The Battle for NFT Supremacy: Can Blur.io Sustain Its Success?
If you're conversant with Web3, you probably already know about the current realignment that has been going on in the NFT (non-fungible token) space over the past six months. If you don't know, here's a rundown of what's happening.
In October 2022, a new marketplace called Blur entered the NFT space and gave OpenSea, also known as the Amazon of NFT marketplaces, a run for its money. In less than six months, the new entrant has accrued over 50% of the market share in NFT transaction volume, challenging OpenSea's supremacy.
Without a doubt, the Blur NFT marketplace has proven itself as a worthy competitor to OpenSea. But how will this battle for supremacy between both marketplaces affect creators and traders over the long run? And can this new entrant sustain its success or is it just another fad?
What is Blur and What is The Controversy Related to It?
Blur is a decentralized NFT marketplace deployed on the Ethereum ecosystem. It's a 3-in-1 NFT platform: an aggregator, an NFT trading platform, and a marketplace. Unlike most NFT platforms that serve the general Web3 users, Blur has carved out a niche for itself to cater to the needs of professional NFT traders. So it doesn't focus on NFTs, per se, but on the act of trading these digital tokens.
The platform provides its niched users access to better and faster experiences, deep liquidity, and the ability to trade on multiple NFT platforms. It also offers advanced trading tools to professional traders, such as an NFT sniping tool to snipe NFT reveals as fast as possible, NFT sweeping tools for 10x fast floor-sweeping transactions, the ability to batch operations more conveniently, and an order book for NFT transactions.
What's the controversy about?
Even though Blur is not the first NFT marketplace to launch in the past year, its steady growth over the past few months has been enough reason for controversy.
According to Dune Analytics, in just a few months of launch, Blur has outdone OpenSea in several key metrics. For example, in the last 30 days, the platform did over $1.69 billion in trading volume — about 5x the volume traded by OpenSea over the same period.
Blur's success has been fueled by many things:
On February 14, the Blur token, the governance token of the marketplace, was airdropped to incentivize early users for using the platform and providing liquidity. Some eligible users received a valuable chunk of the 'care package.' This no doubt shoots up the popularity of the platform among Web3 natives.
Apart from its intuitive user interface and professional trading tools, Blur charges a very low trading fee compared to OpenSea, and offers high royalties to creators. The tokenomics of incentivizing creators without a doubt attracted creators and professional traders but also raised alarms among ecosystem observers as prioritizing profits over art.
One last thing that continues to raise eyebrows is Blur's on-chain data. While the NFT platform boasts over 400,000 wallet interactions, only a few of the wallets are creating transactions. According to on-chain data, 20% of Blur's transaction volume comes from just 15 wallets, while 50% of the eye-turning transaction volume is from fewer than 300 wallets.
With all of this in mind, it's indicative that Blur has struck the sweet spot among pro NFT traders. But the question still stands: Can Blur maintain its dominance going forward, or is it just another fad? What's the effect of these actions on the broader NFT market?
What’s Blur’s Stance on Royalty Payments?
Royalty, also known as Creator Fee, is a fee paid to creators when their digital artwork is resold on the secondary market. These fees are usually between 2.5% and 5% of the total price of the NFT. While royalties are accepted across the broader NFT market, they're not usually added to the smart contract of the NFTs. So, implementing them usually depends on the decision of the NFT marketplace in question.
OpenSea historically honored the royalties initially set by the creators. Because some have criticized Blur's tokenomics, last December, Blur updated its fee structure by enforcing a minimum royalty of 0.5% on immutable collections so long as creators block trading of their collections on OpenSea after being under fire from its customers. Furthermore, in February of this year, the new NFT marketplace declared that it will ensure complete compensation to creators for any collection that restricts trading on OpenSea, a leading NFT trading platform. This represents a significant increase in animosity towards OpenSea, Blur's primary competitor in the industry. The marketplace's current structure is designed to incentivize and raise the royalty revenue in the ecosystem. For instance, Blur rewarded traders who paid the creator’s royalty with a larger airdrop when the second care package was airdropped in February.
While Blur’s low trading fee and high royalties attracted more creators and NFT traders to the platform, it doesn’t go without triggering OpenSea. As a way to stay competitive, OpenSea also removed its trading fee (which was previously 2.5%) and encouraged its users to trade solely on the platform.
What does the future of creator fees look like?
While competition is a great tool for development, it could lead to an accelerated race to the bottom between competing NFT marketplaces. As the battle for market dominance intensifies between both competitors, it’s important to ask, “At what cost?”
The high royalty payment is good for the NFT ecosystem. Royalties encourage quality art over profit and help appreciate the creators for the time spent on developing those artworks. But based on the look of things, royalties may disappear over the long run as the competition intensifies, which could be bad for the entire Web3 ecosystem.
Can Blur Sustain Its Success?
Although Blur's activities over the last few months could be a trigger for its popularity among Web3 natives, its success stems from something more than that — its utility. A thorough look at the decentralized NFT marketplace reveals that it has hit a sweet spot among both creators and pro traders.
Moreover, OpenSea, the main competitor to Blur, had angered the majority of Web3 enthusiasts with its recent controversial stand on creator's royalty. Additionally, its reputation for flopping during high traffic and its centralized approach to everything has increased the disinterest of the broader Web3 users in OpenSea.
Since Blur comes with a better user interface, advanced trading tools, high royalty payment, and a fast marketplace, it has become a better alternative for traders. And as a result, it could continue to be the go-to platform for the majority of NFT traders.
Dibbs is a huge proponent of paying creators. We believe that high creator fees means more revenue in the originator’s pocket (as opposed to the NFT marketplace’s pockets, for example), because they redistribute wealth to creators, artists and brands. Despite Blur's recent dominance of the NFT space, it remains unclear whether it can sustain its position or not. Web3 is a fast-paced ecosystem, and nothing is cast in stone. So, as the competition between both giants heats up, it's important to be on the lookout for how far each party can go in its struggle for NFT supremacy.
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