Will LooksRare Takeover OpenSea？

2022-03-08, 04:37

[TL:DR]

1. The NFT space has seen a lot of growth over the past year.
2. LooksRare is a new NFT marketplace that is taking over a significant portion of OpenSea’s market share.
3. Unlike OpenSea, LooksRare has its own token.

Fill in the form to receive 5 reward points→

Massive Growth in the NFT Space

The NFT space has seen massive growth in the last year. Interest in NFTs continues to grow this year and shows no signs of slowing down. While OpenSea has pretty much dominated as the goto NFT marketplace, its dominance took a serious hit with the launch of LooksRare on January 10, 2022. Just a day later, LooksRare had already surpassed OpenSea in terms of transaction volume.

We all know that in the tech world, new product launches take months and even years of planning. Companies spend millions in an attempt to gain new users and it is usually a slow and gradual process. Overnight success is a rare and often unheard-of thing, especially when it comes to a new marketplace that is going against an existing player with a huge userbase. So what exactly made LooksRare an instant success and is it here to stay? Let us find out.

The Need for a New Marketplace

OpenSea has been in the market for over four years now and due to the lack of other options, NFT enthusiasts had no other choice but to rely on it for their transactions. This placed OpenSea in an advantageous position while users were left with a platform that charged high fees, had frequent bug issues, and even faced downtime. Community requests for an OpenSea token also fell on deaf ears.

As such, the conditions were ripe for the emergence of a new and better marketplace. A good product or service addresses the pain points of its users. The only surefire way to build a community and gain its loyalty is to truly deliver something of value. This is precisely what LooksRare did. It promised to be an NFT marketplace ‘By NFT people, For NFT people’.
The Battle Between the Two Giants

The key selling point of LooksRare is the $LOOKS token. While in terms of functionality LooksRare is similar to OpenSea, the marketplace incentivizes NFT creators, traders, and collectors with its native token rewards.

The massive success of the marketplace can be attributed to the airdrop of the $LOOKS token that was done with the launch of LooksRare. In essence, based on the 120 million tokens given by the company, this can be seen as a $400 million airdrop. Existing users of OpenSea with a total spend of 3 ETH were eligible for the airdrop. LooksRare only charges a 2% platform fee. Another factor is that LooksRare gives back 97% of its revenue back to the community as opposed to 27% on OpenSea. By staking the token users can get back 100% of the trading fees.

Word about the lucrative incentives spread like wildfire in the tightly knit NFT community via Twitter and discord. As a result, within a day of launch, LooksRare surpassed OpenSea with a record high transaction volume of 115 million US dollars.

Source: https://dune.xyz/hildobby/LooksRare-VS-OpenSea

Chunks in the armor

While LooksRare took everyone by surprise and posied itself as a great NFT marketplace that cared for the community, there have been a few issues.

All is not good with the rewards system. Critics have pointed out that some users are manipulating the rewards system by engaging in wash trading. In such cases, users are basically trading royalty-free collections back and forth between two wallets owned by the same user. In this way, they are able to generate substantial $LOOKS rewards for themselves.

Quite recently the $LOOKS token dropped 70% from its all-time high value. News also broke that the team had transferred 10,500 wrapped ETH (wETH) generated from the 2% transaction fee of the marketplace into their personal wallets. This amounts to around $30 million in value. The move caused some criticism from the community. Daily transaction volumes have also been dropping and leveling with those of OpenSea.

What does the future hold for LooksRare

The need for a reliable and user-friendly NFT marketplace is present as new NFT collections are being released at a constant pace and user adoption and engagement in the space continues to soar. In such a disruptive industry, the competition is certainly tough.

Despite its limitations, LooksRare has a great chance of becoming an NFT marketplace for the community. By continuing to listen to what its users want and delivering them value, it can prove to be a long-term success. OpenSea has also realized that it can not continue working on the old ways. Upgrades in the system are in the works. Only time will tell which platform manages to earn the loyalty of the community in the long run.

The future looks really bright for the NFT space and LooksRare is adding another layer to the ever expanding ecosystem. Stay tuned for more from this exciting part of the crypto space.

Author: Gate.io Researcher: Chuk. U
Disclaimer:
* This article represents only the views of the observers and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.