After OpenSea repeatedly revealed that it was chasing IPOs, platform traders who advocated “returning value to users” became antagonistic. So, when LooksRare, which distributes airdrop rewards to users and distributes platform transaction fees to token holders, started the war.
On January 10th, the LooksRare NFT trading market was launched, and LOOKS token airdrops were issued to eligible OpenSea users. It also introduced a 721-day trading reward mechanism. During the first month, 2,866,500 LOOKS will be distributed to all trading users every day. also. By staking LOOKS, users can share all the transaction fees on the platform.
LooksRare directly attacked the controversial point of OpenSea’s “not to distribute profits to users” and quickly gained market support. The trading volume on the launch day reached $320 million, twice that of OpenSea. Attracted by the trading rewards, in the following ten days, the trading volume of LooksRare has always ranked first on the NFT exchange.
In order to obtain more mining rewards, users often choose to buy and sell a small portion of NFT at a higher price. This has led to the average NFT transaction price of LooksRare exceeding $500,000, which is much higher than OpenSea’s $1,200.
Transaction mining has brought a lot of profits to early participants, and selling pressure is coming quickly. From January 21st to 22nd, LOOKS crashed from $7.1 to below $4, a drop of more than 40%, exceeding the decline of UNI and ETH in the same period. Due to lower trading rewards, LooksRare lost 50% of its users in one day, dropping to 969.
In fact, LooksRare’s roller coaster performance was foreshadowed. Although its transaction volume has been above OpenSea recently, the number of daily users is only 1000-2000, while the number of OpenSea users is stable between 40,000-50,000. The abnormal data performance reflects the false boom of LooksRare, and the current decline in performance is more like the aftermath of its brushing.
Although LooksRare has some improvements compared to OpenSea in terms of transaction mechanism and reward distribution, the latter still dominates the NFT market with its first-mover advantage, creators and users, and it is difficult for anyone to replace it.
LooksRare fell more than 40% in two days
OpenSea, the world’s largest NFT marketplace, has been in controversy for the past few months. Early NFT collectors and trading users contributed huge transaction fees and on-chain gas fees in this market. But it kept raising money and delivering news that it wanted an IPO, disappointing its users. It is widely expected that OpenSea will, like Uniswap, issue airdrops to all users who provide value to the platform, but this possibility is gradually diminishing.
Not long ago, a decentralized organization called OpenDAO tried to “fork” OpenSea. The project airdrops SOS tokens to all users who have traded on OpenSea, and revealed that it will create a new NFT trading market. Although OpenDAO has gained quite a bit of popularity for a while, with the lower price of SOS tokens, and the lack of further action in its follow-up. The project gradually fell into oblivion.
But OpenSea’s pain points remain. More prepared and planned careerists want to directly address user needs in order to replace them. LooksRare is one such force.
On January 10th, the NFT market LooksRare announced the official launch and issued the governance token LOOKS airdrop to users. According to the rules, users with a transaction volume of more than 3 ETH on OpenSea from June 16 to December 16, 2021 need to place an order for an NFT before they can claim it.
The airdrop is here again, and this time LooksRare is obviously prepared. When the airdrop was released, it already brought a complete NFT trading market. This new “subversion story” is even more intriguing.
With the support of its own trading market, LooksRare can do more. It offers the most traffic-attracting “killer move” in the crypto circle—trading mining. According to the mechanism, LooksRare will reward all trading users with 2,866,500 LOOKS per day in the first month. The airdrop will last for 721 days, but the number of subsequent rewards will gradually decrease.
At the same time, in order to digest these daily new token selling pressures, LooksRare has established a pledge mechanism, that is, users who pledge LOOKS can share all the transaction fees generated by the trading market, which is equivalent to becoming a platform shareholder, which is similar to Opensea’s own retention. The income approach is very different.
With products and plans, LooksRare quickly detonated the NFT market. On the day of its launch, LooksRare’s transaction volume reached $320 million, twice that of OpenSea. Since then, the transaction volume of LooksRare has remained high. As of January 22, DappRadar data shows that the transaction volume of LooksRare in the past 24 hours exceeded 500 million US dollars, ranking first in the NFT trading market, while OpenSea ranked first with a transaction volume of 180 million US dollars. second. LOOKS also once rose from $3 to $7.1.
The dazzling data made LooksRare fans shout the slogan of “subverting OpenSea”. But the “killer move” of trading and mining has always been “kill a thousand enemies and lose eight hundred.” Transaction mining has made a lot of profits for early participants. However, after getting the LOOKS reward, many people do not seem to intend to pledge it to share the handling fee. When LOOKS rose all the way to $7.1, the huge selling pressure poured into in the market.
From January 21 to 22, LOOKS crashed from $7.1 to below $4, a drop of more than 40%. This decline exceeds that of most assets in the market during the same period, with UNI falling by 28% and ETH by 23%.
