The Liquidity Battle between Blur and OpenSea: The "Life-and-Death Chase" of the NFT Market

In the second half of 2022, the NFT market experienced a harsh winter. With the release of Otherdeed for Otherside exhausting the last bit of liquidity, the NFT speculation frenzy came to an end.

However, as an excellent NFT trading platform, Blur's token issuance is expected to bring some incremental benefits to the market. When the $BLUR token is officially issued, the massive airdrop rewards will inject new vitality into the market.

Several conclusions can be drawn from the data of the NFT trading platform:

1. The comprehensive NFT platform ( is mainly PFP ), which has fully outpaced art NFT platforms.

2. Blur's trading volume exceeded OpenSea before the airdrop on February 15.

3. After experiencing the peak and disillusionment of speculation in 2022, the NFT market has returned to rationality in the first quarter of 2023.

The value of NFTs comes from their function as proof of ownership, and this value does not disappear due to market downturns. Before discussing the competitive landscape of NFT trading platforms, it is necessary to first explore the value of NFTs.

Consistency and Inconsistency of NFT

NFT stands for Non-Fungible Token, which is a non-homogeneous token. Compared to the simple consistency of FT(Fungible Token), NFTs have both consistency and non-consistency attributes.

Currently, the NFTs that are actively traded in the market are mainly divided into two categories: NFT artwork and NFT PFP. With the deep integration of humanity and the internet, PFP is more suitable as an embodiment of online identity, which explains why PFP is valued more than artwork in the NFT field.

NFT artworks only possess non-fungibility. NFT PFPs usually exist in series, combining both fungibility and non-fungibility. PFP is the embodiment of pop art in Web3, and its underlying logic is "repeated subjects + random variables."

The industrialization of repetition creates commonalities, which condense communities, reflecting consistency. The scarcity of variables artificially creates inequality, marking the levels of social status. For humans who inherently pursue "inequality," the hierarchy of class disdain is a basic necessity. Consistency logically precedes inconsistency; only consistency can nurture the value foundation of PFP, which in turn generates the social discriminatory value of inconsistency. The value of PFP is proportional to the energy of the community.

The combination of consistency and inconsistency in NFTs has become the biggest challenge faced by every NFTfi project. This has led to a split in handling liquidity into two main directions: P2P(CLOB) and P2Pool(AMM). Each of these two directions is only proficient in handling one contradiction, becoming the fundamental contradiction that hinders the development of NFTfi.

NFT Royalty Issues

The contentious issue of royalties in the industry can be interpreted more clearly within the framework of consistency and inconsistency.

NFT artworks carry the artistic value and unique expression of the artist, focusing more on collectible value rather than high-frequency trading. Throughout the lifecycle of an NFT artwork, it appreciates over time. High royalties allow artists to share in the time value of their work earlier, preventing tragedies from repeating. Therefore, high royalties are very suitable for the characteristics of NFT artworks.

The NFT PFP initially followed the high royalty model of NFT artworks, which presents significant issues due to industry inertia. Since the consistency of PFP precedes non-consistency, and its value greatly relies on community energy, higher liquidity is more beneficial for the value growth of PFP. PFP needs to capture greater community value through better liquidity and lower friction.

According to the data, the overall average royalty rate of Blur is only 0.65%, which has led to a decline in the overall NFT market royalties. Many NFT project teams are complaining about this. However, these project teams take the bull market dividends for granted and have not reinvested the royalty income back into project development, but instead, it has been divided among the founders. The fact that NFT projects can only profit by managing their communities is the greatest respect users can show for a healthy NFT market.

Competitive Landscape of NFT Trading Platforms

Strictly speaking, NFT trading platforms can be divided into three categories: CLOB trading platforms, AMM protocols, and Aggregator (.

The earliest players in the aggregator market were Gem and Genie, both of which were acquired by OpenSea and Uniswap, respectively. Rather than calling them aggregators, it would be more accurate to say they are batch operation tools for OpenSea.

Aggregators originated from Genie, while Gem entered the market with better usability and convenience, along with superior customer friendliness and stronger promotional and capital support, winning in the early competition. However, as challengers to OpenSea gradually emerged, a more powerful aggregator, Blur, appeared, but Blur seems more like a tool to drive traffic to its own trading platform. An aggregator that doesn't want to be a trading platform is not a good aggregator.

Currently, the only aggregator that is strictly focused on aggregation functions is Reservoir, but it seems somewhat lonely under the pressure of the two giants, Blur and OpenSea. The aggregator track may need to wait for a more chaotic market before there is room for development.

![Blur and OpenSea's cliff racing: a "life-and-death chase" around NFT Liquidity])https://img-cdn.gateio.im/webp-social/moments-7952f5bf91e6cb430596d80b3ead408d.webp(

Battle of Trading Experience and Liquidity

One of the competitive dimensions of NFT trading platforms is the convenience of transactions. From the trading interface, it is clear that Blur's trading experience is geared towards professional traders and the wholesale market, while OpenSea's trading experience is more suitable for ordinary users and the retail market. Most other trading platforms have referenced OpenSea's design.

Blur's outstanding trading experience is the reason it was able to attract users in the early stages, and it is also why many airdrop hunters are willing to invest resources and time on Blur before the token launch.

But discussions about CLOB trading platforms should focus more on liquidity. As a market, the greatest value lies in providing users with the best liquidity. Whether it's the LP scheme originally designed by Uniswap in the DeFi space or the emergence of GMX on Arbitrum with zero slippage betting and GLP design, all are striving to enhance liquidity.

