NFT Marketplace Tokens Are Rising in 2023, and Blur’s Recent Airdrop May Extend the Trend
Cumulative NFT trading volume rose in January, with data from a recent Delphi Digital report showing monthly volumes hit an eight-month high above $1 billion.
The key factor affecting NFT trading was the Blur token airdrop on February 14th. Since launching last year in Q3 2022, Blur has been rewarding users with “care packages”, which can be redeemed for tokens starting February 14 at 12:00 PM EST.
Many users have tried to cultivate these airdrops, which increases the trading volume of the platform. Since the start of 2023, Blur’s trading volume has surpassed that of OpenSea, the market leader in the NFT trading space.
Airdrops often create excitement in the market for excited users who receive free money and FOMO from those who missed out. It is likely that the next step for the Blur team will be to launch new liquidity mining campaigns, similar to Optimism, to retain volume and users. Moreover, users will also move to other possibilities in the room, similar to Blur.
On-chain data shows that whales are accumulating NFT tokens
The best NFT trading platforms on Ethereum with a native token are LooksRare and X2Y2. The year-to-date increase in the price of their tokens is 100% and 260% respectively. The tokens have outperformed the market’s average gain, which suggests that buyers are paying more attention to these tokens.
Independent analyst in the chain, The Data Nerd found that Taureon Capital collects NFT marketplace tokens. Ethereum wallets identified as “smart money” by Nansen have also significantly increased their holdings of X2Y2 and LOOKS. It shows a rising trend among sophisticated investors towards NFT marketplace tokens.
Let’s take a closer look at each platform:
X2Y2
X2Y2 ranks third in terms of NFT trading volumes on Ethereum. The platform launched its token in February 2022 and has since had steady usage. It distributes the platform’s trading fees among X2Y2 actors and encourages trading through X2Y2 incentives.
The platform has a price-to-earnings ratio of around 14, which is in the lower range of other DeFi tokens whose PE ranges between 10 and 250.
Recently, 37.5 million LOOKS tokens, representing 17% of the circulating supply, were unlocked for the development team and treasury in early February. The team reassured investors, claim“The X2Y2 team will NOT be selling any token from this upcoming unlock or any tokens unlocked so far for the foreseeable future.”
Nevertheless, the token faces risks due to inflation which will see circulating supply almost double by the end of the year. The team has also put in place a monthly burn mechanism to counteract the dilution.
The token is trading near its 2022 highs of around $0.20. If buyers can break out and consolidate above this level, more gains are likely in X2Y2.
Looks Weird
LooksRare is another OpenSea competitor that offers token stakers with the platform’s trading fees in ETH and Wrapped Ether (WETH). The marketplace has a competitive PE ratio of 11.7, which is less than X2Y2.
On-chain analysis platform LookonChain revealed prominent trader and founder of BitMEX, Arthur Hayes, owns 3.62% of the token’s total supply. Confidence among whale investors like Hayes motivates retail and other funds to follow in their footsteps.
Like X2Y2, the LOOKS token went through significant unlocks towards the end of 2022, but there are no major unlocks of the token until Q2 2022.
The price action of LOOKS suggests that the market has absorbed the recent dilution. Based on the trading levels in 2022, the token has the potential for significant upside towards $0.35 and $0.50. However, the platform needs to show an increase in usage to support further rallies.
Related: ApeCoin leads in NFT and metaverse market share, but are APE’s hefty stake rewards sustainable?
Rare
Rarible’s native token differs from LooksRare and X2Y2 in that it does not share the platform’s trading returns. The RARI token only serves as a governance token used when voting on proposals in the Rari Foundation.
The team adopted Curve’s escrow-style tokenomics, which hasn’t seen any real stake tracking yet. Apart from that, RARI can be used to trade on the platform, but its use as a payment token is limited compared to ETH and stablecoins.
The token’s price performance has reflected its poor tokenomics. Unless the Rari Foundation moves to improve the token’s utility, RARI’s performance may remain muted compared to the rest of the market.
There may also be some hidden opportunities in DeFi NFT platforms such as JPEG’d and Pine, which enable loans against NFTs as collateral.
The total NFT trading volume is less than one percent of the volume of cryptocurrency exchanges. However, it is a growing segment that is estimated to generate close to $5.9 billion by 2025. Therefore, early investments in decentralized marketplaces that share a portion of the revenue can reap handsome gains within a couple of years.
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This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making a decision.
