X2Y2 is a comprehensive NFT trading market built on Ethereum. It uses token airdrops to conduct vampire attacks on Opensea, and launches a series of pending order rewards, gas fee rebates and transaction mining rewards to seize market share.
Original title: “First-class warehouse research report: NFT comprehensive trading market X2Y2”
Written by: First Class Warehouse
X2Y2 is a comprehensive NFT trading market built on Ethereum. It uses token airdrops to conduct vampire attacks on Opensea, and launches a series of pending order rewards, gas fee rebates and transaction mining rewards to seize market share. Transaction mining is only an early means of acquiring customers and cannot form a moat. The platform charges a 0.5% transaction fee and focuses on low-price strategies to attract users. The current market data is performing well, but there is a problem of fake transactions. The key point in the later stage is how to optimize the product experience to retain users, while continuously attracting new users and high quality. NFT project entry.
The subdivision track of X2Y2 is the NFT comprehensive trading platform on the Ethereum chain.
X2Y2 pursues a better user experience than Opensea in product design. In addition to basic NFT trading, it also introduces additional functions such as batch listing, batch purchase and peer-to-peer transfer transactions. The platform charges a 0.5% transaction fee, compared to 2.5 on Opensea. % and the 2% fee on LooksRare, the low-price strategy is more friendly to user transactions. The team announced the roadmap, and is currently making continuous improvements to the platform functions. For example, the auction function will be launched soon, and the deployment of the second layer will be considered in the future.
X2Y2 has occupied a certain market share through a series of mining rewards, but there are fake transactions. When the project was launched, it carried out a vampire attack on Opensea through token airdrops. Previously, the pending order reward and gas fee subsidy were launched, but they were cancelled due to the poor incentive effect; the team officially launched the transaction mining reward in May this year, and users and Transaction volumes rose significantly. Transaction mining can form a positive cycle in the short term, but this incentive model will lead to the generation of fake transactions, which not only does not bring real liquidity to the platform, but also squeezes the transaction rewards of real users. Users will soon be lost. It can be seen that transaction mining is only an early means of acquiring customers and cannot form the moat of the project. In addition, since most of the blue-chip projects on X2Y2 do not have royalties set, the real transaction volume cannot be restored by excluding transactions without royalties. Therefore, only the transaction data of the peer-to-peer transactions between the two addresses on X2Y2 are excluded, and the remaining transactions are found. The transaction volume accounts for less than 10% of the total transaction volume, the real transaction volume will be lower, and there are a large number of brush transactions on the platform.
At present, Opensea occupies an absolute dominant position in the NFT comprehensive trading market. X2Y2 and LooksRare have seized a small part of the market share by using token airdrops and mining rewards at the right time, but both of them have the problem of brush trading. Under the mechanism of LooksRare reducing transaction rewards in stages, each reward halving will have a great impact on the platform’s transaction volume and token price. In contrast, X2Y2 adopts a fixed number of rewards per day to reduce this impact. Two Years of linear release time give items a longer buffer to polish the product. At present, X2Y2’s business data is better than LooksRare, but how to optimize the product experience to retain users, while continuously attracting new users and high-quality projects is the key to future development.
1. Basic overview
1.1 Project Introduction
X2Y2 is an NFT comprehensive trading market built on Ethereum. In addition to the basic NFT trading functions, it also introduces batch listing, batch purchase and peer-to-peer transfer transaction functions. The platform charges a 0.5% transaction fee. When the project was launched, the token airdrop was used to attack Opensea. It also launched a pending order reward and a gas fee subsidy. The poor incentive effect has been canceled. The team officially launched a transaction reward activity in May this year, attracting a large number of users. Transaction volumes rose significantly.
1.2 Basic information
2. Project details
The X2Y2 team is anonymous, only know that the founder of the team is named TP, who is Chinese. He mentioned in the AMA that he and the team entered the blockchain industry in 2017. Most of the team members have experience in NFT exchanges. It is an international team. At present, it is impossible to obtain more resume information of team members, and it is impossible to judge the strength level of team members as a whole. The founder’s tweet is as follows:
Figure 2-1 Twitter account information of founder TP 
So far, X2Y2 has not disclosed any external financing information. The team stated that it will not conduct any private financing, and has only conducted an open market pre-sale (Initial Liquidity Offering) of tokens based on the whitelist system, raising a total of 1,500 ETH. See 4.1.2 for details of ILO.
The X2Y2 code is not yet open source, the team said that it will gradually open source in the future, and the API and SDK have been announced. Previously, Cobo founder Shenyu tweeted that there is a risk in the mining of X2Y2 NFT pending orders after the technical staff has checked. In theory, there is a possibility that the contract will be upgraded and the user NFT will be transferred away. The team immediately transfers the management authority of the contract in order to reduce the risk. At most, sign the wallet, and add a time lock at the same time. The protocol smart contract has been audited, and the official audit report has been disclosed .
X2Y2 is an NFT trading platform built on Ethereum. The product functions are similar to Opensea. It mainly provides NFT trading and buying and selling functions. It also develops additional functions such as rarity query, batch listing and batch purchase. In addition, it also supports peer-to-peer trading functions. The product is easy to operate and has a good user experience. The platform charges a 0.5% fee for NFT transactions, and the fee income is rewarded to X2Y2 token holders in the ecosystem. Currently, there are various wallet types supported by the platform, including Metamask, Coinbase Wallet, imToken and SafePal, etc.
Users can search and query NFTs on the platform, and the homepage will display the NFT series (Trending NFTs) that have recently been searched for. Users can click to view the details of the series of NFTs. In addition, the platform also includes the popular NFT series (Hot Collection) on X2Y2, Opensea and LooksRare. Users can see the current market data of each series of NFTs, including transaction volume, transaction amount, average transaction price and number of holders, and more For more details, you can click the Ranking function module. Users can see the brief information of each NFT series in this module, and learn about the current NFT hotspots in the market.
