What Blur’s Success Reveals About NFT Marketplaces

What Blur’s Success Reveals About NFT Marketplaces

Last month data aggregators reported that NFT marketplace Blur had surpassed OpenSea in terms of trading volume.

The four-month-old marketplace has seen a whopping $1.88 billion in sales volume over the past 30 days, according to Dapp Radar. Former market leader OpenSea’s volumes were $474.58 million by comparison.

Spurred by a renewed surge in activity following the release of the platform’s native token on Feb 14, overtaking OpenSea saw Blur make headlines as the underdog that toppled Goliath.

The platform has distinguished itself as the marketplace for professional traders. It has a sleek interface, analytic tools, and floor-sweeping capabilities that have made it easier than ever to perform frequent trades. On top of that, Blur offers zero platform fees and optional royalties, making it a cheaper alternative to its competitors.

However, the race to become the largest NFT marketplace is far from over and the question of how successful Blur has become — and will be — is complicated.

NFT marketplaces are currently mired in intense competition for customers, with companies slashing fees and royalties in an effort to attract and retain users. This competition has led, among other things, to the steady erosion of enforcing royalty fees, a primary source of revenue for many NFT creators who feel betrayed by the marketplaces that once championed them.

It’s a race to the bottom that is disrupting the entire NFT ecosystem.

Blur’s Niche Userbase


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Blur has overtaken OpenSea in the total value of all sales conducted through the platform. But there is debate over what the data is actually showing.

Part of what has made Blur successful is its rewards program. Traders get points for listing and bidding on NFTs and then receive airdropped BLUR tokens dependent on how many points they collect.

Without royalties and marketplace fees, there’s little except for the need to pay gas fees to stop users from “farming” points to earn tokens by buying their own listings using a different wallet.

Last month, NFT sales data tracker CryptoSlam claimed this was exactly what was happening. In an email to subscribers, it said that 1% of high-value traders drove the majority of trading on Blur.

It then decided to remove hundreds of millions of dollars worth of Blur trades from its data due to “market manipulation” and now filters it through an updated algorithm that excludes “suspicious” sales.

Between Feb 14 and Feb 25 alone, the company detected more than $577 million in wash-traded NFTs on the platform.

Sales data from Blur “misrepresents” the NFT market, according to CryptoSlam. This potentially artificial surge in sales raised the industry’s overall sales volume to the highest level since January 2022, leading some to believe that the market was bouncing back following a large drop in activity over the past year.

“What we are finding is that this is artificially propping up sales volume in a very disingenuous way for the entire NFT market,” said CryptoSlam data engineer Scott Hawkins in an interview with Forkast.

Furthermore, OpenSea remains more popular by user numbers than Blur, whose base comprises a smaller amount of more active traders. It has not only a lower number of users than OpenSea — 113,886 over the last 30 days compared to 294,146 — but critics have said that the bulk of transactions is performed by a small percentage of those wallets.

OpenSea Versus Blur

Blur’s main competitor is market giant OpenSea.

SOPA Images/LightRocket via Getty Images

Analytics aside, the data was enough to make OpenSea rethink its approach to royalties.

The company had previously been outspoken in its support of royalties, even building a tool to block the sale of NFTs minted on its platform with competitors that didn’t support royalties. In November 2022, it boasted creators had earned over $1 billion in creator fees using its platform so far that year, adding that it was committed to “helping to protect creator fees and growing them into a more meaningful source of creator income.”

Their decision on Feb 17 to make royalties above 0.5% optional was therefore a blow.

Blur and OpenSea were at loggerheads in the days and weeks leading up to the latter’s decision. OpenSea’s sales ban had affected Blur — though it found a loophole — while Blur enforced full royalties for collections that blocked trading on OpenSea.

The choice of a minimum 0.5% royalty was interesting. Blur announced something similar at the end of 2022. In a Tweet, it said it would start enforcing royalties at a 0.5% minimum on NFT collections unable to use a filter registry for enforcing royalties that the platform had adopted several months earlier. Though this affected a limited number of collections, Blur added that it would test gradually increase the minimum percentage.

