It’s a time-honored tenet of business — slash prices and the customers will come.
Tell that to OpenSea.
One week after the NFT marketplace scrapped the fee it collects on trades, Blur, its upstart rival, hasn’t missed a beat. The four-month-old NFT marketplace has seized a staggering 82% marketshare of the trading volume on Ethereum over the last week, according to a Dune Analytics dashboard created by hildobby, the pseudonymous researcher.
Blur cranked into overdrive after the project airdropped 12% of its BLUR tokens to NFT traderson Feb. 14. It has accounted for more than 70% of daily NFT trading volume on Ethereum for every day since the airdrop, prompting OpenSea to cut fees. Blur launched with zero-fee trading, something other marketplaces like SudoSwap, also do.
Hildobby, whose dashboards are among the most popular on the data site Dune, told The Defiant they see a few primary trends at work. For starters, the Blur has teased the release of a new airdrop totalling another 10% of the supply in the near future.
The market place said on Twitter that the way to maximize the airdrop is through “loyalty,” which can be proved if users list their NFTs for sale exclusively on Blur.
Hildobby also pointed to Blur’s design. “Users who moved have gotten to know Blur and are offered better liquidity, floor price is often lower and bid price higher,” the researcher said. “This shows that users who have migrated find Blur to be a superior product even when fees aren’t lower anymore.”
Not everyone is convinced that Blur’s strategies will be sustainable. Kofi Kufuor, a contributor to the DeFi Llama and former partner at 1confirmation, a venture firm, asserted that 53% of volume on Blur comes from 500 wallets on Twitter.
These could be fairly professional traders, or potentially also users who are looking to maximize their airdrops, or some combination of the two. Wash trading certainly is not unheard of in the NFT space — a study by Hildobby approximated that half of the NFT volume in 2022 was wash trading.
Pacman, Blur’s previously pseudonymous co-founder, revealed himself on Feb. 21 on Twitter and used his legal name, Tieshun Roquerre, in an interview with The Block.
The battle between the two marketplaces has featured moves and counter moves from on the implementation of royalties paid out to NFT creators.
Cutting its own fees on Feb. 17 wasn’t OpenSea’s only major shift that day — the marketplace also dropped enforced royalties to 0.5%.
When The Defiant followed up with him, Kufuor said that OpenSea may have made a mistake. “The more creator-focused demographic of the NFT space liked that OpenSea was still trying to stand up for royalties,” he said via Twitter messages. “So the decision [to lower royalties] didn’t bring in any users or volume from that group.”
Kufuor conceded that the incentives are clearly on Blur’s side. “Pro traders were already getting 0 fees and 0.5 royalties on Blur AND Blur gave them free money,” he said. “If they moved they would get the same fee rates but would be missing out on the free money.”