Original Author: Jam
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The uniqueness of digital assets allows them to be used to prove the ownership and scarcity of digital items, thereby providing new revenue streams for digital artists and creators.
Blur has surpassed Opensea by using various methods such as airdrop incentives, pending order incentives, self-built trading markets and aggregators. Although Opensea was the most liquid NFT market before this, Blurs comprehensive strategy has allowed it to gain more and more attention in the market. Blurs liquidity solution is currently the best, and its combination of marketplaces and aggregators provides users with a wider range of choices. This is very important because in the NFT market, liquidity is often the key, and Blurs liquidity solution has proven to be very reliable.
In response to the onslaught, Opensea dropped its fees to 0%, showing how serious it is about its competitors. However, this strategy could negatively impact Openseas sustainability. Optional royalties are another strategic area. This allows Blur to offer more options in the market and thus attract more users. There is no chance for a segmented Marketplace.
Although there are still many opportunities in the NFT market, market segments such as X2Y2, LooksRare, and Uni V3 (Genie) are hard to come by. This is because these markets are already occupied by large companies and strong competitors, and new entrants will face great challenges.
Blurs comprehensive strategy in the NFT market has proven to be very successful. Although the market is highly competitive, Blurs performance in the market is getting better and better, which shows the feasibility and practicality of its strategy.
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Crypto Kitties Market is the original NFT trading platform
Crypto Kitties Market is the original NFT trading platform, originally established as an extension of the Crypto Kitties game. Crypto Kitties (the earliest NFT) is an Ethereum-based game where players can buy, breed, and sell digital cats. Each digital cat is unique, and NFT is used to ensure its uniqueness and circulation.
Its ecosystem consists of platforms, users, digital cats, and trading markets. The platform provides services for creating, buying, breeding and selling digital cats, and also provides digital cat display, social interaction and trading market. Users buy, breed and sell digital cats, and participate in social interactions and event promotions. The breeds, breeding seasons and competitions of digital cats also add a lot of fun and interactivity to the platform. The trading market provides users with services to buy and sell digital cats, and provides transaction history and price trend analysis.Therefore, the original intention of the establishment of Crypto Kitties Market is to improve the currency and asset attributes of digital kitties.
The development of Crypto Kitties Market is very rapid, and it has also attracted more and more users and collectors to join it, driving the development of the NFT trading market. In addition to Crypto Kitties, the platform has also begun to support other types of digital assets, such as digital artwork, game props, and more.
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（Crypto Kitties Market UI）
NFT Summer marks the explosive growth and popularity of the NFT market
In the summer of 2021, the NFT market has experienced a period of rapid growth and popularity.Both NFT trading volume and NFT prices hit new all-time highs during this time period. Opensea grew rapidly during NFT Summer and became one of the largest NFT trading platforms. During this time period, OpenSea’s transaction volume and number of users have increased significantly, and the price of NFT on the platform has also reached a record high.
The total amount of NFT transactions in 2021 will reach about 20 billion US dollars, setting a record high.This figure is about 10 times higher than in 2020. Major platforms in the NFT market include OpenSea, Nifty Gateway, Super Rare, Foundation, etc. Some projects were especially popular during NFT Summer, such as CryptoPunks, Bored Ape Yacht Club, Art Blocks, and more.
During NFT Summer, various PFP (Profile Picture) projects rose rapidly, attracting a large number of users and investors. A PFP is a digital representation of an avatar picture that can be used in social media, gaming, or other online contexts. But more than simple avatars, these PFP items are an identity and community-building symbol, similar to fashion items worn in real life.
As a result, a frantic snap-up battle started in the NFT market. Investors and collectors jumped in, buying various PFP works for millions of dollars as a display of status and social status. Even if the design of some pieces looks even a little strange, it can command a high price in the NFT market. Some even spend thousands of dollars in handling fees just to get the PFP they want.
