NFT Marketplace Blur Beats OpenSea, But Will It Last?

The Web3 landscape is changing. With the explosive rise of NFT marketplace and aggregator Blur in recent weeks and months, OpenSea now finds itself in an uncomfortable and unfamiliar position: it now has a legitimate contender for the title of NFT market leader.

If Blur’s ever-growing presence since its launch last year wasn’t an indication of this change, the past month has been. In the last 30 days alone, the platform has done $1.24 billion in trading volume. And OpenSea? Almost 383 million dollars. In the wake of Blur’s token launch on February 14, activity on the platform has skyrocketed. Every day since then, the marketplace has surpassed OpenSea in trading volume by as little as $35 million and as much as $100 million.

Given OpenSea’s historical supremacy, these numbers feel like they are the wrong way around. So how did a platform that has dominated the NFT ecosystem for the last five years by a significant margin end up in this position? And what does Blur’s success mean for the wider Web3 ecosystem?

Up in a blur

It is crucial to note the important ways in which OpenSea and Blur differ. The former is intended to appeal to as broad a Web3 demographic as possible. Although it provides tools for NFT pro traders (whose focus is flipping digital assets for profit), it mainly appeals to retail buyers. Retail buyers are more interested in buying NFTs for their art or are more likely to buy individual digital tokens here and there, but not in meaningfully high volumes or frequencies.

Blur has made a name for itself by exclusively appealing to the pro-trader demographic. Platform founder Pacman admitted as much in an early January interview with Token Terminal, and it is a strategy that the company has become almost absurdly good at executing. If it sounds strange that a platform with a more narrow demographic focus is leaving the Amazon of NFTs in the dust, remember that this niche group has significant financial influence in the ecosystem.

Remember the insanely high trading volumes that Blur has been putting up lately? Ecosystem observers have noticed that 50 percent of that volume comes from fewer than 300 wallets. February 21, for example, precisely eight wallets on the platform traded 4000 ETH or more on Blur, which competes with the volume levels the entire OpenSea then during the worst days.

The high volume coming out of the platform tends to center around a handful of coveted, high-profile NFT projects whose names won’t surprise you: Bored Ape Yacht Club, Azuki, Mutant Ape Yacht Club, Pudgy Penguins, Moonbirds, Doodles and the like .

How Blur encourages loyalty

One of the biggest reasons pro traders flock to Blur is the promise to users that it will reward them handsomely with future airdrops of the $BLUR token, totaling about $300 million over the next “season” of handouts. At the time of writing, the token has a fully diluted market cap of $2.5 billion and the Blur team is more than willing to throw their financial weight around to entice NFT traders to stick with them.

Loyalty points are one of Blur’s methods of doing this. While the platform allows users to list their NFTs on other marketplaces, those who list explicitly on Blur will receive a 100 percent loyalty point. More loyalty equals more rewards in the future.

It’s not just Blur’s innovations that have drawn users to it. Collector frustration with OpenSea has always been somewhat prevalent in the NFT space, if only by virtue of the platform being the biggest name in the game. More legitimately, Web3 enthusiasts have been soured by the marketplace’s ever-changing stance on creator royalties.

As of last October, OpenSea was the platform that had paid out the most royalties to creators by a wide margin, but a controversial November announcement by the company sparked what essentially amounted to Web3’s union movement. Beyond the royalty debate, it’s no exaggeration to say that almost no one has been happy with the platform’s policy on stolen items, the marketplace’s reputation for not working well during high-traffic times, and its seemingly centralized approach to, well, basically everything.

So it didn’t help when Blur swooped in with surgical precision to seduce traders looking for a marketplace that could give them what they were looking for without all that baggage (and reward them handsomely for trading). And when Blur’s token was launched and sent into the stratosphere, OpenSea responded by cutting royalties and temporarily blocking platform transaction fees for certain collections, frustrating creatives who helped build the space even more.

Blur supporters have been quick to point out how the platform has been paying out more royalties to creators than anyone else in recent weeks. While this is true, it is partly because the marketplace absorbed a large portion of the trading volume that competitors would have otherwise channeled the royalty payments with.

OpenSea cannot lead the industry in royalties (as it once did) if the volume is transferred to other platforms. What Blur hair done better than OpenSea is to encourage people to pay full royalties on their NFT purchases through token rewards. It’s an interesting model for “enforcing” royalties in Web3 that comes with its own set of serious concerns, not the least of which is that those payouts are contingent on a platform waving a shiny financial toy in front of a small group of influential users. It’s simply too early to claim that Blur’s approach to royalties is working better than others simply because the numbers are doing well at the moment.

The problem with the numbers game

Blur’s far-reaching effects on the Web3 space are manifold, but they may not all be positive. While high volumes and high royalty payments are good for Web3, especially in a bear market, many in the space have been disturbed by the residual effect Blur’s success has had on the ecosystem.

artist Bryan Brinkman highlighted a surreal moment at Blur last week when he saw NFTs from Michael Kozlowski’s recent Art Blocks drop, Metropolis, trading on the platform even when the images of the art weren’t loading onto the site due to lag.