Figure 2-2 X2Y2 Homepage Popular NFT Interface
After connecting the wallet, the user can click on the wallet avatar to see the data panel, which will disclose the current ETH, WETH and X2Y2 token balances in the wallet and X2Y2 token rewards; the most important thing is that this page provides the current wallet holdings Statistics modules such as NFTs, NFTs collected by users, and NFTs that have been bid have already been uploaded in batches, which is convenient for users to classify and query, and is also the entry point for users to perform some functions.
Figure 2-3 Data panel
After connecting the wallet, users can conduct NFT transactions on the platform. Users can choose to purchase a single NFT, or make bulk purchases.
(1) Single purchase
When a user chooses to purchase a single NFT, the NFT name and contract address can be searched to find the NFT. The platform generally displays the rarity of the NFT. As shown in the figure below, the rarity ranking of Stray Dog with number 7245 is 5476. In general, the rarer the NFT feature, the higher the value. The X2Y2 official website integrates three feature tools developed by the team: rarity rank, trait sniper and ratity sniper rank. Users can see the feature information in the attribute list at the bottom of the purchase page, as well as the historical transaction activity records of the NFT. Users can also click the rarity ranking value of the diamond indicator next to the NFT to view the rarity details of all NFTs in the series, as shown in the figure below.
Figure 2-4 Purchase a single NFT operation page 
Figure 2-5 Rarity attribute detail page
Users can click to choose to buy NFTs immediately at a fixed price or by bidding. When choosing to buy at a fixed price, the first-time user will pop up a dialog box to accept the terms of service, and the user can click Confirm to continue the purchase; when choosing to bid for NFT, the user needs to click “Make Offer” to enter the bidding operation page, and the user selects the bid amount. And the expiration time is enough, and the quotation is denominated in WETH. As shown in the image below, there is a bid for Stray Dog number 7245 with an amount of 0.015 WETH and an expiration time of 30 days.
Figure 2-6 Bidding and buying page
Users can also make bids for the entire NFT series. The platform has set a blue logo for the NFTs that can make series bids. As shown in the figure below, users can click “Make Collection offer” to make an offer for this series of NFTs, and only need to enter the quotation amount. and the expiry time, it is priced in WETH, and the quotation can be cancelled at any time. After the user makes an offer, the amount will not be transferred to the transaction immediately, but will not complete the transaction until a seller accepts the bid. If the seller accepts the offer for one of the NFTs, the user’s offer for the other NFTs in the series will be cancelled.
Figure 2-7 Series Quote NFT Logo
(2) Bulk purchase
The bulk purchase function of X2Y2 is similar to Taobao shopping. Users need to add it to the shopping cart first, and then make bulk payment purchases through the shopping cart, and pay a one-time gas fee to save gas costs. Under each item, there are two options: buy immediately and add to the shopping cart. Users can click “Add to cart” to add them to the shopping cart; users can click the shopping cart button next to the wallet avatar to add the added NFT. Make bulk purchases, buy with ETH or WETH.
Figure 2-8 Shopping cart bulk purchase page
As with the purchase event, users can choose to sell NFTs at a fixed price, and the team is developing an auction function, which has not yet been officially launched. Users click on the wallet to select the NFT they want to sell, and set the selling price and expiration time.
If the user wants to accept the buyer’s bid to sell the NFT, he needs to click the wallet to select the NFT, and click the “Offers” option to see the bids of each buyer. As shown in the figure below, Zorb with number 13121 is currently bidding 0.0277 WETH. After the user clicks the accept button to complete the approval, the sale transaction is completed.
Figure 2-9 Accept quotation operation page
2.4.3 Batch listing
Users can click “Bulk Listing” in the wallet to perform batch listing of NFTs. The batch listing is divided into three parts. The first is license authorization. Each series of NFTs needs to charge a gas fee, which is for miners; secondly, users Select multiple NFTs to fill in the listing price; finally, click “List” to list and sign the wallet. Each series of NFTs only needs to be licensed once, and no license is required for subsequent listings.
Figure 2-10 Batch upload operation page
2.4.4 Peer-to-peer transactions
The peer-to-peer transaction of X2Y2 is realized through a pre-designated wallet address, that is, the OTC function, which can realize transactions without platform fees and royalties. The user clicks the NFT in the wallet, selects the “Fixed Price” function, and enters the price and transaction address on the transaction page, which means that only the transaction address can purchase this NFT; finally, click “Approve” to complete. The transaction is free, with no handling and royalties. When the other party logs in to X2Y2 through the wallet address, the platform will automatically display the targeted purchase information, and the user can click to buy now. This function is friendly to users who have real NFT transaction transfers, but at the same time, the setting of no handling fees and royalties may bring false transactions to the platform. Users use point-to-point transactions to frequently convert NFTs in their two wallets to Get trading rewards.
Figure 2-11 Peer-to-peer transaction page
Summary: The goal of X2Y2 is to compete with Opensea for market share, and to pursue a better user experience than Opensea in terms of product function design. In addition to basic NFT buying and selling transactions, the platform has also launched additional functions such as batch listing, batch purchasing and peer-to-peer transfer transactions; The three feature tools developed by the team are integrated to facilitate users to query the rarity of NFTs. The platform charges a 0.5% transaction fee, and the peer-to-peer transfer transaction does not receive royalties and transaction fees. It is friendly to users who have real NFT transaction transfers, but it will also bring brush transactions to the platform. The team is still making continuous improvements to platform functions, such as auction functions will be launched soon.