OpenSea, as one of the earliest NFT trading platforms, not only offers listing functions but also provides bidding functions. However, the convenience and bulk operation of the bidding function are poor, which limits buyer liquidity. When holding a large number of NFTs from the same series, selling them becomes a tricky issue.

Blur adopted limit order mining in Airdrop2, and then introduced bidding mining in Airdrop3, corresponding to both ends of liquidity. Before the official issuance of $BLUR, this dual liquidity scheme has already had a huge positive impact on Blur's trading volume. This is clearly a successful airdrop scheme.

Blur is the first product in the NFT trading platform to actively adopt strategies ) including bidding functionalities and token incentives ( to address the NFT Liquidity issue.

However, Blur's liquidity program still has shortcomings. Compared to Uniswap's LP liquidity design, Blur's bidding function lacks inertia. Currently, more than half of the top 20 bidders are well-known Chinese large holders, scientists, or studios, and most of these funds lack loyalty.

The bidding walls of BAYC and MAYC illustrate this point well. BAYC has no large funds daring to compete in the top three tiers due to MACHI's substantial holdings. In contrast, there is a considerable amount of capital bidding in the second and third tiers of MAYC. These obvious buy walls are all aimed at earning bidding points, and apart from these apparent buy walls, there are not many real market makers.

The total amount of ETH in the bidding pool of Blur significantly decreased on the day of the Silicon Valley Bank crisis. On that day, the market plummeted, and NFT prices were also under tremendous pressure, with the bidding funds for most series dropping from 30,000 ETH to 10,000 ETH.

Moreover, since Blur currently adopts a zero-fee mechanism, apart from the token incentives themselves, it cannot provide incentives to LPs through fees like Uniswap. A healthy system should still be able to provide enough motivation for LPs to provide liquidity even after removing token incentives. Once the liquidity incentives of Blur are removed, these bidding walls are likely to collapse rapidly.

Blur's liquidity mining injects liquidity into the NFT market, but at the same time accelerates the collapse of the NFT market. Originally, due to liquidity issues, large holders found it difficult to quickly cash out. However, with Blur's bidding wall, whales can now sell at will.

Many small NFT projects use Blur's mechanism for dumping. In the early days of Blur's imperfect mechanism, these project parties first inflated trading volume on OpenSea, and after establishing a bottom price on OpenSea, they slowly raised bids on Blur and earned points. During this process, some project parties chose to list part of their NFTs for sale, so even if their bids were successful, they could still partially recover the sold NFTs. On the other hand, some project parties held most of the NFTs in that series, allowing them to raise prices freely to accumulate points, and they would not sell to others when bids were placed.

If there are no competing bidders, the project party may be satisfied with boosting their Blur points, but once retail investors or bots also participate in bidding, after accumulating enough bidding depth, they will immediately withdraw their bids and then sell their NFTs to these bidding retail investors and bots.

In this carnival, NFT project parties and whales gained valuable liquidity, while liquidity market makers obtained "valuable" $BLUR.

Therefore, Blur's token economy needs to be upgraded to increase the costs for these arbitrageurs. Arbitrageurs are a harm to the system.

Although this liquidity has become a double-edged sword for the NFT market in the short term, in the long run, liquidity is still a good thing. If we recognize the long-term value of NFTs, then the price collapse under high liquidity is just helping the price to discover quickly.

![Blur and OpenSea's Cliff Racing: A "Life and Death Chase" Around NFT Liquidity])https://img-cdn.gateio.im/webp-social/moments-91b6b5095bee09bf4fa2fc0f9ed8e413.webp(

Future Outlook

Since the current tokenomics design of Blur does not consider the non-uniformity of NFTs, it is entirely possible to consider using the LP pairing method of Uniswap for mining, in order to enhance the inertia and wear of liquidity market makers.

This is essentially an AMM approach, which aggregates transactions of rare and floor items through the frontend. Blur previously used a frontend method to bypass OpenSea's block when it was blocked by the Seaport contract.

In addition, the competitive direction of the CLOB trading platform should develop towards a more specialized direction, as demonstrated by Tensor.Trade.

Tensor includes Tensor Trade) aggregator( and Tensor Swap) AMM protocol(. In terms of user experience, its direction is similar to Blur, aiming to provide users with richer information) such as NFT floor price K-line( and additional trading experiences) like more advanced order features(.

We also look forward to the bidding feature of Blur becoming more robust, such as adding take-profit and stop-loss functions, as well as batch order management for bidding.

![Blur and OpenSea's Cliff Racing: A "Life and Death Chase" Around NFT Liquidity])https://img-cdn.gateio.im/webp-social/moments-311c1a3939bb4ec75ed9dd8d0ef2cd4c.webp(

The Cliff Race Between Blur and OpenSea

In the face of the competitive pressure brought by Blur, OpenSea implemented zero fees starting from February 22 to counter Blur, but this did not significantly increase OpenSea's trading volume, resembling a more passive defensive strategy.

In terms of traffic, OpenSea has been greatly impacted by the token issuance of Blur.

On the other hand, Blur is also under considerable pressure. After the layoffs in 2022, OpenSea has about 230 employees and its last round of financing was 300 million USD, which provides a relatively ample capital reserve. In contrast, Blur has only disclosed a financing amount of 14 million USD. Although its cost expenditures are lower, its funding is also more limited. The zero-fee Blur cannot increase its revenue by charging fees, nor can it provide for $BLUR.