The irony of NFT marketplaces right now is that even when they slash royalties, they still claim to very much support them. But in a market where everyone is cutting fees, being the one firm that doesn’t makes little sense.

Magic Eden cofounder and COO Zhuoxun Yin referred to the decision as a “prisoner’s dilemma” when his marketplace made royalties optional. The exact same phrase was also recently used by Blur cofounder Tieshun Roquerre when he was asked about royalties by CoinDesk.

Enforcing Royalties

Creators are getting caught in the crossfire between these marketplace battles. Animoca Brands chairman Yat Siu believes marketplaces are competing against each other and catering to frequent traders by infringing the rights of creators.

“Blur has demonstrated that with a strong incentive and interesting trading approach, it was able to increase trade volume significantly, but it all came at the expense of creators. It might be an innovation, but it’s not a positive one for the industry. It’s unsustainable because this takes away the lifeblood that the ecosystem thrives on, and seriously hinders the network effect,” he says.

The removal of royalties disincentivizes creators from supporting and investing in their own communities. Something like the impressive ecosystem that Yuga Labs has created with Bored Ape Yacht Club would have been impossible without royalties.

LiveArt co-founder and CEO Boris Pevzner, whose platform helps traditional artists onboard to web3 and is a portfolio company of Animoca Brands, thinks the solution is finding new ways to enforce royalties.

His company’s earliest mechanism for doing so was, by Pevzner’s own admission, “crude.” It baked royalty payments into the smart contracts of NFT collections so that they needed to be paid every time an NFT was transferred, meaning a holder couldn’t transfer it freely between their own wallets.

Since then he’s encouraged creators to also consider whitelisting systems, which have been adopted by some collections, as well as preventing those that don’t pay royalties from accessing the full range of utilities that come with an NFT.

Animoca Brands has also released creative commons license templates for use by creators with clauses that require NFT buyers to pay royalties.

For others, the issue is more nuanced. NFT creator and collector Jimmy McNelis, who goes by J1mmy.eth online, credits royalties with the success of the projects in the space because the revenue stream generated from secondary sales allows collections to continue working on providing new drops and utility to holders.

“When you remove the incentive for the creator other than them to be able to sell you an NFT at mint, you’ve now removed the incentive for them to continue to make that collection successful,” he says.

At the same time, he’s a collector and understands the desire to get a better deal. He has bypassed royalties on sales himself using marketplace X2Y2, a move which earned him a lot of flack on Crypto Twitter.

Though he doesn’t like the fact marketplaces have made royalties optional, he says it is not a black-and-white issue. How much royalties people had to pay was also increasing before the rush to remove them.

“I do think that creator royalties have gotten out of hand in a lot of cases. I don’t think that a 10% creator royalty makes sense unless you’re giving to some charitable organizations. I do think that putting some caps on creator royalties could perhaps make sense,” he says.

A Blurred Future

Blur is hardly the only company competing against OpenSea. The landscape has become much more diverse over the last year as new players enter the market. The increased competition has led to existing marketplaces having to try new things beyond the realm of royalties and fees.

“Blur would probably have grown even if it hadn’t sacrificed creators’ rights, but almost certainly not as dramatically as it did,” says Siu.

Many have branched out to offer support on additional chains, such as Magic Eden setting up shop on Ethereum or OpenSea offering support for Avalanche.

Taking a leaf out of Blur’s book, LooksRare is due to roll out its own revamped rewards system. Rarible meanwhile is pushing for more community marketplaces — branded, community-run platforms geared towards specific collections — to give them more control over the sale of their own collections.

The likes of Pevzner remain optimistic. There’s currently a lot of emphasis on the needs of traders, but in order to gain back market share marketplaces will also need to start catering more to the needs of creators and collectors.

“I believe that the current marketplace market share wars will eventually work through to a state where royalties are honored,” he says.

“Fundamentally it’s in everybody’s interest.”

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