Analysis of LooksRare's transaction incentive mechanism: How to treat "swiping volume"

Editor's note:Editor's note:The launch of LooksRare and the airdrop of LOOKS tokens are one of the most watched events in the NFT market recently

. Through the airdrops to Opensea users, the synchronous launch of a fully functional NFT platform, the mechanism design of pledge mining and transaction rewards, LooksRare has obtained a huge transaction volume in a short period of time, and the price of LOOKS has also been rising steadily, and it is currently reported at $4.8. However, there have also been many voices of doubt: Is the mechanism of "trading mining" just a moment of excitement, and after a wave of swiping to get rewards has passed, can users settle down? Is the flow unsustainable?

The opinion of this Twitter KOL may have some reference value @dingaling:

I see a lot of people talking about the amount of LooksRare. So did it actually happen? Yes. Is it by design? may be. Is this a bad thing? I do not think so. In fact, I think it's genius. Let's take a deeper look.

LooksRare had 4 phases of trade rewards, which lasted a total of 721 days (not a bad number).

During the initial phase, 2,866,500 LOOKS tokens will be provided to traders every day. According to the current price of LOOKS, this is 10 million US dollars.

This means that if you trade eligible collectibles on LooksRare, your trade volume will be counted towards your trade reward for the day, and you will share 2,866,500 LOOKS proportionally among all traders at the end of the day a part of.

This means that, in a brand new market, everyone will try to generate as much volume as possible to earn their share of the $10 million each day. Since the market fee is a uniform 2%, as long as the comprehensive transaction volume is less than 500 million US dollars, the person who brushes the volume can make a profit.

This is also why scammers take advantage of collectible lines that are eligible for trading rewards, such as Meebits and Loot's 0% royalties, so their washing costs are relatively low. Yes, Meebits alone has a volume of 40,500 ETH.

At this point you might be thinking, this is too bad. How can they let people earn such rewards by swiping? Developers, please think of a way! First of all, there is a cost for brushing. Each transaction will award 2% of WETH fees to LOOKS stakers.

If you traded 1,000 ETH, you will lose 20 ETH in fees. Note that by swiping 1,000 ETH, you are actually creating a 2,000 ETH swing because they are both buyers and sellers. So let's see how many tokens a person with 2000ETH trading volume will earn on the first day.

So the first day is profitable for those who brush the volume!. But there are many uncertain variables that could make it unprofitable in the future. 1) As a person who brushes the amount, you don't know how many people will follow you. 2) It is difficult to predict the price of $LOOKS at the end of the day."So now let's look at the volume"normal

The case of transacting users. I personally traded 65.07ETH on the first day and received 940.15LOOKS as a transaction reward. That's $3,500 more than I would have made on the same purchase on Opensea. So why don't you earn it?

So, as I said before, there is a 2% fee on all trade volumes that qualify for trade rewards. This fee will be shared with LOOKS stakers within the next 24 hours. Now, this helps yield a 978% APR! This incentivizes people to keep their LOOKS investments instead of selling them.

People are so mad at the spam, but I'm having a hard time understanding why. This is a free market. If there is money to be made, people will do it. What they don't realize is that it's all part of a strategy to lure traders/collectors away from Opensea.

Since trading NFTs on LooksRare is basically profitable now, the natural trading volume will continue to shift from Opensea. When this happens, the amount of mining will naturally decrease as you share your rewards with those who are not here just to mine.

The key here is that users' transactions on LooksRare need to remain profitable over the long term for network effects to kick in. How is this possible, you ask? Of course, it is the staking income supported by the WETH fees contributed by people who brush the amount.

The platform has proven to have innovative features that people love. As the user experience continues to improve, I can see more and more people making LooksRareNFT their primary marketplace. Once the real trading volume has the upper hand, the people who brush the volume will say goodbye."To wrest market share (already over 95%) from the giant Opensea, drastic steps will be needed. And that's exactly what LooksRare is trying to do. Their goal is to provide a more transparent, decentralized and user-friendly platform for everyone. That's why I've chosen to support it publicly, and I'm sure you've seen that in the few short days that LooksRare has been live. Yes, brush volume"looks like