Since the boom of NFTs in 2021, OpenSea has been the leading marketplace for both creators and traders. Now a new rival, Blur.io, is challenging the company’s dominance, and has in the process stirred up excitement during a prolonged bear market for crypto and NFTs.
But can the excitement last?
After raising $11 million in a seed round led by venture capital firm Paradigm, Blur launched its marketplace in October. Initially, it sought to attract customers by distributing “care packages” and promising loyal users future rewards in the form of its cryptocurrency, BLUR. Earlier this month, it followed through on its promise, distributing massive amounts of “airdropped” tokens in three waves meant to incentivize members of its target market—professional traders—to switch over from other marketplaces.
For its season 2, the company plans to distribute another 300 million tokens, teasing the idea of “loyalty scores” to encourage creators to exclusively list their NFTs on Blur for more rewards.
300M+ BLUR will be distributed to the community in Season 2.
— Blur (@blur_io) February 21, 2023
What’s the secret to maximizing rewards? Loyalty.
Users with 100% loyalty have the highest chances of Mythical Care Packages, which are worth 100x Uncommon Care Packages.
Here are 3 ways to maximize your loyalty👇 pic.twitter.com/Cgiemrvpxh
In part, thanks to its token airdrops, Blur has overtaken OpenSea as the most popular marketplace, sporting $1.04 billion in sales volume over the past 30 days, compared with OpenSea’s $479 million, according to data from DappRadar.
But it's yet to be determined whether Blur’s feat can be sustained. The competition between the marketplaces has been heating up over the past couple of months—Blur gained its recent advantage by charging less.
Blur does not have a trading fee and enforces a 0.5% minimum creator royalty. Meanwhile, OpenSea has a 2.5% fee and a royalty enforcement tool to ensure creators are paid the royalties they choose and can block marketplaces that have optional royalties.
OpenSea’s tool was directly affecting Blur until it reportedly found a loophole late last month. Last week, Blur directly targeted the royalty enforcement tool—and OpenSea directly—by saying it would enforce full creator royalties, as long as creators block trading of their collections on OpenSea.
The NFT marketplace responded by dropping its trading fee to 0% “for a limited time,” moving to a minimum 0.5% optional royalty fee, and scrapping its royalty enforcement tool.
We’re making some big changes today:
— OpenSea (@opensea) February 17, 2023
1) OpenSea fee → 0% for a limited time
2) Moving to optional creator earnings (0.5% min) for all collections without on-chain enforcement (old & new)
3) Marketplaces with the same policies will not be blocked by the operator filter
The changes were a bold decision by OpenSea, which had pledged to enforce creator royalties after flirting with the idea of following several other marketplaces in making them optional last November.
A spokesperson said that the company is playing the long game.
“While we’re trying out a different fee structure for our core business that reflects the needs of today’s ecosystem," the spokesperson said in an email. "In the long term we’re invested in growing the total market and diversifying our business model—through foundational infrastructure, industry-leading Trust & Safety solutions, and tools for creators and partners to build their businesses."
Despite Blur’s recent dominance, some have claimed that their tokenomics aren't innovative and could be bad for the NFT ecosystem as a whole by making NFTs more about profit than art.
1. I’m going to be 100% real here. @blur_io is bad for NFTs and CryptoArt. There have been jokes that NFTs are just “shitcoins with pictures” and blur has essentially turned them into that by creating a GUI that minimizes the actual art for NFTs into nothing. pic.twitter.com/7vAs7osOcM
— exlawyer.eth/tez (@exlawyernft) February 24, 2023
Pedro Herrera, head of research at DappRadar, said that while Blur has earmarked 51% of its token supply to its community, the allocations are skewed.
“Unfortunately, it is becoming clearer that only Ethereum NFT whales will become the main beneficiary,” Herrera told Fortune. “To give you some context, around 80% of Blur's volume comes from 500 wallets, approximately.”
A spokesperson for Blur said via Twitter direct messaging that while it's true some "whales" received seven-figure airdrops, there were also smaller individuals who received tens or hundreds of thousands of dollars from the airdrop.
"If you browse Twitter you can find many examples of people tweeting that they were able to pay off student debt, loans, etc. due to their airdrop," the spokesperson said.
The bold move to take on OpenSea after years of dominance—and in a bear market—shows that a new era of competition may be arising in the world of NFTs. And all that’s left is to see how OpenSea will continue to respond to the threat.
“Now the question is, wen OpenSea token,” Herrera said.