However, NFT Summer is not a peaceful summer. As speculation heats up, the prices of some PFP projects begin to plummet, and investors and collectors sell their works one after another, and the market sentiment begins to fluctuate. Some PFP projects cannot survive due to lack of sufficient community support. They are like small boats in the ocean, and they are eventually submerged by big waves.After NFT Summer, people began to reflect on this crazy digital art frenzy. Some people thought it was just a short-term speculation, while others thought it marked the opening of a new chapter in the digital art market.
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PFP detonates NFT transactions
The cumulative transaction volume of NFT assets is approximately US$40 billion, of which PFP transaction volume exceeds US$25 billion, accounting for more than 62.5%.This data shows that PFP accounts for a very large proportion of the transaction volume and transaction amount in the NFT market, and also reflects peoples emphasis on and demand for personal identity and digital image. At the same time, this also means that in the NFT market, PFP is one of the most popular and active assets and has become one of the main drivers of the market.
From an economic point of view, the popularity of PFP is mainly related to supply and demand factors.First of all, due to the rapid rise of the NFT market, more and more people have begun to notice the investment value of NFT and are willing to pay high prices for it. Second, the supply in the PFP market is relatively small, because PFPs are designed and issued by individuals or teams, and their quantity is usually limited. Therefore, the supply of PFP is relatively small, but the demand is high, causing the price to continue to climb. However, with the expansion of the PFP market, more and more designers and teams are emerging, bringing more choices and competition to the market, further driving the market development.
From a sociological point of view, the popularity of PFP is also related to social factors.Not only can PFP show personal style and identity, it can also serve as a form of social capital. When many people buy PFP, they will choose those designs related to their identity or hobbies, so as to gain more attention and recognition in the social circle. Also, since there is a limited supply of PFPs, some designs tend to be more popular, so having these popular PFPs can also be a form of social capital. As the PFP market grows, so does the awareness of PFP as social capital, further fueling the market’s fire.
This has some implications for the development and future of NFT.image description
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OpenSea Becomes the Leading MarketPlace for NFT Summer
First mover advantage.Opensea is an earlier established NFT Marketplace. It was established in 2017 and has the support of some famous capitals. It will receive a high valuation of 13 billion US dollars in early 2022. This allowed Opensea to build a large user base and collector audience before the NFT craze started, which enabled the platform to quickly attract more sellers and buyers. Opensea offers the widest variety of NFTs, including collectibles, PFPs, virtual estates, game items, music, movies, and other collectibles. This enables the platform to attract users with diverse needs and allow them to transact on the same platform.
A bridge between Web2 and Web3.Openseas user interface is very simple and easy to use, which makes it easy for people who are not familiar with blockchain technology to conduct transactions, which to a certain extent lowers the entry threshold for the NFT market and even Crypto, and brings certain growth to the Crypto industry. Amount of funds. At the same time, Opensea also provides some trading tools and resources to help users make better use of NFT.
Layout multiple chains.Although Ethereum NFTs is the largest NFT ecology, Openseas advance layout on multiple public chains has established its own stronger moat. Opensea supports multiple blockchains, including Polygon, Arbitrum, Fantom, and more. This allows users to choose the most suitable blockchain for transactions and enjoy lower transaction fees.
Opensea provides the earliest solution for the NFT Marketplace, but is limited by the traditional operating model.image description
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LooksRare, X2Y2 use vampire attack to grab market share
LooksRare and X2Y2 have been launched one after another, adopting a strategy of airdropping tokens to Opensea users to obtain initial traffic accumulation. After that, they launched their respective mining rewards in an attempt to capture market share. However, due to the continuous reduction of the reward mechanism, the real transaction volume eventually continued to decline.
Still, LooksRare and X2Y2 are serious competitors to Opensea because they do so with a better user experience than Opensea. In addition to basic NFT buying and selling transactions, they have also introduced additional functions such as batch listing and batch purchase, and integrated other trading tools to facilitate users to query the rarity of NFT. Compared with Opensea, the transaction fees of these two platforms are lower, which is more friendly to users who conduct real transactions and transfers. However, this may also lead to a certain degree of brush trading on the platform.
