Messari: How will Uniswap’s acquisition of Genie under the leadership of OpenSea “break the game”?

Messari: Under the leadership of OpenSea, how will Uniswap's acquisition of Genie "break the game"?

  • OpenSea continues to dominate the NFT market landscape. Its decentralized competitors X2Y2 and LooksRare have incentivized NFT transactions and gained a certain market share of transaction volume, but they have not achieved significant user volume and volume share.
  • Uniswap’s acquisition of NFT marketplace aggregator Genie may give challengers the best chance to take on the king.
  • Even after adjusting for market cap differences, the fundamentals of other alternative NFT markets are underwhelming.

OpenSea maintained its dominance of the NFT trading market throughout 2021, with an 80% market share. Its near-monopoly position allows it to build a strong brand, maintain centralized ownership, and charge a high 2.5% transaction fees.

Recently, however, some alternatives have emerged that challenge OpenSea’s dominance. Chief among them are the X2Y2 and LooksRare , which launch in the first quarter of 2022 . Are they effectively gaining market share? Now that the NFT craze has subsided, does their native token offer a compelling investment opportunity?

Challenger appears

X2Y2 and LooksRare have marketed themselves as decentralized, community-owned alternatives to OpenSea.

The two platforms launched community airdrops in the first quarter of 2022 and have since attempted to incentivize user participation to challenge OpenSea’s dominance.

  • Both have lower transaction fees than OpenSea. OpenSea charges 2.5% per transaction, while X2Y2 and LooksRare charge 0.5% and 2%, respectively.
  • They reward users with their native tokens (X2Y2 and LOOKS, respectively) for every transaction they make to their users.
  • They subsidize gas fees and reward NFTs for listing on their platform.
  • All fee income collected by the platform is shared with token stakers.

good, bad, ugly

These alternative NFT platforms have seen some success with these initiatives. OpenSea’s average daily volume market share over the past 30 days is 47%, while X2Y2 and LooksRare’s volume share is 40% and 13%, respectively.

Messari: Under the leadership of OpenSea, how will Uniswap's acquisition of Genie "break the game"?

Above: OpenSea’s daily turnover market share has fallen below 50%

However, the volume and user volume shares of these alternative NFT platforms are much lower than their volume shares would suggest. The incentives provided by these alternative platforms ultimately benefit wash traders, leading to this discrepancy. Wash trading is profitable when transaction fees are lower than transaction incentives. These wash trades are often of high value and are carried out by a small number of arbitrageurs, thus giving X2Y2 and LooksRare a high volume market share. As a result, OpenSea has a higher market share of both daily user volume and transaction volume over the past 30 days, both at 92%. As shown below:

Messari: Under the leadership of OpenSea, how will Uniswap's acquisition of Genie "break the game"?

Above: OpenSea’s daily transaction volume and user share still exceed 90%

OpenSea’s huge success seems to come from a strong brand moat, as can be seen from Google search trends. “OpenSea” is a more popular search term than “LooksRare” or “X2Y2”. So far, these alternative platforms have not found a way to challenge the OpenSea brand, even with their incentives and lower costs.

Messari: Under the leadership of OpenSea, how will Uniswap's acquisition of Genie "break the game"?

Above: OpenSea’s brand appeal makes it a top search term 

Elf in a Bottle

While the prospects for these alternative platforms look bleak right now, help may soon be available. Uniswap Labs recently announced the acquisition of NFT marketplace aggregator Genie. Genie, owned by Uniswap, has the potential to erode OpenSea’s brand moat, providing an avenue for these alternative NFT platforms to compete.

In the crypto space, whether it is DEX aggregators like 1inch and Matcha, or NFT aggregators like Gem and Genie, aggregators have yet to capture a significant market. They also face the same problem of not being able to attract a broad user base and overcome the brand moats of existing brands.

Messari: Under the leadership of OpenSea, how will Uniswap's acquisition of Genie "break the game"?

Above: Aggregators occupy only a small market share in both the DEX and NFT markets.

However, this time may be different. Uniswap is probably the only Crypto application other than OpenSea that has successfully developed a brand for a wide range of non-local users. Of the 4.8 million wallets traded through DeFi platforms on Ethereum, more than 4 million wallets traded on Uniswap. The next most popular DeFi app, SushiSwap, has only 500,000 interactions with its wallet as of this writing. By comparison, OpenSea has a total of 1.9 million traders.

Testing the popularity of smart contract applications on Google Search Trends shows that Uniswap’s peak popularity is much higher than any other application except OpenSea. As shown below:

Messari: Under the leadership of OpenSea, how will Uniswap's acquisition of Genie "break the game"?

The popularity of Uniswap will bring a lot of attention to Genie, far more than other aggregators in the Crypto space. Additionally, Uniswap Labs has a proven track record in developing user experiences that have attracted a broad user base that may be recreated at Genie.

Backed by Uniswap’s popularity and execution, Genie may succeed in becoming the platform of choice for NFT trading. As an aggregator, Genie will present the best-priced NFTs to users of the NFT marketplace. As such, transaction fees will be more important than branding and may tip the scales in favor of other alternative platforms.

Profitability & Valuation

In its latest funding round in January 2022, OpenSea was valued at $13.3 billion. By comparison, X2Y2 and LooksRare’s fully diluted valuations of $164 million and $276 million, respectively, are much lower.

However, cheap doesn’t necessarily mean attractive. Unlike OpenSea, both of these alternative NFT platforms (i.e. X2Y2 and LooksRare) are collectively in the red, meaning they pay users more incentives than they earn. As shown below:

Messari: Under the leadership of OpenSea, how will Uniswap's acquisition of Genie "break the game"?


Even though X2Y2 and LooksRare’s market caps are a fraction of OpenSea’s, they have both failed to impress on fundamentals. Gross profit close to zero means that the actual user trading volume is lower than the platform’s daily trading incentives. When the daily incentive paid by the platform is much higher than the fee income, it makes financial sense for arbitrageurs to pay the platform in a wash trade.

However, at such low valuation levels, any improvement in market sentiment, NFT volume or market share has the potential to provide significant upside for these alternative platforms. Uniswap’s acquisition of Genie could benefit these alternative platforms. As previously mentioned, this could erode OpenSea’s brand moat and allow these alternative platforms to shine. As Robinhood and Zerodha have demonstrated in traditional finance , lower commission fees tend to prevail as more users are brought in with a better user experience.

Valuation Notes

LooksRare will have strategic sales, team and vault token unlocks in July. This will increase its token supply by ~18%. Since we used FDV (Fully Diluted Valuation) in our calculation, it does not affect the calculated multiple.

Additionally, as the Crypto price has experienced a significant correction since OpenSea’s financing, our valuation of OpenSea may be significantly higher than its current fair value.


OpenSea’s branding allows it to outperform alternative platforms X2Y2 and LooksRare, even with its high fees and centralized ownership model. Currently, loss-making X2Y2 and LooksRare are trading at much lower valuations than profitable OpenSea. However, Uniswap’s acquisition of Genie could provide a way for these alternative platforms to compete with OpenSea on price rather than brand.

Posted by:CoinYuppie,Reprinted with attribution to:
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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