Table 3-1 X2Y2 major events
3.2 Status Quo
3.2.1 Operational Data
X2Y2 was officially launched on the Ethereum mainnet in February this year. When it went online, it carried out a vampire attack on Opensea through token airdrops. At the same time, it launched a pending order reward activity and a low-handling method to attract the first batch of users; the pending order reward will last until April. It was cancelled, and then a gas fee subsidy for one month was introduced, which has also been cancelled. The team officially launched transaction mining rewards in May this year. Through a series of customer acquisition strategies, the platform has accumulated a certain amount of transaction volume. According to the platform data, the current 24-hour transaction volume of the platform has reached 15,242 ETH. The following is its detailed business data:
(1) Transaction volume
Figure 3-1 X2Y2 weekly trading volume data on Dune Analytics 
From the transaction volume data in the above figure, it can be seen that the platform has accumulated a certain transaction volume, and the transaction mining reward has played a relatively obvious incentive role. When X2Y2 was launched, the pending order reward did not attract users to the platform, and the gas fee subsidy activity launched in April did not bring about an increase in transaction volume; however, with the launch of the transaction mining activity, the transaction volume of the platform increased rapidly, reaching the highest The weekly transaction volume reached 20,000 ETH; when the transaction mining developed to a certain stage, the platform accumulated a certain amount of users and market popularity, and the data could be maintained in a relatively stable state. The trading volume in the past 24 hours reached 15,242 ETH.
(2) Number of users
Figure 3-2 Number of active users of X2Y2 on Dune Analytics
As can be seen from the above figure, the daily active number of X2Y2 corresponds to the change data of transaction volume. The pending order reward did not attract users, but the opening of transaction mining activities brought the number of users to the platform and promoted the increase of transaction volume. At the peak, the number of daily active users in early June this year exceeded 4,700; with the bear market sentiment of cryptocurrencies and the decline in the trading volume of the entire NFT trading market, the daily active number of the platform has declined, but relying on the incentives of the previous series of reward activities, the platform has accumulated There are certain user groups. According to data from Dune Analytics, the cumulative number of users on the platform has reached 724,828, and the current daily active users are concentrated at 3,000 to 4,000.
(3) Transaction fee
Figure 3-3 Fee data of X2Y2 on Dune Analytics
In order to attract users, X2Y2 launched a one-month gas fee rebate activity in April. Currently, transactions on the platform require a 0.5% handling fee. Compared with Opensea’s 2.5% handling fee, X2Y2 has a clear price advantage. Low-fee trading is also one of the strategies to acquire customers. As can be seen from the above figure, the fee income on X2Y2 is constantly rising, especially after the start of transaction mining in May. The influx of users into the platform under the incentive of tokens has prompted The transaction fee rises, the pledge income rises, the token price rises, and the transaction reward rises, which further attracts users to trade, and the fee income increases again, thus forming a positive cycle.
(4) Real transaction volume
Transaction rewards can significantly increase the number of users and transaction volume of the platform in the short term. The number of users and transaction volume of X2Y2 even surpassed that of Opensea for a time, and the market data performed well. However, this incentive model will bring false transactions to the platform. The method is that users choose NFTs without creator fees, buy and sell by left-hand-to-right-hand, and complete transaction mining to obtain rewards; another method is the peer-to-peer transaction function launched by the platform, users use this function to realize NFT between two addresses. Switch frequently to get rewards. The entire process of the two methods did not bring liquidity to the market, and also accumulated the enthusiasm of real users to participate in transactions. It can also be seen from the statistics in the figure below that there is currently a brush volume situation on the X2Y2 platform. The transaction data presented on the front end needs to exclude the brush volume part to be the real transaction volume of the platform.
Figure 3-4 There is some transaction data on X2Y2 
Figure 3-5 Real data on X2Y2 excluding brush transactions 
According to the statistics on Dune, after excluding the transactions between the two addresses, the current real transaction volume on X2Y2 is about 2 million US dollars; the previous transaction data including brush volume is about 25 million US dollars, which can be seen from the above figure. The actual transaction volume after that accounts for less than 10% of the total transaction data. However, it should be noted that there is also a zero-royalty NFT transaction that has not been excluded, but considering that X2Y2 defaults to zero-royalty for NFTs that have not been set by the project party, some zero-royalty transactions may also be real transactions. To sum up, the above data only excludes the situation of left and right hand scalping transactions on X2Y2, there is still a deviation from the real trading volume, and the real trading volume will actually be lower.
3.2.2 Social media scale
Table 3-2 Social media data for X2Y2
The size of the community can reflect the popularity and future development potential of the project in the market. Up to now, X2Y2 has mainly opened two social media platforms, Twitter and Discord. There is a dedicated Chinese community in Discord. Higher, the team handles user bug feedback in a timely manner; the project joined Twitter in January 2022, and has accumulated 83,300 followers so far, with daily updates and more comments and likes.
The team published a roadmap on the official website , including short-term, medium-term and long-term plans, and formulated multiple subdivision goals. In the short-term plan, functions such as batch listing, batch purchase and chart analysis have been implemented, but functions such as integration with Opensea, auctions, NFT project launch tools and support for ERC-1155 have not yet been developed. The functional team of ERC-1155 has not yet been developed. It is said in the community that it will be launched in the near future. In the medium-term plan, the team will focus on the development of more functions of the official NFT and the empowerment of X2Y2 tokens. In the long-term plan, the deployment of the second layer will be considered.
Summary: The pending order reward and gas fee subsidy activities previously launched by X2Y2 did not bring about an increase in the platform’s transaction volume. After the cancellation, the transaction mining reward was officially launched in May, which produced a significant incentive effect, and the number of users and transaction volume were both rapid. Growth, the data is doing well. Transaction mining is the most effective and direct way to attract users to increase transaction volume in the short term, but this incentive model will bring false transactions to the platform, which not only does not bring real liquidity, but also squeezes real users. transaction rewards. By excluding the transaction volume of the point-to-point transaction between the two addresses on X2Y2, the real transaction volume of the platform accounts for less than 10% of the total transaction volume, and the actual transaction volume will be lower. The team has a clear roadmap and is currently working on the development of platform functions, and will consider the deployment of the second layer in the future.
