The economic model of the NFT trading platform is continuously optimized. How long can OpenSea sit on the “throne”?
Recently, the LooksRare team’s exchange of WETH worth about 73 million US dollars has become a hot spot in the market, which once caused panic in the community.
In the NFT track, the competition of NFT trading platforms is the most intense. Mainstream L1 public chains have launched NFT trading platforms, such as Magic Eden (Solana), Treasureland (BSC), PiantSwap (Fantom), etc., and the top centralized exchanges have also launched their own NFT trading platforms, such as Binance, Coinbase, FTX, etc.
Thanks to the prosperous ecology, the NFT trading platform on Ethereum has an advantage in terms of transaction volume and number of users. According to DappRadar data, as of February 16, the top two transactions in the past month are LooksRare and OpenSea on Ethereum, which are 56 times and 15 times that of Magic Eden on the third-ranked Solana ecosystem, respectively.
In addition to LooksRare, the challengers to OpenSea in the Ethereum ecosystem have never stopped. From the early boutique art trading platform SuperRare, the multi-chain NFT trading platform Rarible, to the recently popular “transaction mining” NFT platform LooksRare, and the first “NFT pledge mining” X2Y2, etc.
LooksRare has risen to prominence with its sophisticated economic model, and while the vast majority of transactions come from incentives, it has now become OpenSea’s biggest competitor. After analyzing the economic model of the above-mentioned NFT trading platform, PANews found that:
1) The project party gradually benefits the community. The handling fee charged by the NFT trading platform belongs to the project party in the early stage, and gradually transitions to the community treasury. The recent projects LoosRare and X2Y2 directly return the handling fee to the platform token pledger.
2) The ability to capture the economic value of platform tokens has been improved. From the early days, platform tokens were limited to voting governance rights, and now token holders can also receive token rewards, as well as platform transaction fee dividends.
3) The proportion of total tokens allocated to the community has increased. The proportion of tokens allocated to the community has continued to increase, from 40% of SuperRare to 80% of X2Y2, gradually reducing the proportion of investors, and even de-VC. For example, X2Y2 claimed that it did not raise institutional financing.
4) Optimize the incentive scheme for improving liquidity to reduce speculators’ brushing behavior. From Rarible’s launch of market liquidity mining, to LoosRare raising the transaction threshold for obtaining rewards, and X2Y2’s launch of the new “NFT pledge mining”, the incentive scheme to encourage users to trade and increase liquidity is constantly being optimized to slow down speculators’ brushing. quantitative behavior.
In the face of new competitors whose economic models are constantly being optimized, the challenges facing OpenSea, the leading NFT trading platform, are intensifying. According to Dune Analytics data, LooksRare has been leading OpenSea in transaction volume for nearly a month after going live. As of February 15, the OpenSea platform’s market share fell to around 47% from around 98% previously, and was once as low as around 17%.
Although LooksRare launched the “transaction mining” incentive, which stimulated speculators to brush transactions, causing the transaction volume to exceed OpenSea to a certain extent. In terms of the number of users and transaction volume, OpenSea still holds the leading edge. However, LooksRare has a short launch time and is still in the early stage of development. With the launch of a new NFT trading platform, OpenSea, which has not yet launched a token, may face more intense competition.
This article, PANews, will introduce the changes in the economic model of NFT trading platforms in detail by analyzing the main competitors of OpenSea.
SuperRare is an old-fashioned NFT comprehensive trading platform on Ethereum. It aims to provide a platform for crypto art lovers to exchange and collect. Compared with the comprehensive trading platform OpenSea, SuperRare is more inclined to serve real and high-quality works of art.
The governance token of SuperRare is RARE, and its economic model is as follows:
- The community treasury accounts for 40%, of which 25% is unlocked and circulated when the token is issued, and the remaining 75% is unlocked linearly within 4 years;
- Airdrop accounts for 15%, no unlock period;
- The team accounts for 25.5%, and it will be gradually unlocked in 3 years after 12 months of lock-up;
- Investors account for 14.5%, and they are gradually unlocked in 3 years after 12 months of lock-up;
- Strategic partners and future contributors account for 5%, with an unlocking period of at least 6 months.
SuperRare Spaces is an independent trading gallery on SuperRare (equivalent to a store on Taobao), which is voted by the SuperRare DAO to decide whether to set up. Space is in charge of its own operation team, which can set different commission standards, and the obtained handling fee will be distributed to the managers of the space.
In addition to enjoying the governance rights of SuperRare DAO, RARE token holders can also choose different Spaces to pledge to obtain corresponding benefits (such as management rights, fee sharing, artwork access, etc.).
The value capture of RARE tokens is weak. The transaction fee of SuperRare has transitioned from the earliest inflow to the team to the SuperRare DAO, which is a performance of the transaction fee to give back to the community. In addition to the fees for sharing space in SuperRare Space, RARE token holders do not directly enjoy the platform transaction fee dividends, and there are no token pledge rewards, so their value capture is limited.
