Where Will NFT Marketplaces Hold The Next Battle After Tokens And Royalties?

Key Points:

• There is no doubt that NFT trading platform competition has increased the liquidity of the NFT market, particularly now that rising star Blur has made the seemingly impossible attainable.
• The overall tendency is to lower or possibly eliminate NFT taxes and payments in 2022 as the NFT market keeps contracting. In reality, royalties across the board have started to plunge.
• Now, Opensea is more suited to beginners and artists, and its pages can better display NFT’s beauty.

The NFT marketplaces used to be very illiquid, but now it seems to be recovering from the bear market to the rhythm of the entire crypto market. In January, NFT sales increased 38% month-on-month, reaching $946 million.

There is no denying that competition among NFT trading platforms has also boosted the liquidity of the NFT marketplaces, especially as Blur, a rising star, has made the impossible possible.

So how will the structure of the NFT trading market evolve? This article organizes the concepts related to NFT and compares the Top 5 NFT marketplaces for reference.

From tokens to royalties to aggregators

The competition in the NFT marketplaces basically revolves around aggregators, royalties, and platform coins.

NFT aggregator is essentially a search engine, which is convenient for users to browse NFT data in different blockchains and NFT marketplaces and directly trade across chains on this platform (no need to switch back and forth between different platforms and public chains), which is very convenient optimized the user experience to a great extent.

NFT royalties mean that NFT creators can profit from subsequent secondary transactions, usually between 2.5% and 10%, and are charged directly on the chain so that creators can continue to benefit from their own creations.

Different NFT platforms will have different royalty settings, and some platforms do not directly support royalties. As the NFT market continued to decline in 2022, it is the general trend to reduce or even cancel NFT taxes and fees. In fact, the entire market’s royalties have begun to fall off a cliff.

The two themes of NFT aggregator and NFT royalties were not originally the keywords of the last round of narratives in the NFT market, but in the future, they may dominate the evolution of the market together with token incentives.

OpenSea

Founded in December 2017, OpenSea is by far the largest NFT exchange. Since its establishment, it has attracted the attention of many investment institutions and is constantly accepting challenges from various aspects – mainly from aggregators, token incentives, and royalties.

In fact, the aggregator will not directly affect OpenSea’s fee income, but it will pose a threat to the platform’s traffic entrance. So OpenSea acquired the NFT transaction aggregator Gem in 2022 to alleviate the threat of traffic entry.

In terms of token incentives, OpenSea’s strong opponents are LooksRare and X2Y2. Nevertheless, OpenSea is still indifferent. Some active users are disappointed or even angry because OpenSea has not issued tokens.

But OpenSea bowed first on royalties. It once firmly supported NFT royalties, but under Blur’s low royalty challenge, it allowed NFT traders to set their own royalties (minimum 0.5%). Not only that, but we also reduced the original 2.5% platform fee to 0%.

Up to now, OpenSea is still the trading platform with the largest number of users and trading volume in the NFT marketplaces, and the trading volume ranks second.

Blur

Since Blur was officially launched in October 2022, it has quickly occupied a considerable market share. It is positioned as “a combination of a real-time NFT market and an aggregator” and is currently OpenSea’s biggest competitor.

A large part of Blur’s rapid rise is due to its complex staged airdrop design.

The first phase rewards social referrers. Retweet the link on social media to attract more traders to join and get an airdrop.

The second phase rewards NFT sellers. Users with active Ethereum NFT transactions in the past 6 months can apply for airdrops, but the requirement is to list at least one NFT on Blur within 14 days.

The third phase rewards NFT sellers who use Blur. Rewarding individuals who list NFTs on Blur by November.

The fourth stage rewards bidding. Blur has launched a bidding contract, and bidders can get airdrop rewards, and the closer to the floor price, the more rewards.

This staged airdrop has played a different role in promoting the development of the platform, and its uncertainty is more attractive to users.

In addition, Blur also allows NFT traders to set royalties independently on the basis of 0 platform fees, but later began to enforce royalties on NFT, with a minimum of 0.5%.

Since the end of last year, Blur has successfully surpassed OpenSea in terms of transaction volume but ranks second in terms of transaction volume and user volume.

SudoSwap

SudoSwap was launched in April 2021 by an anonymous developer named 0xmons. It is an AMM protocol for NFT, where users can buy and sell from a liquidity pool instead of pending orders.

LP deposits NFT or ETH (or ERC20 tokens) into the liquidity pool, choose whether to buy or sell NFT (or both), and specifies the initial price and bonding curve. Users can then buy or sell NFTs from these pools, and each buy or sell will change the price, and LPs can change the bonding curve parameters or withdraw assets at any time.

The biggest advantage of AMM is that it does not need to place orders manually, which improves the transaction efficiency, and SudoSwap does not charge royalties, only a 0.5% agreement fee, but its operating system can be complicated for new users, and the current users are not widely used.

At present, the total transaction volume of SudoSwap is 65,788 ETH, and a total of 226,029 NFTs have been traded through AMM. The daily transaction volume is still far less than that of OpenSea.

LooksRare

In January 2022, when Opensea irritated users for not airdropping, LooksRare started to gain attention.

Looksrare and X2Y2 attracted a large number of users by giving airdrops to early OpenSea users. Later, they continued to attract users to participate in transactions through transaction mining, pledged LOOKS tokens for transaction fees and rewards for pending orders, and finally grabbed a point from Opensea.

LooksRare will charge a 2% handling fee for each transaction, and after staking, users can conduct fee-free transactions and have the opportunity to obtain additional LOOKS rewards.

However, the transaction mining mechanism is easy to cause fraudulent orders, and LoosRare seems to be aware of this and later changes the incentive strategy, allocating part of the original transaction mining revenue to pending order rewards.

The form of LoosRare transaction mining can only provide short-term liquidity, and when LOOKS falls, liquidity will also decline. Currently, LooksRare ranks 6th in trading value and 4th in trading volume, and its number of traders is quite low.

X2Y2

X2Y2 will also be launched in early 2022, with a Chinese team behind it. X2Y2 has also formulated transaction mining rewards similar to Looksrare. The more successful innovation is peer-to-peer transactions with no handling fees and royalties.

In peer-to-peer transactions, user A enters the price and transaction address on the transaction page NFT, and only this transaction address can purchase this NFT. When user B logs in to X2Y2 through the wallet address, the platform will automatically display the information of the directional purchase, click to buy now.

This function is more friendly to users who have real NFT transaction transfers, but at the same time, the setting of no handling fee and royalty fee may also bring false transactions to the platform. Users use peer-to-peer transactions to frequently convert NFT in their two wallets to get transaction rewards.

Currently, X2Y2 ranks 5th in transaction volume, 3rd in trading volume, and 5th in user volume.

Conclusion

At present, Opensea is more suitable for novices and art creators, and its pages can better show the beauty of NFT. Blur shows the transaction to the extreme, and its operation page is more suitable for professional traders.

For now, the transaction volume of Sudoswap is small, but its AMM mechanism is highly innovative. LookRare can indeed attract a large amount of traffic in the short term, but it still needs to consider how to retain users. Before Blur, X2Y2 was indeed the best choice for private transactions, but now it faces similar problems as LooksRare.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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