The dominant OpenSea

The booming of NFT is closely related to OpenSea. As one of the earliest participants in NFT transactions, OpenSea monopolized over 90% of NFT transactions in the market, and its popularity, number of users, and transaction volume ranked first.

However, by the end of 2021, OpenSea experienced unprecedented turbulence: the poor user experience and the increasing tendency towards centralization have already made it a target of criticism. The exposed “rat warehouse” incident of the former product manager and the speech delivered by the new CFO has made more users completely lose confidence.

LooksRare: Competed directly with OpenSea

Along with the booming NFT market, OpenSea has constantly confronted negative news. LooksRare, a quality project recognized by the market as the “OpenSea Killer”, was officially launched in January 2022 against this backdrop.

Strategies towards a Decentralized Platform

OpenSea has always been treated as a centralized trading platform. The core of LooksRare is its decentralized NFT trading platform. Arya, the head of the platform, mentioned in the AMA: The LooksRare development team remains anonymous, with the aim of building a Web3 NFT trading market with the community, allowing all users to participate in the decision-making of the DAO.

LooksRare advertises its no-censorship mechanism. It promotes that it is friendly to community creators and is able to provide the most timely support and allow project parties to quickly obtain certification. On the contrary, it is much slower on OpenSea. Many excellent NFT series have not yet obtained Blue Tick certification, which makes it difficult for users to distinguish between true and false.

In terms of royalties, LooksRare will settle royalties to creators in real-time, while OpenSea only settles them once every two weeks.

In Web3, decentralization is the most important feature, while the community and users are the core. LooksRare closely binds the community, users and projects in a decentralized way. Therefore, they will be in the same boat.

The token LOOKS issued, making precise attacks

What OpenSea wants to take is the traditional IPO route, and it ignored its users’ constant calling for token airdrop. However, LooksRare issued the official token LOOKS as soon as the platform was launched, which met the users’ urgent demand for tokens of the NFT trading platform. Once the platform was launched, the FOMO sentiment of the community was detonated, and the number of users increased exponentially.

According to the white paper, 75% of LOOKS is allocated to the community, and the recovered 2% fee will be distributed to users who pledge tokens in the form of WETH, thus achieving the goal of returning the profits to NFT holders.
Of the 75% of tokens allocated to the community, 44.1% are used as rewards for users trading NFTs in LooksRare, and 18.9% are used for staking rewards.

If the strategy of decentralization and the issuance of tokens laid the foundation for the platform to function well, then the precise action is what makes LooksRare successful.

In the economic model of Looks, 12% of the airdrop reward will go to active trading wallets on the OpenSea platform. In other words, LooksRare uses only 12% of the tokens to attract the most active users in the NFT space to the LooksRare platform. The newly introduced active users ranked first in terms of NFT holdings and trading frequency, accounting for more than 40% of the trading market!

Through a differentiated market strategy, the initial offering of the token, and targeted attacks on OpenSea core users through airdrops, LooksRare has achieved the fastest growth in users and transactions. Since its launch, the platform’s turnover has surpassed OpenSea for many consecutive months. At the peak, the turnover ratio of LooksRare and OpenSea even reached about 4.3:1.

Unique features of LooksRare

LooksRare has developed some unique features, which perfectly meet the needs and solve the sticking problems of NFT users.

Mixed payment with ETH and WETH

On OpenSea, ETH is used to pay a buy-in price, and WETH is used for bidding. Sometimes users need to convert the two, which not only consumes gas fees but also is cumbersome. However, the ETH and WETH mixed payment supported by LooksRare solves this problem.

One-click Offer function

Nowadays, there is a growing number of projects that issue tens of thousands of NFTs. These non-fungible tokens are increasingly fungible, which also makes many people not care about the appearance of the NFT they buy, but only care about the series of the NFT.

For example, if you want to buy a random Bored Ape for 70 ETH. First, you need to convert 70 ETH to WETH, then write a piece of code to bid on Bored Ape in bulk on the market, and finally wait for the seller to accept your offer. And if you have 140 WETH in your wallet but you only want to buy one Bored Ape, you need to cancel the order in batches immediately after one transaction is done. This will consume a huge gas fee.

Writing code is not an easy job. 90% of NFT users do not know how to write code. As a result, it requires manual order placement one by one. The process is cumbersome and complicated, and the user experience is extremely poor.

LooksRare provides a one-click Offer function that everyone can easily use, and all open orders on the LooksRare platform can be canceled with one click, making it easy for users to operate and improving the user experience.

Negative news of LooksRare

Cash-out incident

Although it came to the market like a warrior, LooksRare is also involved in some negative news.

In February 2022, Twitter users revealed that LooksRare team members publicly admitted that the team obtained income by staking the platform’s governance token LOOKS, and the accumulated cash out was close to 10,500 ETH (about $30 million), which was distributed to more than 10 staff members. Although the team promised the future, this behavior intensified the panic of the community, causing the price of LOOKS to drop all the way.

Transaction mining model

Senior players are familiar with the transaction mining model. Such exchanges became popular around the world around 2017, but they all died out due to the abuse of the mechanism.

(Source: Dune analytics)

As shown in the data, there are serious “brushing” traces on LooksRare: Its users are less than one-tenth of OpenSea, but its total volume is far more than that of OpenSea!

The crisis brought about by the “transaction mining” model has already arrived. If the transaction rewards cannot be prevented from evolving into a game where users “swipe the volume”, it will eventually lead to the loss of LooksRare’s quality users, the departure of users who take advantage of promotions, and the platform will eventually fall into a death spiral.

Conclusion and Expectations

According to Dune Analytics data in August 2022, the total number of users of the LooksRare NFT market has exceeded 110,000, the total number of transactions has exceeded 270,000, and the total transaction volume has reached $26.4 billion.

Compared with OpenSea’s millions of users, LooksRare is still in the early stage of development. Whether it’s growing based on users or market share, LooksRare still needs time to verify.

In the NFT trading market, although no platform can take the place of the leading position of OpenSea in a short period of time, the emergence of LooksRare has injected new vitality into the market. As it is said that “By NFT people, For NFT people”, users are looking forward to an NFT that is truly born in the Web3 world to break Opensea’s monopoly. LooksRare still has a long way to go.

The current NFT market is booming. With the entry of Coinbase, the competitive arena of the NFT market will be reshaped. No one can guarantee that an experienced technical team and an excellent economic model will make the newly-launched NFT trading platform successful, but Web3 needs healthy competition between different platforms to jointly promote the prosperity of the blockchain ecosystem.