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Dear Bankless Nation,
An OpenSea competitor launched this week. Did you get your LOOKS airdrop? 👀
This feels like it was a long-time coming…
OpenSea has executed well. As NFTs blew up last year OpenSea sales increased over 50,000% from $71 million to $36 billion from Q4 2020 to Q4 2021. Incredible growth.
This earned them a well-deserved valuation of $13 billion.
But who gets the spoils of these earnings?
The Team ✅
VC investors ✅
The community 🚫
See the vulnerability?
I understand why OpeaSea executed this way. Devin Finzer explained it in our recent episode. Centralized teams can build faster. And accredited investor laws in the U.S. can make it straight up illegal to give retail users upside. Thanks SEC!
But this exposes a soft underbelly to competitors.
Someone could replicate OpenSea…but give the upside to the community.
Enter LooksRare—a community-owned NFT marketplace.
LooksRare is tailored to the degen crypto-native community: a token, massive incentives, attractive economics, a lucrative airdrop, and some new features for collectors….oh and a vampire attack.
They gave everyone who’s traded at least 3 ETH on OpenSea some tokens to win them over.
There are still some things it needs though…
But LooksRare is off to a hot start. The community-owned NFT marketplace quickly surpassed OpenSea’s daily volume within 24 hours of launching, facilitating hundreds of millions of dollars in transaction volume.
A lot of people will be quick to point out that this is because of the incentives to trade on the platform, resulting in a lot of wash trading as collectors try to earn LOOKS from trades.
Yes, but that’s not the point.
In 24 hours, a community-owned counterpart was able to beat OpenSea and bootstrap a multi-billion dollar platform. Let’s also be clear: If you want to rival OpenSea’s dominance on NFTs, token incentives are probably the secret weapon.
Do not underestimate the power of tokens.
While LooksRare is off to a fantastic start, there’s still a ways to go. For one, it’s still lagging in terms of daily users. Second, whether or not the platform retains its volume metrics is an open question. What happens when the incentives run out?
There are some hidden icebergs
LooksRare launched unaudited and without a public GitHub repo. This is frightening and irresponsible and I hope they change course. Until then, use at your own risk.
Most people are overlooking this because of the shiny new token and the staking APYs. Stakers on the platform earn over 1,000% APY right now—600% of it is earned in WETH too 👀
Suits vs. Community
Overall this feels quite similar to the Uniswap vs. Sushiswap dichotomy. One is VC-funded and the other is not. Suits vs community.
Sushiswap forked Uniswap, slapped a token on it, and attracted billions in liquidity within a week.
Then something happened…
Despite Uniswap’s anti-token stance, it was only a matter of weeks after the Sushiswap vampire attack that Uniswap launched a UNI airdrop.
Do you think OpenSea will follow their lead? 🤔
Here’s what’s lined up for next week:
Li Jin breaks down the rise of the ownership economy
William is going to teach you how to get paid to learn about crypto
We explain what’s preventing institutions from adopting crypto
Have a stellar weekend.
- RSA
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Recap for the week of January 10th, 2021
🎙️WEEKLY PODCAST EPISODE
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METAVERSAL 🧙♂️
Recap this week in NFTs
Understand how NFTs will be used for merchandise and ticketing
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I'd like to make a critique of your point that it doesn't matter that the volume on the Looksrare platform is all wash trading. First of all, I agree that value given to users is great, community ownership is one of the best parts of being in the space. That being said, wash traders dominating volume and receiving the vast majority of newly issued $LOOKS token. This means that the only people benefitting from activity on the platform are the VCs who receive the lion's share of the fees that come from the wash traders and of course the wash traders themselves who will in the long term dominate the governance of the platform.
A simpler and more effective way to create organic growth would have been to waive fees for some time. This would have been enough to bring BAYC owners and owners of other high value collections to trade safely and cheaply. Just as community ownership matters, it matters deeply who in the community owns these tokens and that we're incentivizing the right kind activity. We shouldn't be endorsing fabricated volume and to be quite frank, a complete waste of blockspace.