The drainage effect of SuperRare is weak. In the early stage of token issuance, SuperRare did not launch a reward scheme to incentivize users to trade, so it could not effectively attract users to participate in transactions like LooksRare.
Rarible is a multi-chain NFT comprehensive trading platform that has integrated Ethereum, Tezos and Flow public chains. In the second half of 2021, Rarible developed an APP version and became the first NFT trading platform to launch a mobile application. It also launched Rarible Messenger, a communication tool for users and creators, to develop social functions.
Rarible’s platform token is RARI, and its economic model is as follows:
- Marketplace mining (market liquidity mining) accounts for 60%, and is distributed according to weekly statistics. Buyers and sellers will be rewarded 50% (the number of tokens awarded each week is about 75,000), and the market will start from July 15, 2020. Liquidity mining;
- Airdrop accounts for 10%, 2% of the total amount is airdropped to users of the Rarible platform, and 8% is airdropped to all NFT holders;
- Investors and teams account for 30% (unlocking time information has not been announced yet).
Later, the community voted to change the reward of Marketplace mining (market liquidity mining), and adjusted it to 75% of the reward to the buyers and sellers of the Rarible platform, and 25% of the reward to the Rarible DAO treasury.
After a year and a half of liquidity mining, the DAO community has voted to cancel the token reward for traders on the Rarible platform from January 16, 2022, and the market liquidity mining reward will be changed to:
- 10% reward to token RARI stakers (not yet opened, this part of the reward is allocated to DAO);
- 35% reward to DAO;
- 55% of the applications will be rewarded based on the fees earned by the applications on the platform (the list will be determined by DAO voting. Once the applications with fraudulent transaction data are found, they will be excluded from the reward list). The applications on the Rarible platform are mainly to provide users with NFT-related services, such as customizable NFT storefront services, professional NFT casting services, and NFT discovery and management services.
According to the latest reward scheme, the Rarible platform can obtain rewards by staking the token RARI to obtain token rewards. In addition, the applications on the platform that obtain token rewards will be distributed according to the internal management plan.
Compared with SuperRare, Rarible has the following differences:
Introduce a reward scheme for incentivizing transactions to attract users to participate in transactions. Rarible’s reward plan is to initially distribute about 75,000 RARI tokens to buyers and sellers on the platform every week, each receiving 50%. Later, the reward was reduced to 75% of the original, and the remaining 25% was rewarded to the DAO community. The transaction reward will be cancelled from January 16 this year. The reward scheme launched by Rarible in the early and mid-launch period can motivate users to trade, improve the liquidity of the platform, and facilitate the development of the platform.
The value capture power of the platform token RARI has been improved. The token RARI will be able to participate in the pledge in the future, obtain token rewards, and increase the application scenarios of the token.
Rarible’s economic model suffers from two shortcomings:
Give speculators a chance to brush. Although Rarible’s early launch of the transaction mining incentive scheme can effectively attract users to trade, the team has not set up a transaction-related censorship system, providing speculators with the opportunity to brush the amount.
There was a lot of selling pressure in the initial stage of the token launch. In the early stage, the value capture of the token RARI is limited, and the related handling fee dividends or pledge rewards cannot be obtained. In the early stage of token issuance, there is a high probability of facing selling pressure from airdrop recipients and speculators who brush volume.
On January 10, LooksRare was officially launched and launched a transaction mining incentive plan. The transaction volume of the platform on that day reached 320 million US dollars, which is about twice that of OpenSea.
LooksRare’s platform token is LOOKS, and its economic model is as follows:
- Token rewards accounted for 63%, including transaction mining rewards (44.1%) and token pledge rewards (18.9%);
- Retrospective airdrops account for 12%, with no lock-up restrictions;
- The team, treasury and investors account for 10%, 10%, and 3.3% respectively, with a vesting period of 721 days;
- Liquidity management accounts for 1.7%, mainly to establish liquidity pools and provide LP rewards.
way of earning
Staking LOOKS tokens. In addition to token rewards for staking LOOKS, users can also get platform transaction fee dividends in the form of WETH. According to the official website information, the current APR for staking LOOKS is about 242%, of which the LOOKS reward APR is about 87%, and the dividend WETH reward APR is about 155%.
Participate in NFT transaction mining. Users who trade NFTs on the LooksRare platform can enjoy handling fee dividends. In addition to the 2% handling fee for each transaction, there is also a 5% ~ 10% royalty. At the same time, only certified NFT transactions can participate in the reward distribution, and there is a risk of losing money by brushing (to slow down speculation).
Lock up LOOKS tokens. Teams, treasuries and investors’ locked-up tokens can receive transaction fee dividends.
In order to slow down the selling pressure from airdrop recipients and transaction mining speculators in the initial stage of the token launch, LooksRare adopts a model of halving the staking rewards in stages.
Compared with SuperRare and Rarible, the features of LooksRare are:
The value capture power of the platform token LOOKS has been improved. In addition to the token rewards, the token LOOKS pledge can also share the dividends of the platform’s transaction fees, which improves the value capture ability and encourages users to hold for a long time.
