As you may have heard of the infamous goliath OpenSea. which has been dominating the NFT marketplace for many years now, things are about to change. We might be seeing a worthy NFT marketplace opponent after all.
Who? None other than LooksRare.
I managed to find out some insider info about this new comer but don’t get too excited as yet. I also found out they’re ‘wash-trading’. What is this? And why you should be concerned as a user?
Read on…I’ve shared the answer to this further down in my article.
Rewards for platform users.
Just taking a look at both companies sales volume in the last 24-hours up till Mon (10/1/2022), according to a financial analytics company Dune Analytics said, LooksRare did $105 million in sales. They generated 615 ETHs in platform fees alone (today’s market price worth nearly $2 million).
What will they be doing with all this money? Share it as part of rewards with the community members. Unbelievable? Believe it!
Here’s how LooksRare reward system works.
Community members who trade NFTs on their platform stand to win big. All they need to do is stake the native token of the LooksRare platform, called LOOKS.
Trading fees collected by the protocol are distributed to LOOKS stakers as rewards. Reward rates are adjusted every 24-hours. The rates fluctuate though. At the time of writing this article the published reward rate was 912.98% APR.
According to the same analytics company, OpenSea on the other hand (which has 90% of the entire NFT market’s trading volume) did $169 million in sales. Could this mean, OpenSea needs to get worried of this new ‘kid on the block’? Perhaps.
Two reasons of being a worthy opponent.
Here are TWO reasons why I think LooksRare might be the competitor worthy of OpenSea.
(1) LooksRare is doing airdrops like crazy!
On Mon (10/1), 75,000 Ethereum address have claimed the LOOKS airdrop (worth $3500). They were even about to break the top 200 cryptocurrencies by market cap. They might get to top 100 for that matter but question is, how far can they go? Many users from OpenSea have switched to LooksRare.
Last year, the undisputed winner in sales volume was non other than OpenSea. Of the $20 billion in NFT sales registered in 2021, OpenSea captured more than 60% ($14 billion) of the market, generating an increase in trading volume of nearly 646 times from 2020’s $21.7 million.
(2) The challenge presented to OpenSea is – LooksRare is decentralized.
Traders and stakeholders have been pushing the idea of decentralization to OpenSea for a long time now. They’re saying OpenSea should at least release a token of some sort where traders can benefit from but OpenSea seems to have no plans of doing so. Bewildering!
So, I guess, LooksRare’s timing to get into market is rather timely. They see this lackluster decision from OpenSea as an opportunity and jumped right in. Just like what any other competitor in any industry would do.
OpenSea has no plans to decentralize.
You must be wondering, why OpenSea has not launched its own native token to fill the market demand is anyone’s guess.
Traders are now clearly jump shipping to LooksRare because of several reasons.
One of the major reasons is LooksRare has its own native token and the company is not greedy. They do not want to keep the platform fees all to themselves. They’re pouring it back into the community by way of rewards. Bravo!
Did you know, the 2.5% platform fees users are paying OpenSea is going into the pockets of the OpenSea team? Shouldn’t this be routed to users?
Then, there is also a lot of criticism by the Web3 community.
They’re saying OpenSea has weird policies of delisting hacked or exploit items. They are claiming to be decentralized but on the other hand want to IPO instead of releasing tokens and they’re heavily relying on centralized third parties too.
What’s with LooksRare’s ‘wash trading’?
First of, lets understand what is ‘wash trading’.
It is a practice of a company owning several thousand digital wallets whereby they will conduct “buy and sell” trades back and forth on the platform. This is of course not a natural process and because its not based on natural demand, LooksRare may get into some serious issues if left unchecked.
Then, you have the ridiculously high rewards.
The LooksRare protocol (blockchain program) is rewarding 2,866,500 LOOKS tokens (worth $10 million) per day based on volumes traded and they will continue like this for the next 30-days before reducing commissions.
What we need to observe is in the months to come, can LooksRare maintain the new traders, collectors and sales volumes?
Usually, the tactic of a company offering high rewards during launch is to quickly generate more following and sales but the question is what will happen when the rewards start to fade away? How long will the users stay on the platform? LooksRare seems to be confident with their lower 2% fees, and a handsome royalty return of 5-10% to keep their newly moved in users happy.
Whether the winner is LooksRare or OpenSea, I love what the NFT community is doing. Who would have thought NFTs would become this big. And its always healthier to have a worthy opponent in business.
Have some thoughts you’d like to share? Tell me about it in the comments section below.
(As I was about to push the publish button, this just came in: LooksRare surpasses OpenSea sales volume.)
Feature Img: George Desipris
BlockchainAcademy.asia does not have a stake in either of the companies mentioned in this article. The views and opinion of the writer is his/hers alone and does not represent the views of the stakeholder of BlockchainAcademy.asia.