Reservoir’s decision to sunset its NFT API services is puzzling. It strikes me much more as a canary in a coal mine and legislative overreach than some organic industry evolution. This news should send a chill down our collective spine. It follows closely behind a $14 million Series A funding round. It’s hard not to read this as a simple business decision, a pivot to a “brave new token infrastructure project.” We should challenge ourselves to say what this truly means for the everyday creator. What difference will it make for the small-time developer and the average NFT buyer?

Accessibility: Vanishing For Small NFT Players?

As NFT projects exploded in 2021-2022, Reservoir became increasingly important back-end support for NFT marketplaces and wallets – including blockchain giants like Coinbase and MetaMask. That's significant. Now, let’s not kid ourselves, those megas are going to survive. Unlike smaller organizations, they have the financial wherewithal to quickly pivot, to build in-house, to scour the space for alternatives. It’s the little guys that are starting to panic. The indie devs making the coolest NFT experiences will be hit the hardest.

Think about it. These smaller teams like many others depend on inclusive and cost-effective infrastructure to simply get started. Reservoir’s API freed them up to focus on building incredible projects. They didn’t have to deal with the nuances of NFT data indexing and cross-marketplace trading. Now, they're scrambling.

Along with Alchemy and Sequence, Reservoir is a great resource that’s helping guide users through this transition. Great, in theory. But is this really such a smooth change for all? Will these other options give you the same capabilities and cost structures? Will they meet the level of support that the latter, smaller developers have been able to count on? What about the learning curve? Time that’s spent migrating is time that’s lost innovating.

This isn’t just about convenience. It’s about accessibility. The NFT space provides a great case in point and poses an important question. Or rather, is it actually accessible to all, or becoming an exclusive playground for the rich and globally connected?

Innovation: Will It Stifle?

It is a troubling trend that so much power would be further consolidated into the hands of a few nodal infrastructure providers. Reservoir’s shutdown raises a critical question: are we inadvertently creating a bottleneck that will stifle innovation in the NFT space?

When this underlying infrastructure is controlled by a small number of companies, they have the ability to exert outsized power. They can control availability, control access, control pricing, set the highest standards, and in the end decide who gets to play and who doesn’t. This isn’t aimed at Alchemy or Sequence specifically, but the larger systemic issue at play.

What we have is an extremely centralized, fragile ecosystem. One where developers have more options to choose from, one where innovation is not subject to the fancies of a few VC-funded firms. Reservoir’s decision to open-source its entire codebase is an incredibly positive move. Many small teams do not have the institutional expertise or resources to be successful with that infrastructure on their own.

Consider what’s transpired with the internet’s earliest days. Open-source technologies and community-driven initiatives harbored an impressive, passionate explosion of creativity and innovation. Are we not running the same risk of Web 2.0, where a handful of tech monopolists end up owning the entire landscape?

This backdrop is similar to the wars that independent musicians are waging against major record labels. Those labels were effective tools for censoring content, controlling what was produced and who could see it. Now, semi-monopolistic, highly powerful infrastructure providers may unwittingly set the pace of innovation in the NFT ecosystem.

Sustainability: VC Model Hindering Growth?

Reservoir's pivot, mere months after securing a significant funding round, highlights a potential flaw in the VC-backed model for NFT infrastructure. VCs are, understandably, looking for returns. Is this pressure to scale fast and chase the next shiny object detrimental to the NFT space? This rush threatens the measure’s long-term viability.

What to do when that “broader token infrastructure project” fails to produce the promised returns? Will other NFT infrastructure providers be subjected to the same pressures to pivot, thus leaving their users high and dry? The anxiety is palpable.

We need to explore alternative models. Perhaps more community-owned and operated infrastructure. Maybe even more grant-funded efforts to try and bring available tools, and just really reliable tools to developers. The answer is to cultivate a more diverse ecosystem and lessen our dependence on a handful of centralized actors.

The discontinuation of Reservoir’s NFT API services is more than a business tale. It's a wake-up call. Capital MSMEs often have limited access to institutional financing, making them riskier investments for banks and funders. The NFT space is still nascent and diverse. We need to make careful choices now, because those choices will determine the future of this creative yet delicate ecosystem. Let’s put accessibility first, freedom to innovate and create second, and lay the groundwork for a more sustainable NFT revolution. The NFT winter risks claiming more than just corporate scalpers. It might snuff out the spirit of decentralization and creativity that first imbued this space with such promise.