A traditional belief in business is that when prices are reduced, the customers will flock to your company. OpenSea disproved this theory recently: After they abolished their trading fee, Blur– its four-month-old NFT marketplace rival – skyrocketed and now has an overwhelming 82% share of Ethereum’s total trading volume over the past 7 days, as reported on Dune Analytics’ dashboard by hildobby, a well-known researcher.
Hildobby, Anonymous Researcher, Explains His Analysis of Blur
On February 14th, Blur rapidly accelerated after it dispersed 12% of its BLUR tokens to NFT traders. Since then, the platform has secured more than 70% of daily Ethereum’s trading volume every day since. This prompted OpenSea to reduce its fees in response! Not only did they kick off with zero-fee transactions – similar to SudoSwap – but according to Hildobby and other popular dashboard users on Dune Analytics, there is an upcoming 10% airdrop supply release coming soon which has undoubtedly increased excitement around the project.
According to the marketplace on Twitter, users can maximize their airdrop rewards by demonstrating loyalty – which is attainable when they exclusively list their NFTs for sale on Blur. Hildobby further emphasized Blur’s design as an incentive for users who have migrated over due to its superior liquidity; lower floor prices and higher bid prices are evidential of this point. Therefore, even though fees may no longer be a motivator in migrating over, it seems that many still find Blur’s product better nonetheless.
Of Course, Not Everyone Is Optimistic about Blur
Despite Blur’s strategies, some skeptics remain unconvinced of their sustainability. Kofi Kufuor from DeFi Llama and former partner at 1confirmation suggests that half of the volume on Blur comes from 500 wallets on Twitter – these could be expert traders or users who are seeking to get maximum airdrops or both. Moreover, wash trading is not an alien concept in NFT space; Hildobby estimated that around 50% of the 2022 NFT volume was generated through such unethical practices.
On February 21st, Pacman of Blur’s co-founders publicly announced himself under the name Tieshun Roquerre in a conversation with The Block. Consequently, this has sparked intense competition between multiple marketplaces; each making strategic moves to implement royalties for NFT creators and reducing their own fees as well. OpenSea made a major change that same day by bringing down its enforced royalty rate to 0.5%.
“OpenSea Made a Mistake”
After being contacted by The Defiant, Kufuor pointed out that OpenSea might have misjudged the situation. He declared on Twitter messages: “The NFT space’s creator-focused demographic still liked what OpenSea was doing in regards to royalties, so this decision [to lower them] didn’t bring more users or volume.”
Kufuor accepted that Blur had a definite edge. He remarked: “Pro traders were already receiving 0 fees and 0.5 royalties with Blur, and then they got an additional bonus of free money too – how could they not switch? If they stayed put, their fee rates would be unchanged but without any extra cash rewards”.
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