4. Economic Model
X2Y2’s native token, X2Y2, has a total of 1 billion tokens, and as of July 18, 2022, there are about 118,025,837 tokens circulating in the market.
4.1.1 Token distribution
The team issued the token X2Y2 in February 2021, and announced the airdrop plan at the same time. The total amount of X2Y2 tokens is 1 billion. The detailed token distribution plan is as follows:
Table 4-1 X2Y2 token distribution plan
Figure 4-1 X2Y2 token distribution details
Figure 4-2 X2Y2 token release schedule
As can be seen from the token release schedule above, the tokens will be released by airdrops that account for 12% of the total supply on the first day. The tokens of X2Y2 token pledge reward, NFT pledge reward, and ILO released by block are gradually released; the tokens belonging to the development team from the 180th day also begin to be released at fixed intervals.
4.1.2 ILO 
The team launched the ILO program on February 14, 2022, and opened a whitelist to 1,000 trading users and community users on the Beta version. The whitelist was obtained by lottery. A total of 15 million X2Y2 were sold, accounting for the total The supply ratio is 1.5%, and the price of 1 X2Y2 is 0.001 ETH (about 0.25 US dollars). The team will divide the X2Y2 participating in the ILO plan into 1,000 shares, each containing 15,000 X2Y2s worth 1.5 ETH, and a total of 1,500 ETH has been raised. This part of the funds and 1% of the tokens in the pledge reward (ie 10 million) will be distributed Deposited to Uniswap together as initial liquidity, the LP tokens obtained as initial liquidity will also be destroyed, which means that this part of the liquidity will be locked in the pool.
X2Y2 tokens sold through ILO will be unlocked linearly in blocks within 360 days. The unlocked X2Y2 can be used for trading and pledge. Users who hold X2Y2 obtained through ILO can participate in obtaining a certain percentage of WETH market transaction fees as a reward. In addition, whitelisted users have the opportunity to participate in receiving the official NFT, namely Ajin Youth Rebels, abbreviated as AYOR, which is a collection of equity NFT affiliated to X2Y2, holding this NFT can enjoy certain rights, for example, in the transaction reward, the buyer can get double award. OG characters in the Discord community can receive up to two NFTs, and other whitelisted users can only apply for one. The team raises funds from ordinary users through the ILO strategy. For early platforms, it can win users’ trust in the platform in a short period of time. Due to the binding of interests, users can spontaneously promote X2Y2 in their organizations.
4.1.3 Token Airdrop
The team conducted a vampire attack on Opensea in February this year, and airdropped X2Y2 tokens to trading users on Opensea. It is planned to use 12% of the total supply of X2Y2 for airdrops. A total of 861,417 users are eligible for airdrop rewards. In order to reduce the whale effect, X2Y2 requires in the airdrop rules that whale users whose transaction volume is greater than or equal to 30 ETH on Opensea will distribute 1,000 X2Y2; ordinary users whose transaction volume is less than 30 ETH will be allocated airdrops according to the proportion of their transaction volume. At the same time, the team has set claim conditions for users to claim X2Y2 airdrop tokens. Users need to list NFTs on the platform to participate in the claim. The higher the airdrop amount, the more NFTs users need to list, so as to motivate users to list NFTs, such as wallets Whale users with airdrops greater than or equal to 1,000 X2Y2s need to list at least 5 series and more than 50 NFTs on the platform.
Figure 4-2 Conditions for claiming airdrop and listing NFT
Due to technical reasons and poor user experience within three hours of the launch of the token airdrop, the team announced the suspension of the airdrop. At that time, users had claimed 0.5% of the airdrop share, and the airdrop was restarted within 48 hours. The airdrop will end on April 1st this year, and unclaimed tokens will be permanently locked in the contract. As of March 30, 2021, a total of 36,059 wallet accounts have claimed X2Y2 airdrops, and a total of 28,043,778 X2Y2s have been claimed. The details are as follows:
Table 4-2 X2Y2 token airdrop details
Figure 4-3 X2Y2 airdrop claim status
As can be seen from the above table, about 92 million X2Y2 were unclaimed at the end of the airdrop plan, accounting for 76.67% of the total airdrop. The team will destroy them, and this part will no longer enter the market. X2Y2 New Economic Model 2.0.
In addition, the team officially released a tweet in March this year  announcing that another 16 million X2Y2 had been destroyed. In addition to the 92 million airdrops that had not been claimed and destroyed by users, a total of 108 million had been destroyed, accounting for the total Compared with 10.8%, the total number of tokens of the current project is 892 million.
4.1.4 Staking rewards
The pledge reward consists of two parts, X2Y2 token pledge reward and transaction reward, of which it is estimated that 200,070,000 X2Y2 (about 20%) will be distributed to token pledge, and 449,930,000 (about 45%) will be distributed to trading users.
(1) X2Y2 pledge reward
Users can get transaction fee rewards (WETH) and X2Y2 token rewards by staking X2Y2. The team expects to distribute all rewards within 720 days, and the first 30 days of total token rewards will be the most rewarded. When the staking reward activity was launched in the early stage, the team released 38% more X2Y2 of the total reward than the original plan in the first 30 days due to the wrong parameter settings in the smart contract , resulting in token selling pressure, so the team changed the later release. It is planned that the X2Y2 released in each stage will be gradually halved, and 200 million X2Y2 will actually be released. The staking reward program is compared to the actual sell-off as follows:
Figure 4-4 Comparison of X2Y2 token pledge reward plan and actual release
Every time a user pledges or unstakes X2Y2, the transaction fee reward WETH will be automatically withdrawn to the wallet. In addition, the protocol provides the automatic compound interest function of pledge, and the contract will automatically convert WETH in the user’s account into X2Y2 and pledge it to the fund pool to increase the pledge income.