In general, the design concept of LooksRare and X2Y2 is to design the Marketplace as a Taobao Mall model, that is, to provide more convenient and perfect services and charge lower handling fees.
When it comes to low-priced NFT transactions, batch transactions are a more suitable transaction method.This is because batch transactions can reduce the time and labor costs required for individual NFT transactions, thereby reducing transaction costs and fees. In addition, batch transactions can also increase the efficiency and speed of transactions, making transactions more rapid and efficient.
However, when conducting batch transactions, it is necessary to pay attention to collecting appropriate handling fees to maintain the normal operation and development of the platform. The handling fee should be charged within a reasonable range, not only to maintain the operation of the platform, but also to be affordable by traders. In the process of batch transactions, the phenomenon of brushing orders is also a problem that needs to be paid attention to. The phenomenon of order brushing will lead to a continuous decline in real trading volume, which will affect the normal operation of the entire trading market. Therefore, it is necessary to take measures to prevent and combat order brushing, and maintain the healthy and stable development of the trading market.
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Aggregator Story
Gem is an NFT aggregator project, the largest aggregator before Blur went live.It provides a platform for users to easily discover and purchase NFTs on different NFT marketplaces and platforms. Similar to Blur, Gem aggregates the traffic of multiple mainstream NFT markets and realizes the bulk purchase of NFT at a lower cost. This can help users get the best deals on different Marketplaces, and also bring more traffic and revenue to Gem itself. Gem has a diversion function and can guide users from different NFT markets and platforms to its own platform, which may form a certain traffic hijacking effect, making Gem a center for aggregating a large amount of NFT traffic . In April 2022, Gem was acquired by Opensea, but remains independent. This means that Gem will become a part of Opensea and be supported and resourced by Opensea, but will continue to provide its unique features and services to meet the needs of different users. As a part of Opensea, Gem can better serve Opensea users and expand its influence and market share.
Genie is the earliest NFT aggregator project, which has similar functions and positioning as Gem.Compared with Gem, the number of NFT markets and platforms aggregated by Genie is small, but it can still provide a convenient platform for users to easily discover and purchase NFTs on different NFT markets and platforms. In June 2022, Genie was acquired by Uniswap and became part of Uniswap. Uniswap is a decentralized exchange based on the Ethereum blockchain, which realizes asset exchange and liquidity provision through smart contracts. The acquisition of Genie can help Uniswap expand its service scope and provide users with more NFT-related tools and services. This means that Uniswap can use its leading position in the field of decentralized exchanges to attract more users and provide them with more NFT services. At the same time, using Genie as a tool, Uniswap can provide a better NFT browsing and purchasing experience. Additionally, partnering with the emerging NFT marketplace could help Uniswap expand its user base and increase its revenue streams.
Overall, the Genie of Gem has a single function and is highly replaceable. In addition, neither platform has issued tokens, so tokens cannot be used to drive the continuous development of the business.image description
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The Birth of Blur
The target group of Blur is NFT professional traders, whale players, and ordinary users (although the number of ordinary users is small), the positioning of this target group is very different from other platforms in the market from the beginning. The model of the platform is Marketplace+Aggregator, which aims to aggregate multiple markets and platforms together to provide users with a more convenient experience. Therefore, in this model, NFT market makers and LP providers will benefit to a certain extent. beneficial.
In addition, its economic model is also worth mentioning, including airdrop incentives, royalty fee incentives, and pending order incentives. The purpose of these measures is to reduce the pending order gap and provide stable liquidity for NFT orders.But I think Blurs best strategy is managing expectations. For example, the goal of airdrops in the first season of the platform is to encourage smart pending orders, the goal of airdrops in the second season is to motivate Bid pool, and the goal of airdrops in the third season is to encourage market making. The core point of this series of operations is that the rules are vague and the expectations are forever.
