massive user base and KnownOrigin’s platform to create a new marketplace for digital collectibles. However, less than two years later, KnownOrigin closed up shop.

Signs of the NFT market’s troubles surfaced on February 20, 2024, when it laid off 30% of its staff, as reported by crypto.news. The layoffs followed a cooling of the NFT frenzy that had characterized the crypto space from late 2020 to mid-2022.

Months later, on July 17, things came to a head, when KnownOrigin announced via a series of posts on It also redirected users to secondary marketplaces including OpenSea and Magic Eden.

The IPFS debate: on-chain versus off-chain storage

While the full impact of the KnownOrigin shutdown is still unknown, one of the things it has caused is to raise questions about the longevity and security of digital assets.

The news has also raised concerns about the sustainability of the InterPlanetary File System (IPFS) as a storage solution for NFTs.

Digital artist Ella, aka BrightLightArt, took to X to express her concerns in the wake of KnownOrigin’s announcement. In her post, the artist stated: “Is eBay going to pay the IPFS storage bill forever? If they stop paying, the art will eventually die.”

Ella’s sentiment highlights a critical problem in the NFT ecosystem: the misconception that NFTs and their associated media are completely on-chain.

The reality, as described by tech experts, is more complex and less reassuring. According to them, most NFTs are not stored directly on the blockchain. Instead, they contain metadata that points to an off-chain file stored on platforms such as IPFS.

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

Understanding what you “own” with an NFT

In an earlier post on

His findings were eye-opening. According to him, when you buy 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 contains information about the media. This file in turn links to the actual media hosted on a server managed by the NFT platform.

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

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IPFS storage is not completely secure for NFTs

The technologist also stated that even NFTs that use IPFS hashes for storage are only partially secure. Although IPFS is a distributed file system, it only serves files as long as there is a node on the network that continues to intentionally host the file.

If the startup or entity responsible for pinning the file to IPFS goes bankrupt, as is the case with KnownOrigin, the file can disappear from the network, leaving the NFT similarly pointed to an inaccessible file.

This reliance on third-party platforms for the life of NFT data is a significant vulnerability that must be addressed.

Jonty’s assessment was blunt: “Right now, NFTs are built on an absolute house of cards, built by the people selling them,” the digital researcher said.

He further claimed that every NFT sold so far will likely break within the next decade. This stark warning underlines the fragility of current NFT storage solutions.

Sam (@cloudonshore), an Ethereum engineer with extensive IPFS experience, acknowledged Jonty’s criticism, stating that the technology is still evolving and the industry needs better tools and practices to ensure the security and sustainability of NFTs.

However, keep in mind that not all NFTs face this problem. Some projects are completely on-chain, meaning they have a decentralized system to store both NFT metadata and their visual media.

Unfortunately, the biggest barrier to more projects taking such measures is the fact that full on-chain storage isn’t cheap, especially for projects with larger media files.

Possible solution and future considerations

The closure of KnownOrigin has sparked a wave of introspection within the NFT community. In response to these concerns, some artists and collectors are advocating the use of storage solutions such as Arweave. Unlike IPFS, Arweave is a blockchain-based storage solution that aims to provide persistent data storage for a one-time fee.

When you save a file on such platforms, it is stored on a decentralized network of computers, theoretically guaranteeing its availability as long as the network exists. This makes it a more reliable option for storing digital art in the long term, although it is still dependent on the health and continuity of the underlying network.

What’s next?

The closure of KnownOrigin should be a wake-up call for the NFT community. It shows how important it is to understand how NFTs are stored and the risks associated with current practices.

Furthermore, as technology evolves, it will become imperative for NFT platforms, artists, and collectors to advocate for more secure and durable storage solutions for digital art.

The reliance on off-chain storage solutions and the potential for data loss if these services go offline pose significant risks to the value and integrity of NFTs.

Hopefully, the discussions sparked by this event can lead to significant improvements in the way digital art is stored and preserved, which will ultimately benefit the entire crypto art community.

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