Original title: "Valentine's Day Special: Blur Airdrop + Coin Issuance, Where is the Surprise (The Floor is All Yours, Blur)"
Author: Eric, Puzzle Ventures
If you look at the market traffic ranking of NFT trading volume in the last 3 months, it is not difficult to find that Blur's total trading volume has surpassed OpenSea, and the floors of almost all NFT projects are hung on Blur.
What is it that makes Blur so successful? Can its success be sustained? This article will take you through a detailed analysis of Blur's past and present.
NFTGO trading market data for the last three months (source: https://nftgo.io/analytics/marketplace)
Market environment
At the end of March 2022, an inconspicuous financing news was posted on Twitter. Blur raised 11 M, led by the famous Paradigm, and other angel investors were a group of NFT KOLs, including Deeze, Zeneca, 6529 et al. The project information given in the announcement is not much, what they want to do is: NFT professional trading (pro-trading).
At the time of the last wave of the market at the end of the last round of the market, the NFT market is also emitting heat. Various new blue-chip projects are emerging one after another, and various emerging NFT trading markets are also showing their magic. Since looksrare started airdropping tokens to stimulate transactions, it has opened up new ideas for the original trading market. x2y2 is another to join this competition, introducing the concept of pending order incentives.
Since then, trading volumes in these markets have boomed, although most of the trading volume is wash-trading to earn tokens [see Puzzle Ventures"Looking at Wash Trade in the NFT Market from Data"], but the real traffic is not to be underestimated. According to statistics, on average, more than 15% -20% of the traffic occurs outside OpenSea.
The NFT market has broken away from the situation dominated by OpenSea, and has become a market dominated by OpenSea. Although there are still many people who only know Opensea, for degens, even if it is a price difference of 0.1 ether, they will not suffer from this loss, so they keep switching between major platforms to obtain the lowest price of NFT. Quotation (floor price), under such a demand, aggregation tools came into being naturally.
The Birth of Aggregation Tools
There are two different types of users of NFT aggregators who value two different functions.
The first is to buy a certain NFT. The purpose of using an aggregator is to quickly browse all pending NFTs more conveniently, and finally buy a favorite or wrongly priced NFT. (Sniper)
Another type of user wants to buy a certain NFT project in large quantities, so he will use aggregation tools, because it will be very profitable to sweep the floor in a separate market, and before that, major exchanges still have There is no bulk purchase feature. (Trader)
The public aggregator headed by Genie has begun to show its presence, and Genie has attracted a lot of transaction volume since its launch. But it was replaced by Gem a few months later because of the latter's better UI/UX, faster information updates, and lower transaction failure rate. But Genie couldn't afford it, and was finally acquired by Uniswap. This shows that aggregators need to pay attention to the user experience, because they only help users buy NFT more conveniently, and do not have a strong moat; if the product experience is not good, users might as well go to the market to buy directly, so it is better and more The fastest products will quickly occupy the market.
The need for professional tools
Most of the trading volume in the market is dominated by large investors, and the 3/7 law can often be applied, that is, 70% of the trading volume is in the hands of 30% of users, so the needs of these users are the most important . However, the experience of using aggregation tools such as Gem is not much different from that of ordinary trading markets. They are all similar to the interface of shopping websites, and the loading speed is relatively slow, which allows users to browse each NFT very well and decide to buy slowly instead of engaging in professional transactions.
NFT traders attach great importance to the timeliness of information, smooth operation and professional trading functions, and may often miss good opportunities because of a few seconds.
Before Blur, there were also some professional tools, such as Trait Sniper, etc., but most of them were paid, and their functions were mainly to kill rare NFTs when the project was opened. The market urgently needs a more powerful aggregation tool to integrate browsing, flash sales and bulk purchases, reduce information lag and page loading time, and use it for free, so Blur was born.
marketing
From the middle of 2022, Blur began to spread among the big NFT circles, thanks to the strong lineup of angel investors KOL. Then they launched a platform beta test, the rules are very simple, invitation only. They score users from their transaction data in OpenSea in the past year. Users can also send invitation codes to other users to earn points based on the transaction data of new users. The higher the score ranking, the priority will be given to Test eligibility. Because the market is dominated by large users, these users with traffic can already represent a large market share for testing.