(2) Transaction Rewards
The earliest team launched the NFT pledge reward program. Users can get X2Y2 token rewards for NFTs listed for sale on X2Y2, but the incentive effect is not good and has been suspended. In April this year, the team launched the Gas fee subsidy, which compensates the gas fee of the transaction in the form of X2Y2 tokens, which has been suspended for one month. The team has undergone several changes to the token model and determined the details of the transaction reward plan in May this year. It was launched on May 1 this year, and the revenue originally allocated to the pending order reward was transferred to the transaction reward. The team expects to complete the distribution of transaction rewards within 720 days, and will distribute 624,902.8 X2Y2 to NFT traders every day, focusing on rewards for sellers, of which 604,902.8 are reserved for distribution to sellers, and 20,000 are reserved for buyers and sellers. It will be calculated and distributed uniformly at 00:00 UTC the next day, and can be claimed on the transaction reward page around 3:00.
The seller’s reward is calculated based on the actual transaction fee paid. The agreement stipulates that the transaction fee ratio is 0.5%. The seller’s reward calculation formula is as follows:
For the buyer, each purchase of NFT will receive a fixed number of points. Only buy orders with a transaction price of not less than 0.01 ETH can get points. For users who do not hold AYOR NFT, they can get 1 point per buy order; for users who only hold AYOR NFT, but the NFT is not obtained from ILO A buy order can get 2 points; users who hold ILO to obtain AYOR NFT can get 4 points per buy order; each buyer address can get a maximum of 20 points per day.
The agreement is based on the purchase points of the buyer on the day as the distribution standard. The calculation formula of the buyer’s reward is as follows:
Transaction mining is the use of token incentives to promote transactions. It can form a positive cycle in the initial stage of the launch. Users will continue to trade on the platform in order to obtain rewards, which will lead to a significant increase in transaction volume, so that the platform fee will increase and the fee will be distributed. For those who pledge tokens, the increase in pledge income will attract more holders to pledge tokens, and the price of tokens will rise, which further promotes the increase in transaction mining incentives, thus forming a positive cycle. In the short term, transaction mining can attract a large number of users and transaction volume to X2Y2, but from a long-term perspective, it cannot bring sustainable development. When the giant whale users flooded into the market, they squeezed retail investors’ trading mining space by setting up NFT transactions with inflated transaction prices, and then used the left-handed to right-handed method to complete the transaction to obtain transaction rewards. This process did not substantially benefit the platform. Bringing liquidity has not brought effective users to the platform, and also squeezed the enthusiasm of retail investors to participate in transactions. The transfer cost of users on the trading platform is low. Once the transaction reward drops, it will likely lead to the loss of users and the decline of the pledge reward, which will lead to a drop in the currency price and fall into a death spiral.
4.1.5 Analysis of currency holding address
Figure 4-5 X2Y2 currency holding address analysis
From the data of etherscan.io, X2Y2 currently has 7,123 currency holding addresses, the top 100 holdings account for 99.77%, the top 10 holdings account for 99.35%, the first address accounts for 34.28%, and the second Addresses account for 31.20%. Overall, the current concentration of currency holding addresses is relatively high.
Among them, there are 9 contract addresses in the top 10 addresses, accounting for 97.49%. Deducting this part, the top 100 addresses account for 2.28% in total. Considering the first place is the address of the transaction reward; the second place is the NFT pledge The address of the reward; the third place is the unclaimed X2Y2 airdrop address, so the concentration of large households is relatively low, and the current X2Y2 currency holding addresses are relatively scattered.
4.2.1 Token usage
X2Y2 currently has no clear purpose. The protocol focuses on community users, and the community votes to participate in the modification of the economic model. The team promises that it will be managed in the form of DAO later.
Summary: X2Y2 conducted a vampire attack on Opensea through airdrop tokens. The initial team hoped to quickly increase the liquidity and launched a pending order reward, but the incentive effect on the transaction volume was not obvious and was cancelled. After several revisions to the economic model, the team launched a transaction mining reward in May this year. It can form a positive cycle in the short term and quickly attract user traffic, but it cannot bring sustainable development to the platform in the long run. Whale users enter the market to swipe orders for arbitrage, which squeezes out the transaction rewards of retail investors, and does not bring effective users to the platform; on the other hand, the user transfer cost is low. Once the rewards drop, users are likely to lose users quickly, and the transaction volume of the platform will drop sharply. A negative cycle that leads to a further decline in transaction rewards; it can be seen that transaction rewards are only an early means of acquiring customers and cannot form the moat of the platform.
5.1 Industry Overview
The subdivision track of X2Y2 is a comprehensive NFT trading platform built on Ethereum.
5.1.2 Status Quo
(1) Rapidly growing NFT market
The market for non-fungible tokens (NFTs) took 21 years by storm with explosive growth in transaction volume and users. According to the statistics of NFTGO, it can be seen that the NFT transaction volume and market value on Ethereum have grown rapidly in the past year, especially in the second half of 21, the market experienced a relatively large growth. At the beginning of this year, in the case of the falling market conditions of Bitcoin and Ethereum, the NFT trading market once again ushered in explosive growth. A large number of funds and users continued to pour into the market, and the market value and trading volume once again broke through record highs. In recent months, the NFT market on Ethereum has also declined along with the decline in the entire cryptocurrency market, but the total transaction volume is still higher than in 21 years. At present, the trading market value of the NFT market on Ethereum has reached 24.63 billion US dollars, and the seven-day trading volume has reached 292 million US dollars.
Figure 5-1 Trend chart of NFT market value and transaction volume on Ethereum
It can also be seen from the figure below that the number of NFT users has grown linearly since 21 years. The number of addresses holding NFT in June 2021 was about 470,000, and the number of NFT addresses that had bought or sold at least once a year was only about 3,000; but as of July 22, the addresses currently holding NFT There are more than 2.79 million addresses, and more than 1.39 million addresses have been bought or sold at least once within a year, showing a huge increase in the number of users. Recently, with the continuous decline of the entire crypto market, the NFT market has been affected, and the number of transactions has dropped.
