Original author: defioasis

Original editor: Colin Wu

In the past month, with the overall recovery of the Crypto market, the mainstream NFT trading market has experienced four consecutive weeks of positive growth in trading volume for the first time in the second half of this year (the last time it occurred from late January to mid-February this year), with trading volume almost Doubled. This growth is significantly higher than the increase in the value of ETH, which means an increase in ETH trading volume. On the other hand, blue chip prices have also rebounded. BAYC once returned to above 30 ETH, and Azuki has risen by more than 17% in the past month. (Note: Unless otherwise specified, the trading volume mentioned below does not include wash-trade)

Data source: https://x.com/punk9059/status/1720431770804371564?s=20

Under the current market situation where ETH cannot compete with BTC in terms of growth, ETH holders are unwilling to exchange their positions for BTC. Without explicit leverage, investing in the NFT market has become a better choice. Not only did investors expect to achieve the double growth of currency standards and E-standards, but it also allowed the NFT trading market to see the dawn of a bull market.

What is worth sighing about is the tenacity of the NFT trading market. Despite the difficult market, no large trading market has collapsed; for the persistence of emerging assets such as NFT, if we look at the longer-term future, the returns may be no less than today. CEX.

The author once analyzed the competitive landscape and strategies of the NFT trading market in April this year. Looking back now, the landscape has not changed fundamentally. Blur still shows strong dominance, but more new forces have also emerged, such as OKX NFT Marketplace and Flooring Protocol. In addition, some mainstream trading market strategies have also undergone many interesting changes in response to market changes.

Knock down and rebuild, the failure of OpenSea’s empiricism the calmness of Blur

Just at the beginning of November, OpenSea announced that it would lay off 50% of its employees in order to adjust the team and reduce middle management, build operational culture, products and technology from scratch, and create OpenSea 2.0. OpenSea CEO Devin Finzer said that OpenSea 2.0 will be reshaped from multiple aspects of underlying technology, reliability, speed, quality and user experience, and will have a team that has direct contact with users.

OpenSeas layoffs are essentially strategic adjustments it has to make in response to the continued decline in revenue caused by the continued decline in market share, and the demolition and reconstruction of OpenSea 2.0 is a bit like a desperate move to regain market share.

OpenSeas criticisms can be mainly divided into two types: the product is difficult to use and slow to update; it is operated centrally and does not care about the communitys voice. However, these points that outsiders pay more attention to may not be truly realized internally. Judging from OpenSeas current layoffs, OpenSea will have a set of empiricism adapted to survival since its survival in 2017. On the whole, it will be conservative and wait for opportunities. This set of experience is closely related to the long quiet period between 2017 and 2020, and the sudden explosion of NFT transactions in 2021. Although it cannot be said that there is anything wrong with it, it also allows it to continue to lose market share to Blur. In particular, during the recovery phase of the entire Crypto market, which is not limited to NFT, it can be clearly seen that Blurs rebound momentum is much stronger than that of OpenSea, and the gap between traders who once led by 2 times is also rapidly narrowing. This is a direct reflection of OpenSeas past experience. The impact of doctrine. OpenSea realizes and suspects that past experience no longer applies.

Data source: https://dune.com/hildobby/NFTs

Although in response to the impact of Blur, OpenSea has also made some product responses and community feedback, such as following the example of Blur Bid Pool and launching a simpler Offer Wall, and launching the OpenSea Pro aggregator based on Gem, and targeting Gem Historical users airdrop NFT, but unfortunately, these products and community strategies are more like independent passive responses, rather than being connected together and lacking sustainability. This method of using NFT Drop to start projects and give back to the community has only been used by OpenSea Used this once.

On the contrary, although the team maintained a long social media silence to focus on development, the Blur product is still running in an orderly manner. Then we have to talk about Blurs core moat: individual market makers, which is also the root of the failure of OpenSeas empiricism. After the birth of Blur Bid Pool, Blur introduced individual market makers to bring strong liquidity, while points and potential airdrops continue to incentivize this behavior. Blurs personal market makers are mainly NFT OG players, NFT blue-chip top holders and NFT KOLs. They not only have strong asset strength but also have a great voice in the community. Their on-chain behavior and social media are subtle. It has greatly affected NFT players, such as Machi Big Brother, hanwe.eth and the former BAYC whale Franklin. They provide liquidity and profit from the spread around the assets true price. The liquidity they provide makes NFT transactions more efficient and brings more revenue to creators. Products can be imitated, but the chips to win peoples hearts will become more and more expensive.

It is precisely because of the existence of individual market makers that Blur appears to be very calm when facing the challenges of the new Flooring Protocol. Flooring Protocol is a liquidity solution that fragments NFT into ERC-20 μToken, launched by NFT OG player FreeLunchCapital. With the incentives of FLC, Floorings average daily trading volume is approximately US$4 million to US$6 million (excluding FLC, only including μToken after NFT fragmentation).

Data source: https://dune.com/queries/3151047/5268010

Since it is not fully applicable to long-tail assets, Flooring implements a whitelist-like permission access system. Comparing BYAC with the largest trading volume, we can find that the liquidity and trading volume guided by Blurs Bid Pool and individual market makers are not inferior to μToken applied in AMM Pool. However, the Safebox model introduced by Flooring has greatly improved the price discovery capabilities of rare NFT assets, which Blur cannot yet effectively achieve.