Blur has been developed for professional users from the very beginning, which means that Blur's various functions have a general direction during the beta test, and it does not need to spend much effort to win the preferences of ordinary retail investors. On the contrary, although a platform like OpenSea has a large number of users, its transaction volume is not much higher than that of Blur. When Blur chooses this path, it saves a lot of marketing resources, and does not need to do retail marketing like looksrare or x2y2, gem to let them use the product. While letting big users use Blur, these KOLs will indirectly promote Blur on twitter, and the effect is very significant. If the quality of the product itself is better than that of existing competitors, retail investors are also willing to try it.
Join the trading market
For an aggregator, the aggregation function cannot make money. Because once they decide to collect money, many users will not be willing to use this platform. They can obtain the NFT pending order information on the platform, and then bypass the platform to make direct purchases in the pending order trading market. But if the information is opaque, few users will use it, because the service they want to obtain is the aggregation of information. Therefore, the aggregator must be used as a traffic portal to make profits through another product.
Such aggregators, like Gem and Genie, did not find this source of income in the end, and their final fate was to be acquired. In order to retain user traffic, OpenSea will eventually integrate Gem into its own UI. And Uniswap uses Genie to realize its ambitious plan of introducing defi users to purchase NFT. It can be seen from the above that a single aggregator product will not work, and a combination of cards must be played.
And Blur naturally thought of the trading market, which not only ensures that users get the best quotation in the market, but also allows users to place orders and bids on the same platform. However, this cannot be done on other platforms, so that users stay on its platform and obtain income from buying and selling on the platform when users use the aggregation function. This also makes looksrare and x2y2 jealous, so that they are also developing their own aggregation tools, x2y2 is about to launch pro, and looksrare is also developing aggregation tools based on reservoir. But their thinking is the opposite of blur, developing aggregates for platform drainage.
closed market
Although Blur's API is under development, the speed of development is quite slow, making it impossible for the outside world to access the liquidity of Blur's own market, thus temporarily forming a system that only enters but does not exit. That is to say, Blur can aggregate external liquidity, but other aggregators cannot aggregate Blur. However, because Blur occupies a large part of the bottom liquidity, it reduces the competitiveness of other aggregators, so it has received a lot of suspicion of vicious competition.
Optional Royalty Battle
How can an aggregator achieve even more traffic in its own market than OpenSea? Token rewards and product operations are second, and the most important thing is because of optional royalties. It is precisely because of the optional royalties that OpenSea and Blur are fighting for this.
At the beginning of Blur's launch, the most noticeable thing was optional royalties. Of course, it was not the first project to do so. As early as the end of August, x2y2 was the first to announce that they supported optional royalties. This has aroused many people's doubts, because most of the project's continuous income depends on royalties from the secondary market. Many people feel that this is not good for the ecological development of the entire NFT system, but this has just become the entry point for these second-tier trading markets to earn traffic.
NFT royalty is a payment that needs to be paid to the project party in the NFT transaction. It is set by the project party, generally around 5% -10%, but based on the standard ERC-721 contract, the project party It is not mandatory to collect royalties, it is completely realized by the trading market's own contract. It is precisely because the high amount of royalties makes users unwilling to pay, so many people prefer to choose these markets with optional royalties to place orders. Since the sellers will get more profits in the optional royalty market than in the compulsory royalty platform, they are more willing to place orders in the optional royalty market at a lower price, which will pull down the floor price of the entire trading market, and also That is to say, the transaction market price of mandatory royalties like OpenSea is often relatively high, which reduces the enthusiasm of buyers to purchase on such platforms, so traffic begins to lose.
In fact, not long after Blur came out, x2y2 has realized the potential threat of Blur, because Blur has zero handling fee, while x2y2, which is also an optional royalty, still has a 0.5% handling fee. x2y2 once resisted Blur by restricting API keys. Although it finally solved the problem of purchasing x2y2 NFT on Blur, it is still unable to sell NFT on x2y2 through Blur.
As for OpenSea, it has lost more transactions than x2y2, so that the transaction volume for several weeks is almost about to be caught up by Blur. In the bear market's currency storm, OpenSea finally decided to make a move. At that time, it had two options. The first was to announce that it would also become an optional royalty, and the second was to introduce a new compulsory royalty plan. However, due to the pressure of public opinion and the fact that even the high transaction fee of the first OpenSea cannot compete with the low transaction fee of Blur, the latter had to be chosen.