In addition, Blurs fee rate is 0, and the gas fee is also very affordable. Users can easily scan goods, and at the same time complete trading tools (including data analysis panel). In addition, compared to other aggregators, Blurs transaction speed is faster, bringing users a faster transaction experience. Functional differentiation differentiates users of Blur, and more professional trading depth charts, tools for monitoring liquidity and floor prices are more suitable for professional traders.
Through unique product positioning, product design and airdrop distribution methods, Blur initially created a different positioning from Opensea, solved the problem of insufficient differentiation, and stood out in many NFT trading markets.The real problem Blur solves, however, is the problem of illiquidity.
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(Average daily trading volume and market share of NFT MarketPlace in the last 3 months)
When we think of Amazon in the context of Web 2.0, what comes to mind is a wide range of products, efficient and fast logistics, and humanized after-sales service. NFT is essentially a consumer product/commodity, and the characteristics of places that provide trading platforms for NFT are similar to those of e-commerce platforms.Therefore, we believe that the NFT marketplace can be seen as the Amazon of Web3.
First, e-commerce has several key business characteristics that enable businesses to sell their products online. These include online category and product information, shopping cart and checkout systems, secure payment processing, order management and fulfillment, customer relationship management, analytics and reporting, and personalization and customization options. By leveraging these capabilities, businesses can create powerful online marketplaces, sell products or services efficiently, manage orders and inventory, build customer relationships, and optimize marketing and sales strategies.
Additionally, NFTs can be considered a commodity. Commodities are defined as raw materials or primary agricultural products that can be bought and sold, such as gold, oil or wheat. NFTs, on the other hand, are unique digital assets that represent proof of ownership or authenticity of a particular digital item such as artwork, music, or even a tweet. They can be bought and sold like any other commodity, and their value is determined by market supply and demand.
Similar to traditional commodities, the value of NFTs can fluctuate based on various factors, such as the popularity of the underlying digital asset, the reputation of the artist or creator, or the rarity of the NFT itself. Additionally, NFTs can be used as a means of diversifying a portfolio, or as a speculative asset for potential financial gain.
Overall, while NFTs are a unique type of digital asset, they can be considered a commodity in the sense that they are bought and sold in the marketplace, and their value is determined by market forces.Therefore, it can be considered that NFT is a commodity first, and an asset with investment attributes second.
There are two key factors that contribute to the success of NFT Marketplace: liquidity and user stickiness. In terms of liquidity, a market needs a sufficient number of buyers and sellers to ensure the depth of the transaction and ensure the smooth progress of the transaction. As for user stickiness, this is largely driven by the token economic model, and the end result of strategies starting from this perspective may not necessarily translate into deep loyalty among users. However, once the liquidity of the platform improves, coupled with the catalytic effect of the token economic model, the liquidity of the platform will continue to form a positive feedback loop until the marginal arbitrage opportunity disappears.
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OpenSea loses to the market
The speed of update iterations cannot keep up with the speed of changes in market demand.This means Opensea has been slow to update its platform and capabilities to meet the changing needs of the market. Opensea led the market in the early days with better liquidity depth and the ability to provide a more complete range of NFT assets. But the NFT market is very volatile and vulnerable to sudden changes in demand, and platforms that fail to keep up with these changes may lose customers to competitors. In essence, Opensea cannot surpass other projects in terms of transaction performance, because there will always be Fork products in the market.
There is no token economy.A token economy refers to a system that uses tokens as a means of exchange and incentives. Opensea currently does not have a token economy, which may limit its ability to attract and retain users interested in earning or using tokens on the platform. LooksRare, X2Y2s vampire attack and attracting a group of users are direct examples.
Fragile user stickiness.User stickiness refers to the loyalty of users to a specific platform or brand. Openseas user stickiness is fragile, which means that users are not necessarily loyal to the platform, and may be more interested in speculative investments (i.e. buying NFTs, hoping to sell them later for a profit) than the platform itself. Most users demand for arbitrage through different platforms is greater than the pursuit of the performance of the platform itself. Blur is aiming at the needs of this part of users and has carried out a token airdrop plan with strong expectation management.
