Blur chasing market share from OpenSea, but its success depends on upcoming governance proposals

Blur, an NFT marketplace, has seen its trading volumes and total sell-side liquidity skyrocket since an airdrop took place on February 14, 2023. The reason for the spike could be the start of Season 2 airdrops, where 10% of the total supply BLUR token will be distributed to certain users based on their activity. The team allocated 12% for an initial user airdrop in season one, which ran from the closed market launch in March 2022 to February 2023.

Blur has made a significant difference in OpenSea’s position as the market leader. Data scientist Hildobby’s analysis shows that Blur is taking market share from OpenSea and other aggregators such as X2Y2. Blur’s incentive program and advanced NFT trading features are making users switch from OpenSea to Blur.

OpenSea feels the heat

Following Blur’s lead, OpenSea has discontinued its 2.5% market fee per sale. The fact that OpenSea LLC is willing to give up a significant portion of its earnings – about $336.8 million for a year – suggests that Blur’s growth threatens it.

The two NFT giants have also recently clashed on the critical issue of creator royalties. By restricting the ability to earn full creator royalties on both platforms, creators have to choose between Blur and OpenSea to list collections.

Pacman, the founder of Blur, told Cointelegraph on Feb. 23 that OpenSea started the fight first. They were forced to retaliate with restrictive features like limited royalties on Blur if a collection is also listed on OpenSea. However, ideally, he would like both creators to be able to earn their royalties on both platforms without having to choose. It seems that Pacman wants OpenSea to succumb to the competition, and instead of fighting Blur, it should progressively accommodate the aggregator.

Blur also incentivized creators and users through the Blur token. It was also a way to offset the earnings that creators would have from royalties lost on the platform when it did not previously support them. NFT traders, on the other hand, receive token rewards for adding liquidity to the platform by listing NFTs. So far, the plan has worked successfully as Blur’s liquidity skyrocketed after the token was launched.

Blur has also gained a reputation as a “marketplace for professional traders” thanks to its innovative features for experienced NFT traders, such as scan optimization, near-instant aggregate price update, filtering based on rarity score, and gas optimization.

Blur’s success depends on governance and updates

There are two paths the BLUR token can take from here: remain a non-rendered token with governance features like Uniswap (UNI) or switch to allocating methods of accumulating value to token holders.

In its current state, the BLUR token is similar to the UNI, which puts it at a disadvantage as the market has shifted towards concepts of real yields (e.g. GMX and SUSHI) or other innovative methods of accumulating value (such as the escrow model). Curve voting system). that encourage purchase.

The underperformance of the UNI token against Bitcoin in the recent January-February 2023 crypto rally is a testament to the fact that the market is discounting non-yielding tokens. UNI rose 40% in 2023 to the top against Bitcoin’s 50% rise.

Since its inception, Blur has not charged fees on its platform. Pacman also discussed the potential accrual of value for BLUR holders by triggering the “rate switch” and directing rewards to holders.

Bidding is also a widely implemented feature that protocols use to prevent selling by providing inflationary rewards. While this strategy helps retain investors to some extent, without real yields it would likely do more damage in the long run via inflation.

The performance of the Blur token will highly depend on the decisions voted by BlueDAO. Until then, the growth of Blur in the NFT market is likely to influence the price of BLUR because investors may not want to give up the opportunity for exposure to the niche market leader. However, the overall trajectory could remain negative, similar to what DYDX experienced in 2022.

The decentralized derivatives exchange is close to implementing significant changes to its platform, including improved value accrual for DYDX holders. However, while the dYdX team is working towards the launch of V4, platforms such as GMX and Gains Network are benefiting from Ethereum’s layer 2 liquidity and LP-focused rewards and incentives.

Since the February 14th airdrop, BLUR’s selling pressure has eased considerably. Dune data scientist PandaJackson42’s Blur analytics page shows that 76.7% of BLUR airdrop recipients sold their tokens.

This suggests that the selling pressure from airdrop receivers should soon end. However, the token acquisition schedule risks dilution of investor and team token unlocks starting in June 2023 and the distribution of Season 2 rewards later this year.

Blur is well positioned to capture a big market advantage, especially considering that OpenSea’s last raise in January 2022 valued the company at $13.3 billion. Blur’s fully diluted market capitalization is currently five times lower, at $2.7 billion. The project can generate significant buying demand for its token, improving value accumulation.