LooksRare team “cash-out” leads the storm

Under the “exposure” of Twitter netizens, the members of the NFT trading platform LooksRare publicly admitted that the team obtained profits by staking the platform’s governance token LOOKS.

On February 8, netizen “tradfi guy” tweeted that the LooksRare team had cashed out 23,116 WETH worth about $73 million, most of which went directly into the currency mixing tool Tornado Cash.

The news of “Breaking News” continued to ferment in the following days, and some netizens were worried that the LooksRare team would have the problem of cashing out and running away. LOOKS also fell from around $3 to $1.9 today, a drop of more than 40% in 7 days.

It was not until February 14th that Zodd (screen name), the co-founder of LooksRare, responded to the thread that the amount disclosed by the “tradfi guy” was incorrect. It should be close to 10,500 ETH, which was allocated to more than 10 full-time members because the team was in Worked for 6+ months with zero compensation, shared over 7-figure costs before product launch, and used Tornado Cash to protect the privacy of the anonymous team, “We’re not going anywhere: we haven’t even started …The team LOOKS distribution cycle is 2 years, and the future looks bright.”

Zodd’s response reassured some. Pledging LOOKS on LooksRare to earn transaction fees settled in WETH is one of the platform’s public incentive measures, and can even be regarded as one of the competitive means for LooksRare to surpass the trading volume of the giant competitor OpenSea, which has no transaction procedures. Fee “dividend” mechanism.

At present, the LooksRare team is making money in the same way as users. Some users think this is understandable, and some users have higher expectations, hoping that the team can manage funds more transparently.

LooksRare members’ cash-mixing leads to panic

Twitter netizen “tradfi guy” has been paying attention to the team income of NFT trading platform LooksRare.

As early as January 24, 2 weeks after LooksRare went live, he tweeted, “The LooksRare team has cashed out 9169 WETH (over $25 million) in less than 2 weeks. The team’s ingenious The thing is, they get paid a lot in WETH instead of LOOKS.”

WETH is the encapsulated asset of ETH, the native encrypted asset of the Ethereum network. Since ETH is not a “token” under the ERC-20 standard of the Ethereum network, it cannot be directly exchanged in the application on the Ethereum chain. Circulating in the application, it is encapsulated (converted) 1:1 into WETH, and the value is the same as ETH.

On February 8, when LooksRare was launched for nearly a month, the “tradfi guy” updated the data on Twitter, saying that the team member had cashed out 23,116 WETH, worth about $73 million, not including the platform governance token. The value of LOOKS, while most of the WETH goes directly to Tornado Cash.

Tornado Cash is a non-custodial Ethereum privacy solution, also known as a “mixer” by the crypto community, that hides the details of users’ transactions on the blockchain by breaking the on-chain link between source and destination addresses. Protecting users’ transaction privacy is the original intention of this tool, but it has gradually become a “money laundering (currency)” tool for criminals.

“Team’s huge revenue” flows into “coin mixing tool”. These two keywords in the latest tweet of “tradfi guy” aroused panic among users. Some users are worried that the LooksRare team will run away with money.

According to Coingecko, an encrypted asset trading data website, since February 8, LOOKS continued to decline in the previous downward channel. After oscillating around $3.1-3.8 for 4 days, it fell below $3.

LooksRare team "cash-out" leads the storm

The trend of LOOKS since it was launched on the secondary market on January 10

The news that the LooksRare team cashed out continued to ferment, and LOOKS also fell endlessly. On February 14, LooksRare co-founder Zodd (screen name) finally showed up and responded with a thread under the “tradfi guy” tweet.

“First of all, the amount is incorrect: close to 10,500 ETH, we have more than 10 full-time team members.” Zodd attached a link to the distribution instructions published by LOOKS, stating that the fact that the team earns WETH has never been a secret, and the LooksRare team has been in 6 Working around the clock with zero compensation for many months, until the first team WETH distribution, “I can also tell you that team members also shared over 7-figure costs before the release. WETH has no opinion, especially if there is no compensation for these months, a lot of it may also be reused to buy NFTs.”

