While the overall crypto market has remained resilient despite the regulatory chatter, a new entrant in the NFT marketplace has shaken up this segment. Since its launch in October 2022, has captured a 78% market share of NFT transfer volume, surpassing after its airdrop on February 14th (top chart above). The platform is designed to be a leading professional trading platform for NFTs, offering a zero trading fee model and the choice of optional royalty payments.
Despite the token experiencing a value drop of approximately 13% in the past week, the airdrop brought renewed attention to the emerging competitor, leading to a 34% increase in Blur’s market share and a corresponding decrease in OpenSea’s from 36% to 15%. In an effort to counteract its emerging competitor, OpenSea implemented significant changes to its fee model and policies.
These changes include the temporary elimination of the OPENSEA fee, optional creator earnings (with a minimum of 0.5%) for all collections without on-chain enforcement (both old and new), and non-blocking of marketplaces that have the same policies as the operator filter. However, these changes had a limited effect.
This can be attributed to the contrasting user bases of the two platforms. OpenSea has primarily appealed to creators and collectors, while Blur is focused on professional traders. Through its token rewards program, Blur has effectively increased market depth by encouraging users to place bids, thereby boosting the frequency of NFT sales and enhancing the overall NFT trading and liquidity experience.
The uniqueness of NFTs means that measuring their liquidity based solely on trading volume in relation to the total number of assets may not accurately reflect the situation. Therefore, examining the daily sales frequency per unique user can provide a more precise measure of the turnover rate. For non-fungible assets, this describes the rate at which individual vendors find buyers who are willing to purchase any NFT from the collection and at what price.
In this regard, Blur is clearly leading the race with between 4 to 5 trades per user on a daily basis, while OpenSea sees an average of two daily trades per user (bottom chart, above). A higher sales frequency can create a flywheel effect, where more NFT sellers feel confident listing on Blur’s platform, creating a larger offering that attracts more buyers.
OpenSea’s move to reduce fees and royalties in response to competition from Blur could potentially lead to a paradigm shift in the NFT market. As the two primary marketplaces shift their focus from creators & collectors toward traders, it could also change the way value is created for NFTs. This shift could potentially turn NFTs from being just collector’s items into a new version of the asset class, with the potential for increased liquidity & tradability.
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