OpenSea Blacklist
In November 2022, OpenSea released the "Operator Filter Registry", which is a contract code that uses a blacklist to block the optional royalty market, and stipulates that all new projects after January must be in the optional royalty and Make a choice in Mandatory Copyright, and if Mandatory Copyright is selected, their "Operator Filter Registry" code must be used. And the trading market intercepted in this code, needless to say, naturally has Blur. The influence of this news is so great that some trading markets, such as x2y2, have to compromise. Their marketing strategy is to obtain the traffic of long-tail new projects, so if these new projects choose OpenSea’s blacklist code After that, it will not be possible to trade in x2y2. So x2y2 enforced the copyright, and it was logical to remove it from the blacklist. The effect of this blacklist strategy is a little lagging. When everyone is still celebrating the Christmas holiday and Blur's traffic hit a new high, the undercurrent has already begun to surge.
The long-awaited two new NFT projects in 2023 have broken the silence. Memeland's Captainz and Yuga Labs' newly issued Sewer Pass, without exception, adopted the OpenSea blacklist and rejected Blur. All the traffic is on OpenSea and x2y2, which hit a new high that day, and Blur's traffic suddenly became the third.
So Blur fell into a vicious circle. Although royalties cannot be enforced for the old projects that have been released, so the traffic of these old blue chips will still be on Blur, but as time goes by, new projects are getting more and more The more, Blur will not be able to earn future handling fees through these projects, in other words, it can only eat money.
However, there is no way out, and these projects that were added to the blacklist were actually available on Blur not long ago! Why? It turns out that Blur has developed a new trading market using OpenSea's own underlying trading protocol Seaport. Because Seaport is OpenSea's own protocol, it has not been blacklisted. While the issue is resolved, new NFTs listed on Blur are still subject to royalties due to Seaport's mandatory royalties. That's pretty good though, there's still a 2.5% savings in transaction fees on Blur, and the floor is starting to show up on Blur again. Although the advantage is no longer great, it is enough to save the game. The fly in the ointment is that Blur can't list the bidding feature for these new items.
Controversial Airdrop
What method should be used to attract users to use a new platform? As Blur is a Web3 Native Protocol, the method of use is naturally airdrop!
Users only need to list an NFT on Blur for more than 14 days to get airdrops. The number of airdrops is determined by their previous transaction data in OpenSea. But the airdrops are not tokens but mysterious boxes that can be opened to obtain tokens when the final tokens are issued. In other words, it is delaying the issuance of coins and issuing some off-chain points to users. In doing so, many users criticized it, so that the high transaction volume in the first few days did not last for a long time. But there is no way to do this, because the market is really bleak in 2022 Q4, and the value of the entire NFT market has dropped by 80% from its peak. It is better to divide the airdrop into several cycles. So they did, and it was divided into three cycles.
The second wave of airdrops is determined by the pending orders and trading volume on Blur, and it will be released in November. However, due to data statistics and sales and wash transactions, the number of boxes when it is distributed is not correct. Many big players only take When there are very few boxes, the amount of the second wave of airdrops is not 10 times that of the first wave. At the same time as the release, let users know that this is not the last wave of airdrops. The third wave of airdrops and The real token issuance will be in Q1 of 2023. This caused more criticism from the community, and there was even a lot of FUD at one point. In the end, Blur had to bow his head and readjusted the number of airdrops to about 10 times the number of the first airdrop. There are many doubts, because throwing coins like this makes everyone realize that these airdropped boxes are not worth much. And under the influence of uncertain token economics in the future and the bear market environment, the first thing everyone thinks of is to sell airdrops. Many people think this will cause the next wave of NFT bear market. However, this did not affect Blur's transaction flow. Instead, the conditions of the third wave of airdrops pushed Blur to its peak.
