The NFT ecosystem has exploded in 2021 and 2022 is off to a great start. A huge winner of this phenomenon is marketplace OpenSea, which has seen its trading volumes reach $3.25 billion in December alone, according to Dune Analytics data. But now, newer entrants are cropping up and might put a dent in its quasi-monopoly.
For example, on Jan. 10, platform LooksRare finally went live. The company, which describes itself as “the community-first NFT marketplace that actively rewards traders, collectors and creators for participating,” is already off to a great start.
“Why do we need another marketplace? Because the NFT community deserves better. We, the NFT community, are tired of not being taken seriously by market leaders. We’re tired of the de-platforming of creators, and the decision makers who value business over community, seeking IPO instead of benefiting the communities that got them there. So we’re building something better. Something that rewards, empowers and gives back to you — the platform’s users and creators. We’ll be taking your suggestions, your feedback, your crazy ideas, and smooshing it all together into something glorious,” the company said in a blog post.
LooksRare is already at the second spot by trading volume behind OpenSea, according to DappRadar.
To get there, LooksRare did a so-called “vampire attack” on OpenSea, which occurs when an emerging platform tries to replace an incumbent by offering incentives to investors to move their liquidity to an alternative platform, according to Blockworks.
LooksRare is the community-first NFT marketplace with rewards for participating. Users who trade NFTs from eligible collections on LooksRare earn trading rewards in the form of LOOKS, LooksRare’s native token, according to the platform’s blog post. Both the buyer and seller of an item earn rewards for their trading volume and trading rewards are calculated daily and rewarded to users 2 hours after the end of each day.
If you traded 3 Ether ($9,724 as of Jan. 11) or more on Opensea between June 16, 2021, to Dec. 16, 2021, you’re eligible for an airdrop of LOOKS Tokens, according to the blog post.
“100% of trading fees are earned by LOOKS token stakers, so the more people trade on the marketplace, the more WETH earned,” the blog post said.
So why is it important to have options when it comes to NFT marketplaces?
Martha Reyes, head of research at Bequant, told GOBankingRates that the NFT market is heating up again, with total volume year-to-date at over $1.7 billion, “and we’re not even halfway through the month of January.”
The previous record was $3.3 billion during the summer frenzy that peaked in August, Reyes noted, adding that to put the figure in context, the traditional art market is around $50 billion per year.
“Just three years ago, Sotheby’s was sold to Patrick Drahi for $4.8 billion, when it registered $3.9 billion in sales but couldn’t even eke out a profit. This year, Sotheby’s had a record $7.3 billion in sales, boosted in part by new interest from tech-savvy millennials. It’s no wonder that, according to Bloomberg, the company is considering going public again and that it has also entered the NFT arena,” she said.
“NFTS are more than art, though. It’s no surprise that competition is ramping up. Already in December, Solana’s Magic Eden gained a significant share. OpenSea still boasts 85% of the market, down from 95% last August but fresh funding, valuing the platform at $13.3 billion, and an ability to execute should help them maintain an edge.”
Even legacy companies such as GameStop said they have plans as well. The company — which reached somewhat cult-like status among Redditors by becoming a so-called meme stock — has solidified its plans to launch an NFT platform earlier this month, in an effort to turn around its business in 2022.
Most recently, NFT sales totaled $576 million, according to NonFungible.com, and this comes against the backdrop of the NFT space experiencing one of the most impressive expansions overall, amassing more than $23 billion in trades in 2021, according to blockchain analytics firm DappRadar. The term has even been named Collins’ Word of the Year for 2021, and now, NFTs’ value is surpassing the market cap of some publicly traded companies.
Anthony Georgiades, co-founder of Pastel Network, an NFT marketplace built on its own native blockchain, told GOBankingRates that the competition that is happening in the NFT space is healthy and normal, it’s a part of the growth process.
“OpenSea was the first NFT marketplace, ever. And it’s still really young. But without any competition, what would push OpenSea to make the necessary changes needed for its long-term sustainable growth?” he said. “Recently, we’ve seen OpenSea’s name in quite a few headlines on scams, NFT disappearances, and other issues that threaten creators and collectors on the platform. Challengers to OpenSea will undoubtedly push the giant to put better infrastructure and protocols in place to protect its users.”
Georgiades however added that he doesn’t think OpenSea will necessarily be dethroned, “it’s here to stay as one of the big NFT marketplaces.”
“That doesn’t mean that others won’t rise to its level. Much like in other industries, there can be multiple brands or platforms that ‘share the throne,'” he said.
“This just means that users will have more options available to them when deciding which platform to mint their NFTs or buy and sell on. Ultimately, people shop at different clothing stores depending on what they can find in each. NFT marketplaces will be treated in the same way at some point in the future, so that the rise of one doesn’t have to incur the downfall of another,” he added.
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