Data source: https://dune.com/queries/3172383/5295405

LooksRareX2Y2 Trading mining is gradually coming to an end

At the end of September this year, LooksRare took the lead in adjusting token economics, ending the transaction mining model that lasted for more than a year. From October 1st, 50% of the fees generated from LooksRare Game: YOLO and Raffles and other upcoming games will be used to review LOOKS on the secondary market, 10% will be added to the LooksRare protocol and rewards can be earned, 40% is sent to the treasury. This also means that although transaction mining has ended, for LOOKS stakers, in addition to continuing to enjoy platform transaction fees, they can also enjoy LookRare Game’s 10% fee reward. As of September 29, when the token economics modification announcement was released, 1.8 million LOOKS had been repurchased and entered the treasury.

Judging from the results, the end of LooksRare transaction mining caused the platform’s false transaction volume (left picture below) to plummet to close to zero, while the impact on the real transaction volume (right picture below) was relatively limited. On the other hand, judging from the changes in the number of traders, LooksRare traders had a large decline in early August, but after the transaction mining ended, the number of traders still fluctuated within the same range, which seems to indicate that, In the later stage from August to the end of September when transaction mining is about to end, the users who conducted transaction mining are still retained after the transaction mining ends (in October). Such changes may reflect the existence of a group of loyal users of LooksRare, or the possibility of the team closing down.

Data source: https://dune.com/hildobby/NFTs?Wash+Trading+Filter_e106ea=

Although it is impossible to completely confirm the facts, the innovative operation methods relying on LooksRare Game have created conditions for user retention. For example, Yolo incorporates Gambling elements, and Raffles is a lottery with NFT as a reward. LooksRare will provide tasks for users to participate in these mini-games to achieve task conditions and obtain gems, which can be exchanged for LOOKS. In this process, there will be some tasks related to NFT transactions, in order to stimulate the trading volume of the platform. The greater the transaction volume, or the greater the funds involved in the game, the more gems you can obtain. However, for now, users don’t seem to be willing to pay a lot of money for this.

Another platform, X2Y2, although it still retains transaction mining, also announced on the first day of November that it will reduce the daily emission of tokens by 50% starting from November 7. In April, the author pointed out that LooksRare is more focused on the internal expansion of the platforms own functions, while X2Y2 is taking the path of external expansion based on the NFT full financial ecosystem. Looking at it now, this is still the case. Also announced along with the token production reduction is the upcoming launch of a cross-chain aggregator, and the announcement that the incubated NFT trading market Dew has obtained 30% of the market share of Polygon NFT. Based on the broader NFT ecosystem that we want to build, X2Y2 token economics will surely see more adjustments in the future. As the date of full production of X2Y2 tokens (April 3, 2024) gradually approaches, the era of NFT transaction mining will also come to an end.

Regarding X2Y2, an interesting episode is that at the end of September, when Yuga Labs’ Otherside game Legends Of The Mara was launched, it was blacklisted because other NFT trading markets were unable to provide transactions with mandatory royalties. X2Y2 was therefore also blacklisted by Yuga Labs serves as the official preferred Mara NFT trading recommended market. This episode inadvertently gave X2Y2 a ​​unique advantage, but it also paved the way for Yuga Labs to create a contract-bound mandatory royalty market.

Multiple chains and aggregation

Avoiding direct competition on Ethereum, most of the platforms that adopt the multi-chain or aggregation route can achieve certain development. Among them, the leader in the multi-chain and aggregation route is OKX NFT Marketplace, and the multi-chain route is still at the forefront. There is Magic Eden. In addition, small platforms such as Element and Zonic also have good traffic support on emerging public chains.

The traffic dividend brought by the Web3 wallet built into the exchange finally exploded in the second half of this year, and the OKX NFT Marketplace transaction volume and users experienced explosive growth. Currently, OKX NFT Marketplace supports 17 public chains and aggregates the liquidity of 6 major trading markets. The current daily aggregate transaction volume of OKX NFT Marketplace is approximately between 7 million and 15 million US dollars. However, the transaction volume of its own market is still small, which is equivalent to the on-chain user traffic converted by OKX using CEX, which also benefits its aggregated Liquid market.

Data source: https://dappradar.com/dapp/okx-nft-marketplace?range-ha=30d

Magic Eden, which has experienced the ecological collapse of Solana, is still making great efforts in the multi-chain market. At the end of June, it cooperated with Helio to launch a multi-chain NFT pre-sale platform. In August, it launched a $1 million creator fund on Polygon. In September Launched Solana cNFT, and announced in November that it would cooperate with Yuga Labs to launch an Ethereum NFT trading market that is contractually bound to protect creators’ royalties. Basically every month there are big moves in multi-chain layout. However, if we look back now, Magic Edens announcement in October to suspend BRC-20 trading does not seem to be a wise choice. Its market share in Ordinals has also dropped from more than 50% to less than 5%, and was replaced by OKX.

Data source: https://dune.com/domo/ordinals-marketplaces

The multi-chain market Element has a similar idea to Zonic. Under the background of one-click chaining, it caters to the development of emerging L2 with the shortest online time, competes for users, and has active address positions on L2 such as zkSync Era, Base, Linea and Scroll. It ranks first, but the development of the L2 NFT community is still in its infancy, the transaction volume contributed is very limited, and the activity is also easily affected by potential activities related to airdrops.

Note: For articles in April, you can refer to this thread:

https://x.com/defioasis/status/1651123667248758785?s=20