The Web3 landscape is shifting. With the explosive rise of the NFT marketplace and aggregator Blur in recent weeks and months, OpenSea now finds itself in an uncomfortable and unfamiliar position: it now has a legitimate contender for the title of NFT marketplace leader.\u00a0<\/p>\n
If Blur\u2019s steadily growing presence since its launch last year wasn\u2019t indicative of this change, the previous month certainly has been. In the last 30 days alone, the platform has done $1.24 billion in trading volume<\/a>. And OpenSea? Nearly $383 million. In the aftermath of Blur\u2019s token launch<\/a> on February 14, activity on the platform has skyrocketed. Every day since then, the marketplace has outpaced OpenSea<\/a> in trading volume by as little as $35 million and as much as $100 million.\u00a0<\/p>\n Given OpenSea\u2019s historical supremacy, those numbers feel<\/em> like they\u2019re the wrong way around. So, how did a platform that has dominated the NFT ecosystem for the last five years by a significant margin find itself in this position? And what does Blur\u2019s success mean for the broader Web3 ecosystem?\u00a0<\/p>\n It\u2019s crucial to note the important ways in which OpenSea and Blur differ. The former is meant to appeal to as broad of a Web3 demographic as possible. While it does provide tools for NFT pro traders (whose focus is flipping digital assets for a profit), it mainly appeals to retail buyers. Retail buyers are more interested in buying NFTs for their art or are more likely to buy individual digital tokens here and there, but not in meaningfully high volumes or frequencies.\u00a0<\/p>\n Blur has made a name for itself by exclusively appealing to that pro-trader demographic. Platform founder Pacman admitted as much in an early January interview<\/a> with Token Terminal<\/em>, and it\u2019s a strategy that the company has gotten almost absurdly good at executing. If it sounds strange that a platform with a more limited demographic focus is leaving the Amazon of NFTs in the dust, keep in mind that this niche group holds considerable financial sway in the ecosystem.\u00a0<\/p>\n Remember the insanely high levels of trading volume that Blur has been putting up lately? Ecosystem observers have noted<\/a> that 50 percent of that volume comes from fewer than 300 wallets. On February 21, for example, just eight wallets on the platform<\/a> traded 4,000 ETH or more on Blur, which rivals volume levels the entirety of OpenSea<\/em> saw during its worst-performing days.<\/p>\n Hey! Here are some fun facts about NFT volume:<\/p>\n 20% of Blur’s volume comes from only 15 wallets.<\/p>\n 50% of Blur’s volume comes from less than 300 wallets.<\/p>\n Watch the top 500 farmers drive artificial volume live over any timeframe with source below \u2b07\ufe0f pic.twitter.com\/chDM6B7uMv<\/a><\/p>\n \u2014 poof (@poof_eth) February 22, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<\/div>\n Yesterday there were 8 wallets that individually traded 4000 ETH or more on Blur.<\/p>\n Most were net-flat (equal buys and sales) but Mando\/OSF cashed out 6000 ETH and Machi ended up net-long 6000 ETH worth of NFTs.<\/p>\n For perspective, at its lows, OS did ~5000 ETH per day. pic.twitter.com\/n3IuaUUxE9<\/a><\/p>\n \u2014 NFTstatistics.eth (@punk9059) February 22, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<\/div>\n<\/div>\n The high volume that comes out of the platform tends to center around a handful of sought-after, high-profile NFT projects<\/a> whose names won\u2019t surprise you: Bored Ape Yacht Club<\/a>, Azuki, Mutant Ape Yacht Club<\/a>, Pudgy Penguins<\/a>, Moonbirds<\/a>, Doodles<\/a>, and the like.<\/p>\n One of the biggest reasons pro traders are flocking to Blur is its promise to users that it will reward them handsomely with future airdrops of the $BLUR token<\/a>, totaling some $300 million during its next \u201cseason\u201d of give-outs. At the time of writing, the token<\/a> has a fully diluted market cap of $2.5 billion, and the Blur team is more than willing to throw its financial weight around to entice NFT traders to stick with them.\u00a0<\/p>\n Loyalty points are one of Blur\u2019s methods of doing this. While the platform allows users to list their NFTs on other marketplaces, those who list explicitly on Blur will receive a 100 percent loyalty score. More loyalty equals more rewards in the future.\u00a0<\/p>\n It\u2019s not just Blur\u2019s innovations that have drawn users to it. Collector frustration with OpenSea has always been somewhat prevalent in the NFT space, even if just by virtue of the platform being the biggest name in the game. More legitimately, Web3 enthusiasts have been soured on the marketplace\u2019s ever-shifting stance on creator royalties. <\/p>\n As of last October, OpenSea was the platform that had paid out the most royalties to creators<\/a> by a wide margin, but a controversial November announcement<\/a> from the company sparked what essentially amounted to Web3\u2019s unionization movement<\/a>. Beyond the royalties debate, it\u2019s not hyperbole to say that almost nobody has been pleased with the platform\u2019s stolen items policy<\/a>, the marketplace\u2019s reputation for not working well in times of high traffic, and its seeming centralized approach<\/a> to, well, basically everything. \u00a0<\/p>\n So it didn\u2019t help when Blur swooped in with surgical precision to seduce traders looking for a marketplace that could give them what they were looking for without all that baggage (and reward them handsomely for making the switch). And, once Blur\u2019s token launched and sent it into the stratosphere, OpenSea responded by cutting royalties<\/a> and temporarily disbarring its platform transaction fees for certain collections, frustrating creatives who helped build the space even further.