Figure 5-2 User change trend chart on Ethereum
(2) Competitive landscape of NFT trading platforms
The competition of NFT trading platforms is also becoming more and more intense with the entry of users and funds. Opensea, the leading NFT comprehensive trading market, is currently the largest NFT trading platform, covering various types of NFTs, accounting for more than 80% of the comprehensive NFT trading market share, with the best liquidity, and is the platform of choice for most NFT players. It received US$300 million in financing in early 2021, and the market has opened up the imagination of the NFT comprehensive trading platform, and Opensea is facing the impact from emerging exchanges.
Looking back at the development of NFT trading platforms from a vertical perspective, it can be roughly divided into three stages: first, each public chain began to have its own native NFT comprehensive trading market; second, different challengers began to appear on each public chain, including the level There are countless imitation disks competing with the top projects on the public chain; the project that finally wins the competition on each public chain will consider expanding into other public chains to further expand its market share. Although major public chains are competing with Ethereum for liquidity, some projects currently occupy a certain market share. For example, the total transaction volume of Magic Eden, the largest NFT trading market on the Solana chain, has exceeded 1.5 billion US dollars, and has recently completed 130 million US dollars. However, the main funds and users of the NFT market are still on the Ethereum chain. Ethereum is the main battlefield for NFT transactions and the main battleground for exchanges.
At present, the top three exchanges with market share on Ethereum are Opensea, LooksRare and X2Y2, but as a whole, Opensea is still the only one. LookRare and X2Y2 were born at the beginning of this year. They both adopted vampire attacks to compete with Opensea for market share. They sent airdrop tokens to early Opensea users to attract users, and launched pledged tokens to distribute transaction fees and transaction mining. Mining and pending order rewards are used to attract users to participate in platform transactions. In the NFT bull market at the beginning of this year, both of them quickly gained user traffic, but the way of token incentives still cannot shake Opensea’s leading position.
Figure 5-3 Market share of major NFT exchanges on Ethereum 
With the active NFT transactions and the influx of funds, the demand for aggregators has emerged, and the use of NFT aggregation exchanges has brought traffic to emerging exchanges. Faced with challenges from emerging exchanges, Opensea officially tweeted in April this year. Wen announced the acquisition of Gem, an NFY transaction aggregator. Gem is currently the largest NFT transaction aggregator. It integrates NFT pending orders on multiple platforms including Opensea, Rarible, X2Y2, LooksRare and NFTX. Users can purchase NFTs in bulk through Gem, thereby saving Gas fee. Opensea used acquisitions to gain strategic initiative. It holds the largest NFT aggregator. Most of the exchange’s traffic still needs to rely on Gem, which is equivalent to relying on Opensea, and its leading position will not be easily shaken.
This article selects Opensea, which has the highest market share, and LooksRare, which also uses airdrop tokens, as the competing products of X2Y2. The following is a detailed comparative analysis:
5.2 Competing projects
Since 2018, it has been deeply cultivating the NFT track, and it has developed into the NFT trading market with the most extensive categories and the most digital commodities. The project has obtained financing from top investment institutions in the industry such as a16z, and has sufficient finances. The project has not yet issued tokens, and has a tendency to be listed on the US stock market. The chief financial officer of Opensea said in December 2021 that it would conduct an IPO. On January 4 this year, it obtained a financing of $300 million at a post-investment valuation of $13.3 billion. . On April 6 this year, Opensea officially launched the NFT based on Solana and priced in SOL. This is the fourth blockchain network supported by Opensea after Ethereum, Polygon and Klaytn. Recently, the platform announced the official launch of Solana Launchpad to support creators to mint NFTs on the Solana chain. Affected by the falling sentiment of cryptocurrencies, the team announced that it would lay off 20% of its staff to survive the crypto bear market. Co-founder Alex Atallah also announced that he would resign on July 30.
Founded at the beginning of this year, it was officially launched on the Ethereum main network on January 11. The protocol token LOOKS was launched at the beginning of the launch, airdropped to Opensea users, and then started transaction mining activities to attract users. The actual transaction volume is at the peak. It reaches about 28% of Opensea. Before the launch, the team also raised funds from early investors through strategic sales, including Danhua Capital, well-known NFT player Dingaling, and some Twitter influencers, and used their community influence to complete the initial marketing. The team announced the cooperation with Aggregate Gem in March this year, and the transaction volume increased instantly; more than four months after the launch, the team launched a pending order reward to stimulate the transaction volume. Recently, the platform announced the integration with Coinbase Wallet, and the team is currently continuously improving the functions of the platform.
5.3 Elements of Competing Products
5.3.1 Operation strategy
Opensea has cooperated with many NFT projects in the early days, and has established a huge trading market with rich projects and a large number of users. Last year, the trading volume reached 14 billion US dollars. Recently, it has also expanded its own network deployment to open In addition to the NFT market, other NFT trading markets are taking their own measures to compete for users of Opensea. At the beginning of this year, Opensea completed financing at a valuation of 13.3 billion US dollars. The team CFO said that Opensea was planning to go public, hitting users who had strong airdrop expectations in the market. , as well as a series of mining rewards to compete for market share.
X2Y2 was officially launched in February this year, and a series of operational strategies have been implemented to compete for Opensea’s market share: 1) First, raise funds through Initial Liquidity Offering (ILO) in the early stage of the launch, and obtain a whitelist by lottery , Participating in ILO to obtain token transaction fee rewards and official NFT, holding official NFT can get more reward ratio in transaction mining. This kind of fundraising method allows users to be bound to the platform. Driven by interests, early Users go to the community to promote. 2) Secondly, X2Y2 launched the pending order reward for the first time to encourage NFT holders to list on the platform. When the variety of NFTs on the platform is enriched, more users will be attracted to trade. However, due to the lack of perfect rules at the initial stage of the launch, the incentive effect is not good. not good. 3) In addition, the team launched a one-month Gas fee subsidy in April to attract users to trade, but the effect was not good and was cancelled. 4) In May this year, the team officially launched the transaction mining reward. After the launch, users poured in, and the transaction volume of the platform increased significantly.