Regarding the use of mixers, Zodd explained that they encourage everyone on the team to use Tornado Cash, “Privacy is a fundamental right, and as anonymity (the team), it’s actually a requirement, and decentralization is welcome.” As for user fears of running away, Zodd said, “We’re not going anywhere: we haven’t even started; we have goals to achieve, and enough enthusiasm and motivation to do so; financial stability removes external concerns and allows for more attention; the team’s LOOKS allocation period is 2 years, and the future looks bright.”

Zodd’s explanation calmed the doubts of some users, but LOOK still did not stop falling.

According to Coingecko data, since LOOKS was launched on the secondary market on January 10, it reached an all-time high price of $7.1 on January 20, and has been on a downward trend since then. After netizens broke the news on February 8, LOOKS continued to decline. It was temporarily quoted at US$1.9 on February 15, a drop of more than 40% within 7 days and a drop of 72.4% from the highest price.

LooksRare’s Brilliant and LOOKS Risks

In the tweet, which is divided into six explanations, Zodd tries to make clear that the more than $30 million worth of ETH is equivalent to the compensation of more than 10 members of the LooksRare team since they worked for six months, and that using Tornado Cash is to continue to keep the team anonymous. The way.

On February 7, the official Twitter of LooksRare released a tweet welcoming 2 new members to the team, and distributed the flower names and job titles of the 14 members. This means that before that, the platform had a total of 12 members, with an average monthly salary of $416,000. The salary of the personnel of this new NFT trading platform is really not low.

LooksRare team "cash-out" leads the storm

Member information published by LooksRare

As pointed out by the “tradfi guy”, the genius of LooksRare is that the realization of the team’s income does not come by selling LOOKS, but by staking LOOKS to obtain transaction fees.

The pledged governance token, LOOKS, gets 100% of the transaction fee dividend, which itself is one of the reward rules formulated by the LooksRare platform. The platform charges a 2% handling fee for all NFT sales (excluding private sales). The handling fee is not calculated in LOOKS, but settled in WETH. All WETH collected from these handling fees will be allocated on a 24-hour cycle For stakers of LOOKS.

So how is LOOKS allocated?

According to the distribution indicators disclosed by LooksRare, 12% of the total supply of 1 billion LOOKS was airdropped to the trading users of the NFT trading platform OpenSea, which is also the way the platform attracts the traffic of competing products; 64.7% of the LOOKS will be provided as rewards to Trading users, liquidity contributors and LOOKS pledgers, there are already a large number of users swiping on the platform for rewards; in addition, the founding team owns 10% of the LOOKS, the platform treasury owns 10%; and 3.3% of the LOOKS is used for Strategic sales.

According to the provisions of LooksRare, all LOOKS holders can pledge to receive fee dividends, and the team with 10% of the total LOOKS supply is of course among them. LooksRare’s team members and users stand on the same starting line in terms of the way to obtain income, and this income is a “hard currency” like WETH, not a volatile governance token like LOOKS.

From this point of view, the LooksRare team has not sacrificed the interests of LOOKS holders, and the fee income has always been the core profit source of the trading platform. The platform tries to break the way of exclusive profit of OpenSea and share the platform income with the trading users. .

Comparatively speaking, the value and function of LOOKS are also more clear after this incident. Its governance function may be much higher than the economic function, and it is firmly bound to the NFT traders on LooksRare, which means that it has a strong impact on the platform. The trading users of LOOKS are more valuable, in other words, pure LOOKS trading hype users need to bear the risk of volatility in the secondary market.

After the “cash out” of the LooksRare team members, although the co-founder responded to the controversy, some were not satisfied with the answer and asked the team to buy back the LOOKS tokens instead of retaining millions of ETH. Regarding this requirement, some people also expressed different opinions. “Users do not have the right to require team members to take out their own salary to buy back governance tokens, but the platform’s use of treasury funds should be disclosed.”

Todd supports the use of Tornado Cash by team members on the grounds of protecting privacy and decentralization, and it is a reasonable voice for users to expect “more transparency” in the use of funds on the LooksRare platform. After all, walking out of the differentiated route with OpenSea is also the reason why the outside world is optimistic about LooksRare. Ambition is not superficial, the platform needs to come up with trustworthy governance to convince its users.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/looksrare-team-cash-out-leads-the-storm/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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