Upstart NFT marketplace Blur has left OpenSea in the dust – for now
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 in the process has sparked 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 the cryptocurrency, BLUR. Earlier this month, it followed through on its promise, distributing massive amounts of “airdropped” tokens in three waves meant to encourage members of its target market – professional traders – to switch over from other marketplaces.
For its Season 2, the company plans to distribute an additional 300 million tokens, teasing the idea of ”loyalty points” to encourage creators to exclusively list their NFTs on Blur for more rewards.
Thanks in part to its token airdrops, Blur has overtaken OpenSea as the most popular marketplace, with $1.04 billion in sales volume in the past 30 days, compared to OpenSea’s $479 million, according to data from DappRadar.
But it is yet to be determined whether Blur’s feat can be sustained. The competition between the marketplaces has heated up in the last couple of months – Blur gained its recent advantage by charging less.
Obscurity does not have a merchant 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 directly affected Blur until it reportedly found a loophole late last month. Last week, Blur took direct aim at the royalty enforcement tool – and OpenSea directly – by saying it would enforce full royalties for creators as long as creators block trading of their collections on OpenSea.
The NFT marketplace responded by lowering its trading fee to 0% “for a limited time”, moving to an optional minimum 0.5% royalty fee, and scrapping its royalty enforcement tool.
The changes were a bold move by OpenSea, which had promised to enforce royalties for creators after flirting with the idea of following several other marketplaces in making them optional last November.
A spokesperson said the company is playing the long game.
“While we are testing a different fee structure for our core business that reflects the needs of today’s ecosystem,” the spokesperson said in an email. “Long-term, we are invested in growing the overall 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 argued that their tokenomics is not innovative and could be bad for the NFT ecosystem as a whole by making NFTs more about profit than art.
Pedro Herrera, head of research at DappRadar, said that while Blur has earmarked 51% of its token supply for the community, the allocations are skewed.
“Unfortunately, it’s becoming clearer that only Ethereum NFT whales will be the main beneficiary,” Herrera said Fortune. “To give you some context, about 80% of Blur’s volume comes from about 500 wallets.”
A spokesperson for Blur said via Twitter direct messages that while it is true that some “whales” received seven-figure airdrops, there were also smaller individuals who received tens or hundreds of thousands of dollars from airdrops.
“If you browse Twitter you can find many examples of people tweeting that they were able to pay off student debt, loans, etc. because of 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 can emerge in the NFT world. And all that remains is to see how OpenSea will continue to respond to the threat.
“Now the question is, wen OpenSea token,” Herrera said.
This story was originally featured on Fortune.com
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