Introduction.
30 days have passed since one of the most anticipated token drops in NFT history: the BLUR marketplace token. In this article, we take a deep dive into the BLUR token — what it is? how it stacks up to its closest comps? what the team did well? and what the future might hold for the marketplace token.
Blur product overview.
Blur is a marketplace dedicated to professional NFT traders. The product launched in October 2022 for a private beta initially available only to a selected group of traders and launched their token in February 2023. During that 5 month period, Blur gamified their go-to-market strategy, tying in a vampire attack on Opensea, growth social media tactics, and a commitment to enabling NFT traders to operate at the highest level through innovative product features. The success led to one of the most anticipated token launches within the NFT ecosystem to date.
Teasing the Blur token helped incentivize both retail and professionals to trade on the platform. Launching with zero fees contributed to a high user churn rate from traditional marketplaces such as OpenSea which were charging 2.5% at the time (and have since cut their fees to match with Blur). Furthermore, giving traders the “option” to pay royalties sparked a large-scale debate around the role of royalties within the NFT space, whether they should be mandatory, and what a trader’s role is in facilitating royalties for NFT projects.
$BLUR token overview
When taking a look at the execution side of the token launch, Blur knocked it out of the park by lining up market makers and tier 1 exchange listings on day 1, most notably, Coinbase, OKX, and Bitget. The success of the Blur token launch was largely driven by the hype that was built up over the three-month teaser campaign, initially with Blur boxes, a points-based system, and the eventual liquid token drop.
Blur’s user airdrop allocation fell in line with several of their direct comps, notably LooksRare, X2Y2, and higher than Rarible, allocating 39% of the token supply to the community for contributor grants, community initiatives, and incentive programs. Adding a novel dynamic to the tokenomics, 10% (3.9% or 300M BLUR) of the community allocation is allocated to the incentive budget for the next retroactive token reward. Once exhausted, the community also has the ability to add more to this incentive allocation via governance vote — a creative wrinkle incorporated into the design.
Forcing users to tweet out their Blur box claim amount sparked a viral reaction to the token launch and was the buzz of crypto Twitter circles for days after the launch — a tactic never seen before at such scale.
Although we don’t know the exact parameters of the next incentive drop (beyond listing and bidding), it brings into play the concept of continuous rewards for traders in a manner that hasn’t been seen before. Unlike passive rewards mechanisms like staking, if Blur were to continuously introduce incentive rewards, we could see more sustained volume and user retention as traders continue to use the platform in hopes of a “second airdrop.” Focusing those rewards on loyalty, rather than just pure marketplace volume, should be paramount in determining what parameters are employed for season two rewards.
Looking forward: Shifting the focus from acquisition to retention.
The next question becomes: How might Blur escape the fate of LooksRare and x2y2 — and avoid losing market share once the bulk of rewards farming ends?
Initially, the anticipated airdrop (along with $0 fees and other product features) was customer acquisition tools. Now that they have market validation. The Blur team can consider shifting focus towards retention and creative uses for the token.
A few proposed sinks for the token are as follows:
- Charge marketplace fees in $BLUR with plans on burning a portion of the proceeds to reduce the circulating supply
- Give users a discount on NFT purchases if they use the Blur token as opposed to purchasing in ETH
- Charge advertising spend by collections in Blur
- Create a subscription model for premium Blur access paid in the native token
- Continue to pay rewards for loyalty rather than the gross volume traded. If Blur can successfully pull users from OpenSea by way of their token, they will have created one of the largest *Paradigm shifts the NFT space has ever seen
Ultimately, rewards should be structured to incentivize traders who are taking short-term losses in ETH by way of wash trading in the hopes they can make up for those losses with their allocation of the season 2 BLUR rewards drop. As the Blur token trends down below its day 1 price discovery range of $0.65, that trade will become increasingly tough to manage effectively as traders will be in the red on both ETH and their initial day 1 Blur allocations. Creating token sustainability is paramount for the growth, perception, and retention of users. What’s key here is that “sinks” for the token exceed “faucets” — that token demand outpaces the supply. If users are willing and able to recirculate those earned tokens back on the platform, a flywheel effect can be created driving long-term sustainability of revenues and the ecosystem treasury.
Conclusion.
Blur’s execution has been near-flawless. Their go-to-market strategy, and pre and post-launch marketing buzz have made this token launch one of the most successful. The key to success for the Blur ecosystem (marketplace and token) will be to switch the focus from pure incentive rewards to creating circularity within their own ecosystem. Namely, introducing meaningful sinks for their native token that drives retention.
What’s also interesting to see will be the developer activity when ecosystem grants are funded and if an API is launched. By way of the DAO launch, the responsibility and fate of the protocol will start to shift from the core team to the community, which is a powerful tool if harnessed correctly. The Blur product itself is outstanding and has carved a niche that needed to be served which helped them at TGE, but true success comes from actions post-TGE. The actions between now and when / if Opensea launches a “pro” product will be crucial for the success of the Blur platform, especially since OpenSea and Blur are now comparable on marketplace fees, both coming in at 0.5% with optional royalties.