The rewards for this third wave of airdrops are based on users placing buy orders (Bid) on the Blur trading market. The rule is that the larger the transaction volume of the project, the closer the price of the pending order to the floor price, the more airdrops will be obtained. So in order to airdrop, many idle funds in the market began to bid on blur, which once made the bid-ask spread of some blue-chip projects close to zero. The total amount of buy orders for most blue-chip projects even exceeds the sum of all buy orders! In this way, the liquidity of NFTs on Blur has reached an extreme, and the transaction volume has naturally increased, because the transaction is no longer just a simple transaction of buying and selling orders (buy listing), but more of accepting buy orders. Transaction (accept bid).
The third wave of airdrop reward formula
Pay Token Economics
February 14 will usher in Blur's third airdrop and long-awaited token launch. Because of the airdrop expectation, there are already nearly 25,000 ethers in the fund pool for buying orders (https://etherscan.io/address/0x 0000000000 a 39 bb 272 e 79075 ade 125 fd 351887 ac). This is actually equivalent to a way of leasing liquidity through pre-mining, but its cleverness is that it does not announce the actual number of airdrops, so let everyone speculate. Whether these liquidity can be maintained after the airdrop requires a good token economic model.
The first trading market to use token economics is Looksrare. They introduced NFT transaction mining and pending sale order mining. They even designed a set of tokens that are closer to the floor price to increase the liquidity of buy orders. A system with more rewards has no choice but to do so. After all, the lower the price, the more buyers will buy it. However, the way of rewarding transactions will cause wash sales transactions, and in the end it does not bring much growth to the platform, but is equivalent to continuous issuance of coins. Blur naturally understands the truth, and it will most likely reward pending orders to attract real actual trading volume and market share. Especially for buy orders, the reason is that its low handling fee and optional royalties are enough to attract everyone to place sell orders on Blur, so it does not need to reward the seller too much. However, other trading markets do not have a mature buy order incentive mechanism, which makes traders and whales in the market more willing to place buy orders on Blur to earn incentives. In the NFT market, especially in the cattle market, users accept selling orders far more than buying orders, because NFT has low liquidity risks, but for a mature market, buyers and sellers should be balanced. With a good incentive model, the potential of buying traffic is immeasurable. At present, from its airdrop model, it can be guessed that in the future, the closer to the floor price (the lower the spread), the higher the reward for buying orders.
Let's analyze it quantitatively. If it can maintain a flow of 10,000 ethers per day, assume that Blur will charge a 0.4% handling fee in the future (it will definitely not charge a higher fee than x2y2 because of competition. ). Assuming that it spends 0.2% of its income to maintain Blur tokens to distribute rewards, then it can give token rewards equivalent to about 7,300 ethers in one year, if it still maintains the current liquidity of 25,000 ethers TVL, then its APY will be around 30%. Although the risk of market making is relatively high, it seems that its liquidity will not decrease too much after the airdrop. After all, there is no flow to the market, and it is also related to the price of the token itself. Let us wait and see what will happen to the token issuance.
Room for product improvement
After the token is issued, in addition to good token economics, Blur can also make product improvements to consolidate its leading position in the NFT professional trading field.
For NFT professional traders, apart from faster data update speed and smooth operation, they prefer a one-stop experience. Blur has already achieved this by allowing traders to place pending orders to buy aggregated NFTs on their own platform, as well as place orders and bids on their own platforms. But this is far from enough for traders, and there is still a lot of room for improvement in the future. Here are a few ideas:
1. Professional Charts
For traders, they not only need to know the current floor price of a certain project, but also need to know the changes in the floor price, just like the K-line charts seen on centralized exchanges. In addition, he must have an understanding of the positions of large players in the market, which are inseparable from analysis charts. For example, some analysis provided by NFTGO is very suitable for implanting Blur.
2. Buy order aggregation
Although Blur allows users to place buy orders on the platform, it does not aggregate all buy orders in the market. For example, Blur cannot know OpenSea's bids, so it is very likely that an arbitrage opportunity will be missed. Skillet is an NFT buy order aggregation platform that allows users to liquidate NFT at a better price. Blur can also add this function.
3. Professional ordering tool
Summarize
Summarize
To sum up, so far, Blur can be regarded as a relatively successful project. Its user experience is good, attracting most professional traders in the market to use it, and allowing them to develop long-term trading habits. The method of increasing liquidity through airdrop expectations will make its traffic surpass OpenSea in a short period of time and become a black horse.
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