Opensea Goes BLURRR: How Blur Captured 40% Market Share and 10xed Volume
The NFT marketplace wars are heating up as Opensea has been the dominating force since 2021, and other competitors – such as Looksrare - have continued to take a bite out of their market share.
Many have been calling for a better Opensea for a long time, as the platform has many UX issues. However, even with all its flaws, Opensea still was considered the market leader until now.
Enter Blur, the NFT marketplace that suddenly has 10x the volume of Opensea as they scramble to catch up.
But how could Blur start from 0 and become the leading NFT marketplace seemingly overnight?
Background on Blur and Their NFT Thesis
According to Pacman, the founder of Blur NFT marketplace, they've been building for 400 days, roughly a week after Looksrare went live.
What differentiates Blur from its competitors is its thesis on the NFT market, which led to its decision to target pro-NFT traders instead of retail.
While retail traders will pay more fees, pro traders command the majority of the NFT exchange volume across web3.
In fact, some believe up to 95% of the trading volume in crypto is from the top 1% - 5% of traders and that it could be even more concentrated in the NFT market due to massive market inefficiencies.
While Pacman fell in love with NFT trading, he was left unimpressed with the infrastructure and user experience during the 2021 bull run – no platform catered to the pro-trading demographic.
In NFTs, there really are only two personas that matter – retail and pro while everyone else falls in between.
NFTs mirror the same market trend that crypto went through in its early days, where only a few marketplaces that targeted a retail audience existed. There weren't any institutional investor or pro trader offerings until around 2018 - 2019, when Binance came into the picture.
Today, multiple exchanges cater to pro traders and institutional investors as the market matures. So, Blur decided from the very start to target pro-JPEG traders instead of retail (Opensea's primary demographic).
At the end of the day, NFT buyers and sellers go where the liquidity is, and in web3, liquidity = attention.
UX First Mentality
Blur stayed in beta for five months before they finally went live.
Why?
They wanted to ensure they had built out optimal retention funnels before executing a series of airdrops; most users would leave once it was completed.
During the bear market, even the most popular NFT platforms, like Opensea and NBA Top Shot, lost a significant amount of volume and users as the market cap of web3 plummeted.
For the user experience, they decided to focus on two areas: speed and bulk execution.
Even retail traders think Opensea is slow, clunky, and difficult to use. In addition, the experience is incredibly confusing for new users looking to bid on NFTs, as you have to wrap and unwrap ETH.
They removed the need to wrap ETH by creating bidding pools, where users locked their Ethereum and never had to wrap or unwrap, which allowed them to buy, sell, and trade much faster than they could on Opensea.
As it stands now, there is $135 million in ETH in the Blur bidding pools. So, if users want to take advantage of this simple improvement in UX, they have to leave their ETH in the pools, which also locks in real liquidity on the Blur platform.
This UX also allowed them to incentivize liquidity over volume by rewarding users for their bids.
Incentivizing Liquidity or Volume
What does it mean to incentivize liquidity over volume? The best example is Looksrare, which launched a week before Blur even started building and had a massive head start in attracting pro traders to their platform.
Looksrare rewarded generating trading volume by giving users a rebate on all of their trades which commanded a crazy amount of volume. However, to this day, 95% of Looksrare volume is supposedly wash trading.
This isn't considered organic liquidity.
Blur incentivizes people to bring real, organic liquidity with the bid and the ask. In addition, with every bid and ask, users, earn loyalty points, and they can maximize their loyalty score by listing NFTs lower on Blur over other marketplaces.
Bids closest to the floor are rewarded the most.
The only two marketplaces with little to no wash trading in Blur and Opensea.
The Blur Airdrop – Adding Gasoline to the fire
Leading up to the airdrop, Blur had carefully crafted a better user experience while in beta targeting speed for the pro trader demographic.
In addition, they created a way to bring real liquidity to the platform and planned to retain the users when they were finally ready to open to the public.
This is where things get very interesting and clever as they executed a phased airdrop, rewarding users for sticking with them along the way. You can read a full breakdown of the mechanics of the airdrop from an impressive article by Variant here, but I will touch on the key points below.
Blur kept users engaged and onboarded them to new product features as they were launched in phases. Additionally, they could build supply and demand by building their network in stages.
Doing their airdrop in phases also created a level of uncertainty with their user base, as the specifics were only known once launched. As a result, they used care packages to provide users with short-term rewards through care packages to keep users satisfied until the next airdrop.
Additionally, each subsequent airdrop was worth more than the next, creating an incentive to keep participating. According to a study linked in the Variant article, researchers found that an uncertain reward generates greater motivation and effort.
They also had tiered care packages of varying rarity levels, which added an additional layer of gamification, adding more incentive for users to get care packages of greater rarity.
Random users could also get care packages if they retweeted announcements. If you wanted to open a care package or claim the airdrop, you also had to tweet it out.
To get off the waitlist to join the early beta, users needed to accrue as many blur points as possible, which was made public through a leaderboard. So, influencers posted their referral links, resulting in new users joining Blur. The more new users an existing user-generated, the more points you got, which started an invite frenzy.
All of this led to an explosion of virality, buzz, and liquidity to the platform resulting in Blur establishing itself as the NFT market leader. Blur currently sits at 40% market share, and the value of the airdrop is just over $434 million.
Opensea Scrambles to Catch Up
Blur currently commands everything you need to be successful in web3:
Attention
Liquidity
Better product features
Better UX
They obviously caught Opensea completely unaware, magnifying their flaws and forcing them to catch up by overreacting.
Opensea has dropped fees to $0 and has copied some of Blur's features. That said, Blur is still in the woods.
In web3, everything is volatile and moves fast. Because you're an established market leader, a clever growth hack is all it takes for the competition to overtake you.
It remains to be seen if Blur can maintain liquidity on the platform. Historically, an airdrop leads to massive token dumping, which has already happened. Once the initial group of people dumps, the strong hands come in and buy the token.
This is playing out similarly for Blur, but no one truly knows if their growth hack and retention optimization will lead to sustainable growth for their platform.
Anyways, do you think Blur maintains the lead, or will Opensea catch up?
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