OpenSea Challenger's Dilemma

Airdrops are a trend and the anti-OpenSea is a new narrative. Since OpenDAO fired the first shot of DAO OpenSea, LooksRare, X2Y2 and other platforms followed, sending airdrops for OpenSea’s trading users and building their own NFT trading market to capture NFT trading users and divide the OpenSea market share.

On the basis of NFT trading, LooksRare was the first to launching trading mining and bonus rewards mechanism for pledging by token holders; X2Y2 continued the pledging by token holders to enjoy bonus, and introduced the NFT staking mining model, trying to emphasize real transactions.

Thanks to the transparency of the data on the chain, it is foreseeable that more ambitious developer teams will send airdrops to OpenSea trading users in the future to challenge OpenSea. But as of now, it seems that LooksRare, X2Y2 and other platforms have not differentiated their competitive advantages from OpenSea except for airdrops and rewards, and the effectiveness of their challenge to OpenSea is still very limited. With the fading of airdrop craze and the gradual decrease of token rewards, their own development is facing major challenges. Of course, one challenge after another is not worthless, and there are lessons to be learned for everyone who comes after.

（data sources：Dune Analytics）

Among the three DAO OpenSea, OpenDAO does not compete with OpenSea, X2Y2 has been launched for a short period of time, and only LooksRare can compete with OpenSea in terms of volume, but due to the existence of trading mining mechanism, the real volume of LooksRare still needs to be further tested by the market. When comparing the trading volume of LooksRare in the first and second stages of trading mining, it is easy to see that the trading volume of the platform is directly brought by the stimulation of mining rewards, and when the token reward gradually decreases, the trading volume of the platform also decreases significantly. On the contrary, OpenSea hit a record high monthly trading volume in January this year in the face of the emergence of LooksRare. Today, OpenSea’s daily trading volume is gradually overtaking LooksRare’s.

（data sources：Dune Analytics）

Trading users is a better measurement than trading volume. From start to finish, LooksRare has not challenged OpenSea in terms of the number of users, and even in the 41 days since LooksRare launched on January 10, the growth of OpenSea trading users has been a bit higher than in the 41 days before January 10. There is no denying that the airdrop and trading mining had indeed played an incomparable role in acquiring rationed users, but most of these rationed users are DeFi powerhouses. They seek quality mining resources, choose the optimal solution under the higher APY, and do not have enough product loyalty, and now LooksRare faces the plight of both incremental users and stock users decline (while rumors from Pancake’s LooksRare team, has made a fortune on WETH).

For the NFT trading platform, the fundamental reason for airdropping to OpenSea trading users is to acquire OpenSea’s stock of users and turn the counterparty’s stock of users into new users for us. The mining activity around the airdrop is to further consolidate these holders and increase the stickiness of their stay on our platform. The problem, however, is that the growth in volume and users from airdrops and mining is declining, as the pools do not always maintain a high APY and output. In addition, airdrops and mining do not necessarily have an obvious causal relationship with the real growth of platform data. Airdrops bring in FT users, mining and fee dividends allow token-holding users to stay, and for NFT users with real trading needs, airdrops are bonus and have little significance in cleaning transactions So what is the motivation to let these NFT Natives stay and trade? There seems to be no answer in sight.

（data sources：Nansen）

NFT trading users can both continue to do NFT buying and selling in the deeper OpenSea, and also enjoy the future of the major airdrop fleece on OpenSea. LOOKS has a peak of over 20,000 holders, and most of the daily trading users are maintained at 1000–1500, the conversion rate of holders to LooksRare trading users is very low. For the use of airdrops, nearly half of the users chose to sell them, and they became the wool of NFT Native, just as DeFi users went to the project to ambush the wool of airdrops. Furthermore, even if more teams want to challenge OpenSea in the future, most of them give airdrops to the trading users on OpenSea and the various trading data collected on OpenSea. An awkward logic is that continuing to trade on OpenSea will instead give NFT users a chance for bonus-getting in the future.

In addition, DAO OpenSea is not just about giving airdrops to OpenSea trading users, but about building a larger community around token holders. Judging from the results of LooksRare and X2Y2 launch, it may not be technically difficult to go from idea to completion of building an NFT trading platform, and the time may not take months or a year and a half. Relative to by airdropping or mining mechanism, heat stimulation volume of short-term growth and profits, than to take a longer time to run and the construction of community much temptation. At the moment, we still don’t have a clear picture of how much the community actually accounts for in these three projects of DAO OpenSea, but instead we see disputes and scandals in the founding group of OpenDAO, controversies over the LooksRare laundering deal and the team cashing out, and the chaos of X2Y2’s multiple changes to the rules when airdrops were distributed. Of course, a project full of attention full of controversy is more likely to get the opportunity to improve, but for the community building and role, the community project called DAO OpenSea still has a long way to go.

The majority of NFT users are probably not native Crypto users and may not be that interested in DeFi’s products and features; Crypto Native is not the same as NFT Native, so the essence of the NFT platform for mining is still to capture users through DeFi’s content, which is a mismatch with the real needs of most NFT players. The effect of acquiring users is hardly ideal. To truly challenge OpenSea, capturing these NFT Natives, who account for the bulk of volumes, and joining the community building is key. Relying on DeFi features to support the operation of the NFT trading platform and attract users, then the platform’s audience will become narrow, for the lack of NFT Native users, the next DAO OpenSea project will instead be the first to divide the market share of this type of challenger platform.