\u00a0<\/p>\n NFT royalties and fees have been extensively discussed with virtually no data, so let’s look into a few charts \ud83e\uddd0<\/p>\n Did you know that @blur_io<\/a> started paying more to creator ~20 days before @opensea<\/a> changed its policy on fees?<\/p>\n \ud83e\uddf5 1\/8 pic.twitter.com\/vVym0Lmrig<\/a><\/p>\n \u2014 hildobby (@hildobby_) February 27, 2023<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n Blur proponents have been quick to point out how the platform is paying out more royalties to creators than anyone else in recent weeks. While this is true, it\u2019s partly because the marketplace absorbed a major portion of the trading volume its competitors would otherwise have facilitated those royalties payouts with. <\/p>\n OpenSea can\u2019t lead the industry in royalties (as it once very much did) if its volume is being siphoned off to other platforms. What Blur has<\/em> done better than OpenSea is incentivize people to pay full royalties on their NFT purchases through token rewards. It\u2019s an interesting model for \u201cenforcing\u201d royalties in Web3 that comes with its own set of serious concerns, not least of which is that those payouts become contingent on a platform waving a shiny financial toy in front of a small group of influential users. It\u2019s simply too early to claim that Blur\u2019s approach to royalties works better than others simply because the numbers are doing well at the moment.<\/p>\n Blur\u2019s wider-reaching effects on the Web3 space are manifold, but they might not all be positive. While high volumes and high royalties payouts are great for Web3, especially in a bear market, many in the space have been disturbed by the residual effect Blur\u2019s success has had on the ecosystem.<\/p>\n Artist Bryan Brinkman highlighted<\/a> a surreal moment on Blur last week when he witnessed NFTs from Michael Kozlowski\u2019s recent Art Blocks drop<\/a>, Metropolis, trading on the platform even when the images of the art were not loading on the site due to lag.\u00a0<\/p>\n While the images did eventually load, the point remains: seeing digital assets from creatives treated as fodder for financial gain is more than a little unsettling for many in the NFT space. However, some have suggested<\/a> that this dynamic is simply Blur capitalizing on what the Web3 market is really about, stripped of any rhetorical veneer of community or culture.\u00a0<\/p>\n Regardless, Blur is moving forward in strident fashion. Dropping all pretense, the platform told its users to block OpenSea<\/a> in a February 15 blog post. The reason? The way both OpenSea and Blur have set up their infrastructure means that creators can\u2019t earn full royalties on both platforms \u2014 users have to choose.\u00a0<\/p>\n Blur needs to be careful in how it manages its user base and how it perceives its loyalty. It\u2019s not the first NFT marketplace to entice pro traders with token farming<\/a>. And it would be a mistake for the platform to presume that the wallets driving its phenomenal rise right now will do anything but jump ship if another offers them a better financial incentive to do so. Blur\u2019s unabashed lean into the pro-trader demographic and clever airdrop mechanisms mean it\u2019s likely to hold the interest of this demographic for some time, but the challenge will be drawing out loyalty in the long term.<\/p>\n We\u2019re going to continue to see the same ~500 accounts rotating their capital between every marketplace that offers them free money<\/p>\n They farmed LooksRare<\/p>\n They farmed x2y2<\/p>\n Now they\u2019re farming Blur pic.twitter.com\/gN0XIWtroJ<\/a><\/p>\n \u2014 Kofi (@0xKofi) February 24, 2023<\/a><\/p><\/blockquote>\n More important than what Blur does next is what its ripple effects do to the rest of the space. The marketplace\u2019s monumental rise isn\u2019t necessarily a bad thing; the NFT world should celebrate the fact that there is such an attentive and inventive platform out there dedicated to serving the needs of pro traders. <\/p>\n But big problems could start to rear their heads when one marketplace or demographic\u2019s prosperity comes at the direct or secondhand expense of another\u2019s, whether that\u2019s in a zero-sum marketplace face-off or eroding royalties rights for the artists who built the space from the ground up. Blur claims OpenSea is a centralized antagonist<\/a> in the NFT ecosystem, but making royalties payouts and marketplace dominance beholden to a group of just a few hundred NFT whales isn\u2019t exactly the most decentralized system, either.<\/p>\n No one platform is responsible for putting pressure on the royalties dynamic in the NFT space. Still, Blur and OpenSea are at least somewhat culpable for pushing it forward into what many now see as an accelerated race to the bottom. Creators, as always, are caught in the middle. <\/p>\n Beyond this, Web3 needs to ensure it\u2019s innovating and catering to the needs of every demographic in the space, not just pro traders. One group that would be great to start with is the creators who helped make the NFT ecosystem what it is today. <\/p>\n Instead of leaving them to wonder which platform will honor royalties on their work and in what manner, there needs to be a decentralized way for artists and project heads themselves to control them. You don\u2019t have to be in Web3 for the art, but shaking its foundations apart in a mad scramble to the top of the numbers game will ultimately result in a victory not worth having.\u00a0<\/p>\n<\/p><\/div>\nUp in a blur<\/h2>\n
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How Blur encourages loyalty<\/h2>\n
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The problem with the numbers game<\/h2>\n
Where do we go from here?<\/h2>\n
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