Blur.io Analysis
Authors: Hanson Zhang and Michael Chai
Introduction
In the rapidly emerging world of NFTs, we’ve seen immense experimentation on the attempted business creation around this nascent technology. From profile picture companies to platforms for generative art to NFTs that offer specific utility, the sheer number of tries at building the next unicorn through NFTs has been astounding. Equally interesting, but given much less of the spotlight, is how the dynamics of the picks and shovels of this infant industry have evolved in real-time as well. The largest developments of this nature can undoubtedly be found in the assessment of secondary marketplaces. Where once Rarible and OpenSea stood unfettered from competition, various new platforms launched in the last eighteen months have eaten away at their huge head start. The race for the NFT market’s leading secondary exchange is the most open it’s ever been, and Jeff Bezos’ “Your margin is my opportunity.” has never reigned more true. Both user interface improvements and a unique approach to the royalties debate have placed Blur, an NFT market aggregator, as the latest and greatest challenger to OpenSea’s throne. The most recent empirical evidence — in the form of the Art Gobblers out-of-the-gates trading activity — suggests that Blur has more than a strong chance of legitimately displacing the incumbents. This paper will detail Blur’s introduction to the Web3 community via airdrops, how it compares to rival platform Gem, and how the aggregator is contending with royalties. By the end, you will have a clear understanding of why many believe Blur has the potential not only to be the leading NFT aggregator, but the dominant secondary marketplace of the industry too.
Airdrops
Analogous to other current projects in the Web 3.0 space, Blur.io is promoting itself through multiple rounds of airdrops. Blur.io airdrops consist of digital care packages containing the native $BLUR governance token, with three levels of rarity: uncommon, rare, and legendary. The rarer the care package the more $BLUR they contain. The first round of airdrops already occurred: all active blur.io users who listed NFTs on the aggregator in the past six months received a care package containing $BLUR. The rarity of their care packaged was dependent on their trading history on Blur.io. Round two is up next, and the users who list on Blur.io from the time of the public launch to the end of November are eligible. To raise the chances of receiving a rarer care package in round two, users can increase their loyalty: their number of NFTs listed on Blur compared to other marketplaces. To sum, a user listing more NFTs on blur.io rather than another marketplace results in higher loyalty. Additionally, listing blue chip NFTs and active collections raises your chances of receiving a rare care package. The care packages from round two will be available in January, the same time the $BLUR token will be usable.
Wash trading is a historic problem when projects perform mass airdrops. To prevent the potential issue of wash trading, Blur.io has been vague in its preventative measures but claims to be implementing “an extensive analysis to weed out traders with unnatural listing activity.” Ultimately, Blur.io’s airdrop methodology is unique in its different rounds and rarities, but the full potential of the care packages, and the $BLUR token, can only be realized in January, once they become usable.
General Comparison with Other Marketplaces
So where does Blur stack up against the other major NFT marketplaces? To be honest, it still has a long way to go before it can rival the existing marketplaces, however, it is still very attainable in the long run. As seen above, there are clear areas where Blur has yet to catch up with other marketplaces like Opensea and X2Y2, but there are also areas that incentivize using Blur over other platforms. Like mentioned earlier, the $blur token and airdrops have attracted a lot of attention over to Blur and additionally a lot of people enjoy the different listing functionality such as floor, top trait and ladder functions.
Blur Comparison as an NFT Aggregator
One of the big selling points of Blur is the fact that it is not only a marketplace, but also an aggregator. An NFT aggregator basically works to consolidate NFT prices from different marketplaces and platforms into one place. For example, you are able to see and interact with NFTs listed on Opensea, X2Y2, and LooksRare all on the same page. Blur has this functionality, making it a very versatile tool that can be utilized by not only beginners but also advanced traders.
The other main NFT aggregator that Blur directly competes with is Gem. Gem has been around for a while now after being launched in January 2022. Since then, it has been able to dominate the market thanks to things like its bulk listing and buying capabilities. Knowing this, Blur mirrored those functions and took over as the #1 NFT aggregator by volume on just their third day. It is clear Blur is trying to make its mark and will not be going anywhere anytime soon.
Royalty
Despite the fact that the general trend of NFT marketplaces is moving closer to little or zero royalties, Blur supports NFT royalties and wants to use that as a mechanism to incentivize creators. “Blur defaults to the highest royalty across OpenSea, LooksRare, and X2Y2. When traders list on Blur, they can customize the royalties of their listings. Traders who are already not honoring royalties on Sudo can list on Blur instead and set the royalty to Sudo’s platform fee (0.5%). They’ll get just as much profit and get a much bigger $BLUR airdrop than they would otherwise.”
The war of NFT royalty never rests. One of the primary reasons behind the opponents of NFT royalties is liquidity. For example, the AMM mechanism adopted by SudoSwap is designed to improve the liquidity of the NFT market. SudoSwap charges a 0.5% marketplace fee and no royalty fee. This value proposition has been well supported by sellers who want to maximize their margins. Instead of losing a significant amount of royalties and platform fees, sellers are guaranteed to pay a maximum of 0.5% on each transaction. However, the proponents of NFT royalties state that in order to reach a balance between the creators and the markets, royalties must be implemented to ensure the self-driven capabilities of an NFT marketplace, especially in the early stage. Without royalties, the idea of the creator ecosystem cannot be established. Besides individual creators, huge brands like Gucci or Nike will also face the threat of losing a significant amount of potential revenue and thus refuse to enter the market.
However, do all NFT markets need high liquidity? The value of artworks rises with their rarity; however, this implies low liquidity. From the perspective of a collector, it is the low liquidity that is one of the hallmarks of fine art. However, the majority of NFTs in the current market are not works of art, but rather “utility” or “universal collectibles”. This type of NFT usually appears in the form of a gear for the game or a membership card for participating in the NFT community. They have different rarity levels, but high rarity NFTs cannot be defined as art in the vast majority of cases (not excluding the possibility of functional and artistic compatible NFTs). This type of NFT fits the liquidity pool. From a NFT community organizer or game designer perspective, high liquidity equals high popularity. If we start from here and take a guess, perhaps the reason why NFT marketplaces, such as Opeasea, are moving towards low royalties but not zero royalties is that it has both artwork and universal collectibles. Also, we can bring up the question: will the future NFT marketplaces become narrow, specific, and category-driven?
Nowadays, royalties are not enforceable on chains. Because as long as the marketplace allows the holder of an NFT to transfer his NFT to another address without any automatic royalties transactions, users can always make the transaction happen off-chain. While there are coercive means of incorporating royalty transactions into smart contracts and thus making it possible to enforce royalty on chains, and some projects already use them, the logic behind these coercive approaches goes against the concept of decentralization. Therefore, leaving aside the question of whether the royalty model adopted by Blur can be sustainable in the long run, Blur’s use of airdrop incentives rather than enforcement measures is intelligent and worth learning from.
Reference
https://dune.com/sealaunch/NFT
https://pro.nansen.ai/nft-trends?platform=All
https://twitter.com/blur_io/status/1583608757690372096
https://mirror.xyz/blurdao.eth/2nba-2j0zHPrBX0iPSNGquZ9s_WotNH6B4e5usz85mM
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