LooksRare was launched earlier than X2Y2, and has set up a collection rule for token airdrops. Users need to place an order to receive tokens. This measure has brought a group of new users to the platform. Compared with X2Y2’s ILO, LooksRare uses strategic sales to raise funds from early investors. Early investors are well-known players in the NFT industry and some Twitter giants, hoping to use their influence in the community to complete early marketing. The team launched transaction mining in the early days of the launch, and the transaction volume soared. The data once surpassed Opensea. However, with the halving of mining rewards in the later period, the market share dropped significantly. The team changed the incentive strategy in April this year, and launched a combination of reward for pending orders, mining rewards and rewards for pending orders.
Summary: The biggest difference between the mining incentive plan adopted by X2Y2 and LooksRare is that X2Y2 has changed from a pending order reward to a transaction reward, and LooksRare has launched a pending order reward based on the earliest transaction reward.
Pending order rewards are unilateral incentives that encourage sellers to place orders for NFTs on the platform. When there are more types and quantities of NFTs that can be traded on the platform, it can attract more users to trade. It can be seen from the launch of the pending order reward when X2Y2 goes online, the incentive effect it generates is not good. On the one hand, users who have a real demand for selling NFTs will be more inclined to choose to place orders in Opensea, because Opensea’s high traffic will make it faster. On the other hand, users who simply want to obtain token rewards through pending orders will set a high price to ensure that NFTs will not be traded, which only increases the number of pending orders and does not promote transactions significantly.
Transaction mining is an incentive for buyers and sellers, and users are attracted to buy and sell transactions through token incentives. Transaction mining can quickly solve the problem of cold start of the project, attract users to experience the product and promote the increase in transaction volume. It is a good customer acquisition strategy in the short term, but it will also bring about the problem of fake transactions. When arbitrageurs find that the token reward income is greater than the transaction cost, one of the ways to participate in mining is to select an NFT with no creation fee, set a high price for pending orders, and then buy and sell through the left-handed and right-handed way to achieve transaction mining. This approach does not actually bring real liquidity to the platform, and it also squeezes the trading rewards of real users. When the transaction mining starts for a period of time, the influx of new users will gradually decrease, but the platform has accumulated a certain user group, and the transaction volume will remain relatively stable for a period of time, and the length of time that can last depends on the transaction mining. Design, once the incentive reward drops, it is easy to lead to a negative cycle of rapid decline in transaction volume and decline in pledge income. Both X2Y2 and LooksRare have the problem of brushing transactions. The key lies in how to continue to polish the product in the later stage, increase the user’s transfer cost, and prevent the loss of users from the reduction of rewards.
5.3.2 Token Mechanism
Opensea does not issue tokens, and has a tendency to go public in the US stock market. At the beginning of this year, it received $300 million in financing at a post-investment valuation of 13.3 billion, and users have lower expectations for its airdrops.
X2Y2 and LooksRare airdrop tokens when they are launched. The token allocation in the economic model design of the two is roughly the same. The main difference is the design of the initial token sale and token reward mechanism. 1) First of all, the tokens distributed through ILO in the early X2Y2 period will be linearly unlocked within 360 days; while the tokens distributed by LooksRare to early investors will be released at one time 180 days after the launch. 2) Secondly, in the transaction reward design, X2Y2 is designed to release and distribute 624,902.8 X2Y2 in a fixed amount every day, which will be distributed within 720 days, of which 604,902.8 are reserved for distribution to sellers and 20,000 are reserved for buyers, which is inclined to motivate the seller’s market; LooksRare The reward is divided into four stages, and the distribution is completed within 360 days. The transaction reward will gradually decay, and each decay will have a great impact on the platform’s transaction volume and token price. Therefore, compared to X2Y2, the transaction mining time will be longer, and the continuous fixed amount of rewards can reduce the impact on the transaction volume.
Table 5-1 Comparison of X2Y2 and LooksRare tokens
5.3.3 Market Data
Table 5-2 Comparison of market data between X2Y2 and its competitors
As can be seen from the above table, Opensea’s market data performance occupies an absolute dominant position, far ahead of the two, and its leading position will not be shaken in the short term. In terms of market share, Opensea currently occupies 83%, X2Y2 occupies 15.2%, and LooksRare only occupies 1.8%. Previously, LooksRare started trading and mining rewards after it went online. The incentive effect is remarkable, and the number of users and trading volume have been rising. However, with the halving of token rewards in April, the market share has dropped significantly; X2Y2 is a rising star, notice the trading rewards The short-term effect of , was launched four months after the launch, and the current business data has surpassed LooksRare.
Since the transaction mining reward will bring a large number of fake transactions, it is necessary to exclude this part of the brush transactions in order to obtain the real transaction volume of the platform. Since most of the blue-chip projects on the X2Y2 platform do not have copyright fees, the real transaction volume cannot be restored by excluding transactions without royalties. Therefore, this method only eliminates the frequent transactions between the two addresses. For the LooksRare platform Only excluding transactions without royalties, the following figure shows the comparison of the two:
Figure 5-3 Data after excluding some brush transactions 
As can be seen from the above figure, LooksRare performed well in the early stage of its launch, and the transaction volume plummeted after the reward was halved in May. After excluding the brush volume in this way, the real trading volume on the X2Y2 platform is about 2.3 million US dollars so far, and the real trading volume on LooksRare is about 360,000 US dollars. It should be added that the above method does not completely eliminate the brush volume, so the real transaction volume will be lower.