The model of halving the staking reward will slow down the selling pressure in the initial stage of the token launch. Like Rarible, LooksRare has launched an incentive scheme for transaction mining, but the increased application scenarios of platform tokens, coupled with the halving of staking rewards in stages, can alleviate the selling pressure from airdrop recipients and transaction mining speculators to a certain extent.
Increase the transaction cost of brush volume and reduce speculators’ transaction mining motivation. In addition to the 2% handling fee, LooksRare also charges 5% ~ 10% royalties, and only NFT transactions certified by the platform can get token rewards, which increases the risk of losing money and slows down speculation to a certain extent. .
The proportion of the community in token distribution has increased, while the proportion of teams and investors has decreased. In the token distribution, community tokens (including treasury, airdrops and rewards) accounted for 55% in SuperRare, 70% in Rarible, 85% in LooksRare, and the proportion of teams and investors increased from 14.5% down to 3.3%.
The recently launched NFT trading platform X2Y2 has launched the “NFT pledge mining” incentive scheme, that is, users can get token rewards by listing NFTs that meet the corresponding requirements on the platform.
The platform token of X2Y2 is X2Y2, and its economic model is:
- Staking rewards account for 65%, token X2Y2 pledge rewards account for 20%, and NFT pledge rewards account for 45%;
- Retrospective airdrops account for 12%, with no lock-up restrictions;
- The team and the treasury account for 10%, and the vesting period is 720 days;
- Liquidity management accounts for 1.5%, of which 1% is used to guide initial liquidity, and 0.5% is used as LP reward;
- The initial liquidity issuance (ILO) accounts for 1.5%. It takes the form of a whitelist and locks the positions linearly for 360 days. The initial price is 1 X2Y2 = 0.0001 ETH ≈ $0.25, and 1500 ETHs are planned to be raised.
- Pledge token X2Y2, you can get platform transaction fee dividend and token X2Y2 reward;
- For listing NFT, you can get token X2Y2 reward;
- The token X2Y2 locked by ILO and the team can get the platform transaction fee dividend, in addition, ILO participants can also get the platform’s original “Ajin Youth Rebel” NFT original version;
Different from the transaction mining incentive scheme adopted by LooksRare, the X2Y2 platform launched “NFT pledge mining” to attract users to sell NFTs, aiming to solve the problem of insufficient supply side (sellers) of the platform. The token reward is calculated according to the contribution of the listed NFT to the platform, which stimulates buyers to buy because of the price heat and advantages of NFT, and slows down the behavior of speculators’ brushing.
- Promotion rewards: Hanging out newly minted or popular NFTs, etc., is conducive to the development of the X2Y2 platform, and will receive more rewards;
- Lower rewards: The price set on the X2Y2 platform is higher than other platforms, and the listing of inactive NFTs is not conducive to the development of the platform, and will receive less rewards.
In order to motivate airdrop recipients to pledge tokens and reduce the selling pressure in the initial stage of token launch, X2Y2 also adopts a model of halving the pledge rewards in stages.
Compared with the above NFT trading platforms, the features of X2Y2 are:
The incentive scheme of “NFT pledge mining” is adopted, which is more friendly to ordinary users. Transaction mining allocates rewards based on transaction volume. Large users have an advantage over ordinary users, so ordinary users can get limited rewards. “NFT pledge mining” distributes rewards according to the contribution of the NFTs listed by users to the platform, avoiding large households to sell left and right hands at inflated prices to obtain more rewards, and is more fair to ordinary users. At the same time, X2Y2 encourages users to sell NFTs, especially newly minted and popular NFTs, which is conducive to solving the supply and demand problem of platform works.
No private financing, token distribution is more community-based. The X2Y2 platform has not conducted any private financing. Through the open market pre-sale of tokens based on the whitelist system, ILO, the ETH obtained from the fundraising and 1% of the total number of tokens form an LP to provide initial liquidity. X2Y2 implements de-institutionalization, making token distribution fairer and relatively friendly to the community and users.
The competition in the NFT trading market has never stopped. Next, based on market data, we will analyze the challenges of competitors to OpenSea.
Judging from the trading volume in the past 30 days, LooksRare leads OpenSea by a large margin, accounting for about 97% of the trading volume, while the trading volume of Rarible and SuperRare is negligible. (Since X2Y2 has just been launched, no statistics yet)
Judging from the number of users of the platform in the past 30 days, OpenSea still occupies a leading position, accounting for about 94%.
To sum up, SuperRare and Rarible, which were launched in the early days, are no longer a challenge to OpenSea. The recently launched LooksRare leads OpenSea in terms of transaction volume, but there is still a significant gap in the number of users. Although LooksRare’s transaction volume growth has benefited from its launch of transaction mining rewards, compared to SuperRare and Rarible, LooksRare is still competitive with OpenSea.
At present, OpenSea, which has a first-mover advantage, is still the leader of the NFT trading platform. To challenge OpenSea, there is still a long way to go to convert these traders into loyal users after the new competing platform has gained initial users.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/in-depth-analysis-of-the-evolution-of-the-economic-model-of-the-nft-trading-market-makes-the-community-a-trend/
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