The rapid shrinking of the market price of LOOKS not only caused a group of investors who bought at high prices to suffer losses, but also directly affected the activity of the LooksRare platform. DappRadar data shows that on January 22, the number of 24H transaction users on the platform dropped to 969, a decrease of more than 50% compared to the previous day.
Apparently, some users left.
LooksRare anomalous stats
So far, LooksRare has only been online for more than 10 days, but both the trading market and the token have stepped out of the roller coaster trend. Whether it is the sharp drop in the number of transactions or the halving performance of the token price, the abnormal data in the early stage has already planted a hidden danger.
DappRadar shows that in the past 10 days, although the transaction volume data of LooksRare has remained high, the number of users has been on a downward trend, and the number of users is far from that of OpenSea.
On January 11, the day LooksRare was launched, the number of users was the largest since its launch, reaching 3,200, while the number of OpenSea users on that day was 42,800. In the following days, the number of LooksRare users dropped rapidly day by day, from 1,500 on January 14 to 768 on January 21. During this period, the number of users of OpenSea was stable between 40,000 and 50,000. According to the number of users, the number of users of OpenSea was about 30 times that of LooksRare.
Unusually, despite the disparity in the number of users, the transaction volume of LooksRare is several times that of OpenSea. Even when the price of LOOKS fell sharply on January 22, its transaction volume exceeded 500 million US dollars. OpenSea volume was $143 million.
This abnormal data intuitively reflects the “false prosperity” of LooksRare due to transaction mining. Most people choose to buy or issue a very cheap NFT, and then frequently buy and sell at a higher price. It can increase the transaction volume to share more mining rewards.
This means that there is a lot of water in the huge transaction volume of LooksRare. In the case of a limited number of users, many people do not have real trading needs, and just buy and sell the same NFT repeatedly to increase their personal trading volume.
The data also reflects this situation. Data from DappRadar on January 22 shows that the average transaction price of NFTs in the LooksRare exchange market exceeds $500,000, compared to OpenSea’s average transaction price of $1,200 and Magic Eden’s $261.
“It is no exaggeration to describe LooksRare as a false prosperity.” It is also the amount of brushing. In crypto asset trading platforms such as dYdX and FCoin, the amount of brushing can at least improve the liquidity of the market. However, in the NFT trading market, since they are all self-purchasing and self-selling a few NFTs, it has little effect on the liquidity improvement of the overall market.
Looking back, LooksRare’s unhealthy data at the beginning made it inevitable that its market activity would decline and the token would fall. Today, the sequelae of swiping in the market has emerged. As the price of LOOKS continues to decline, the swiping reward also decreases. Some users believe that LooksRare may suffer further user loss in the future, and the token price is also prone to enter a downward spiral.
After a short highlight period, LooksRare had to think about how to attract users who really have transaction needs. After all, it is the correct way to catch up and surpass OpenSea through product innovation and to increase the number of users. From past experience, the prosperity brought by transaction mining often comes and goes quickly.
In fact, outside of transaction mining, LooksRare makes some improvements over OpenSea.
In terms of transaction fees, LooksRare charges 2% per transaction, while OpenSea is 2.5%; in terms of creators receiving royalties, OpenSea creators need to wait two weeks to receive income, while creators in LooksRare are in Royalties can be received immediately when the works are sold; in addition, LooksRare supports mixed payment, that is, if the user does not have enough ETH or WETH to pay for the order, he can pay with other assets in the wallet; users can also pay for a series of NFTs at the same time One-click quotation; of course, the most important difference from OpenSea is that the token holders of LooksRare can share all transaction fees in the market.
Judging from the above-mentioned mechanisms and product improvements, LooksRare is indeed prepared. However, OpenSea has obvious first-mover advantages and user advantages, and it is not easy for LooksRare to quickly catch up with the former.
An industry observer believes that, compared to OpenSea, LooksRare is like the relationship between new public chains such as Solana and Ethereum. In terms of performance and experience, the former may be better, but both OpenSea and Ethereum have already formed a head effect. With the support of many creators and developers, this is an important value barrier that cannot be easily broken.
In addition, running an NFT exchange market also requires a lot of costs. Previously, OpenSea had just completed a $300 million Series C financing. So far, OpenSea’s financing has exceeded $420 million. In addition to financing, OpenSea also has a huge daily cash flow income, and LooksRare chooses to distribute the handling fee to users. , although the support of the community can be obtained, but the financial strength of the two is quite different.
OpenSea has a first-mover advantage, with a large number of creators and users, and sufficient capital reserves. Under such “arming”, whether it is LooksRare or other latecomers, it will face various challenges if it wants to replace it. Of course, for the current LooksRare, it must first deal with the side effects of transaction mining, and when the platform is no longer flooded with false prosperity, it can gradually return to the right track.