Then compare the transaction volume of the two by controlling the same elimination method, and at the same time eliminate the situation that the two addresses on the two platforms trade back and forth, and the following figure is obtained. As can be seen from the figure, up to now, under this exclusion method, the real transaction volume of LooksRare is around $490,000, which will actually be lower.
A comprehensive comparison of the two figures shows that even after excluding the brush volume transaction, the current transaction volume of X2Y2 is still significantly higher than that of LooksRare.
Figure 5-4 The transaction data after excluding the reverse transaction of addresses at the same time
5.3.4 Product Experience
The transfer cost of the NFT trading platform is low, and most projects are optimized based on the blueprint of Opensea. For example, X2Y2 has launched functions such as NFT batch listing, shopping cart batch purchase and peer-to-peer transfer transactions; LooksRare provides a full range of NFT one-click bidding and other functions. In addition, the handling fee is one of the important factors affecting NFT transactions. Opensea occupies a leading position and charges a 2.5% handling fee, LooksRare charges a 2% handling fee, while X2Y2 focuses on a low-price strategy and only charges a 0.5% handling fee. More friendly to user transactions.
Summary: At present, Opensea has an absolute leading edge in the NFT comprehensive trading market. X2Y2 and LooksRare have seized a small portion of the market share through token airdrops and a series of reward mining methods. The two use the transaction mining method to produce obvious incentive effects in the short term, but at the same time, there will be the problem of fake transactions, which will squeeze the rewards of real traders, and will not bring long-term sustainable development to the project. Under the mechanism of LooksRare reducing transaction rewards in stages, each reward halving will have a great impact on the platform’s transaction volume and token price. In contrast, X2Y2 adopts a fixed number of token rewards per day to reduce this impact. The platform is given a longer buffer period to polish the product. In addition, X2Y2 focuses on a low-price strategy, charging only 0.5% of the handling fee, which is more user-friendly. At present, X2Y2’s business data monetization is better than LooksRare, but how to optimize the product experience to retain users, while continuously attracting new users and new NFT projects, and capturing more traffic is the key to future development.
1) NFT valuation bubble
Previously, due to the hot NFT market, many NFTs were sold at high prices or even sky-high prices, and there was a bubble under high prices; with the development of the industry, a large number of imitation disks will inevitably appear in the future, and users need to invest cautiously. With the recent downturn in the cryptocurrency market, the transaction volume of the NFT market has dropped significantly.
2) The token reward model is not sustainable
Trading and mining rewards can attract a large number of users in the short term, but they cannot bring sustainable development to the platform in the long run. When whale users find it profitable, entering the market and brushing arbitrage will squeeze the rewards of retail investors. It does not bring real transaction volume to the platform; the user transfer cost is low, the reward drops, and users will quickly lose, and the sudden decrease in transaction volume will cause a negative cycle of further decline in rewards.
Reference X2Y2 official document “Comprehensive Interpretation of NFT Trading Platform Competitive Landscape: What is the Core Competitiveness? “”The Underrated X2Y2” “How to Shake Opensea?” An article summarizing the competition strategy of NFT trading platform ” Remarks: https://www.coingecko.com/en/%E6%95%B0%E5%AD%97%E8%B4%A7%E5%B8%81/x2y2, data deadline 1 August 2022 Day https://twitter.com/tp_x2y2%5B3%5D https://x2y2-io.github.io/api-reference/%5B4%5D https://docs.x2y2.io/developers/sdk%5B5 ] https://docs.x2y2.io/assets/files/X2Y2_Protocol_Report-93b524ab7d8e9a000efcfeec12fc4aa4.pdf%5B6%5D https://x2y2.io/%5B7%5D Figures 2-4 and 2-6 are from https://x2y2. io/eth/0xea97fC2c61B8FAF98F20ba81AA8A2CF117EB04DC/7245 https://app.traitsniper.com/straydogz-official%5B9%5D https://x2y2.io/tools/bulk-listing%5B10%5D https://twitter.com/ the_x2y2 https://x2y2.io/zh-Hans%5B12%5D Figures 3-1, 3-2, 3-3 are all from https://dune.com/zxsasha/X2Y2-NFT-Marketplace%5B13%5D https://dune.com/queries/803525/1421206%5B14%5D https://dune.com/votan/X2Y2-NFT-Marketplace%5B15%5D https://docs.x2y2.io/guides/roadmap%5B16%5D https://docs.x2y2.io/tokens/tokenomics%5B17%5D https://docs.x2y2.io/tokens/initial-liquidity-offer%5B18%5D https://x2y2.io/zh-Hans/launch%5B19%5D https://docs.x2y2.io/tokens/rewards/opensea-airdrop#how-are- airdrop-rewards-calculated https://dune.com/zxsasha/X2Y2-Airdrop%5B21%5D https://twitter.com/the_x2y2/status/1507356639615197189%5B22%5D https://docs.x2y2.io/ tokens/rewards/staking-rewards https://mirror.xyz/x2y2.eth/Y7b0e2ztQFyzlLnS4fuM15XgedkJeA6FUJdjcJ9MtE8%5B24%5D https://etherscan.io/token/tokenholderchart/0x1e4ede388cbc9f4b5c79681b7f94bed36a11 All from https://nftdo.shop/analytics/market-overview%5B26%5D https://dune.com/votan/X2Y2-NFT-Marketplace%5B27%5D https://www.coingecko.com/, until 2022 July 27th  https://dune.com/rchen8/opensea, get data on the Ethereum chain  https://pro.nansen.ai/nft-trends?platform=X2Y2%5B30%5D https ://dune.com/borgley/LooksRare-Wash-Sales-Volume https://tokenterminal.com/terminal/projects/looksrare%5B32%5D Figures 5-3/5-4 are from https://dune.com/votan/X2Y2-NFT-Marketplace
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