Taken together, these factors suggest that Opensea may struggle to compete in a rapidly evolving market, and give inspiration to latecomer projects.image description
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How far can Blur go
One of the biggest challenges facing the NFT market is determining the value of the NFT. Unlike traditional assets, NFTs are unique and have no other intrinsic value backing. Therefore, determining the floor price or fair value of an NFT may be difficult. This lack of transparency makes it difficult to conduct additional derivative transactions or secondary market transactions, as buyers and sellers may not agree on the value of the asset. The likes of Opensea and Blur try to solve this problem by providing a transparent and trustworthy marketplace for NFT transactions.
Opensea is one of the first NFT marketplaces. The platform fosters community culture by allowing users to build different NFTs. This approach has succeeded in building a loyal user base, and Openseas success has provided a paradigm for other marketplaces such as LooksRare and X2Y2, which have adopted a similar model but added token economics to promote their products.
Blur is another NFT marketplace that focuses more on speculation than collectibles. The underlying purpose of these users is to come to Blur to make money, and they dont care about the type of NFT they hold, as long as it has a reserve price. Blur is seen as a platform for speculators, who are more interested in value discovery and making profitable transactions than building collections.
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Where is the next phenomenal project
At the moment, we can regard the platforms with the participation of market makers, LPs and traders as professional NFT Marketplaces, and the representative project is Blur; while those platforms that only provide the most basic Mint, Collect, Buy and Sell are regarded as retail investors A personalized NFT Marketplace, representing the project Opensea. In fact, the competition of NFT Marketplace is also concentrated on the two. For a specialized Marketplace, whether it can provide traders with more stable trading depth and more professional trading tools is the main point that it needs to pay attention to. For the retail Marketplace, it is necessary to think about how to empower the platform and bring continuous traffic input to the platform. Because the initial traffic import is a key factor for the NFT Marketplace to start.
In summary, we make the following conclusive predictions:
A trend in the future development of the NFT market is the emergence of vertical segmentation platforms.These platforms will focus on specific types of assets or markets, such as gaming NFTs, sports NFTs or music NFTs. By focusing on specific markets, these platforms can offer more tailored services and attract corresponding user bases.
Another trend is the emergence of new trading assets.Not just PFPs (Profile Picture NFTs), as the NFT market continues to grow and evolve, new types of assets will emerge and become objects of speculation.
In terms of technological development, a more efficient and functional NFT Marketplace is needed.Currently, most NFT markets use the same AMM/bond curve protocols, which can be rigged and inefficient. New protocols may emerge that provide more transparent and efficient transaction mechanisms.
Finally, due to the network effects and established user base of the Ethereum blockchain, multi-chain NFTs and L2 NFTs may face challenges in competing with ETH NFTs. However, as other blockchains continue to develop and gain traction, there may be opportunities for cross-chain transactions and interoperability.
Reference
[1] Devin Finzer, Opensea acquires gems to invest in “professional” experiences, Opensea Blog, 2022, 25 (4): https://opensea.io/blog/announcements/opensea-acquires-gem-to-invest-in- pro-experience/
[2] Karen, Understanding Genie and Gem in one article: the pioneer of NFT market aggregation platform, Foresight News, 2022, 12 (2): https://www.defidaonews.com/article/6729148
[3] Kunal Goel, Meessari: How will OpenSeas acquisition of Genie break the game? , WeChat public account, 2022, 05 (7): https://mp.weixin.qq.com/s/ph 8 vNngMgU 8344 xNYsxxOQ
[4] Alastair, NFT Finance (NFTfi) and the rise of OTC, OFR, 2022, 13 (6): https://mirror.xyz/0x e 70628 e 0 E 8 e 15 F 222 AAdb 406 ce 93 fea 71 3d 6 c 30 e/1 LT 5 liPLgVCoWx 8 fVxudYVQYg-LE 7 wKJWYVkdV-tUI
[5] Alex Atallah, Creating NFTs on OpenSea for free, Opensea Blog, 2020, 29 (12): https://opensea.io/blog/announcements/introducing-the-collection-manager/
