Unscathed by the recent cryptocurrency price declines, the NFT market continues to explore its growth limits. OpenSea, the flagship NFT marketplace, just hit a record volume of nearly $ 5 billion in January with over 540,000 active traders. While the top dog consolidates its monopoly position, smaller platforms have little chance of asserting themselves in the Ethereum-based NFT market. However, LooksRare seems to have found a way – with the so-called vampire attacks.
What are vampire attacks?
Vampire attacks are a common practice of dragging users and thus liquidity from one platform to another. Rewards serve as an incentive: for the change, newcomers usually receive an amount in tokens. So a vampire attack is basically platform piracy that entices users with a bonus system. Not illegal and not a stroke of genius, but a powerful method, as evidenced by LooksRare’s growth figures.
LooksRare has surpassed OpenSea’s daily trading volume from a standstill. At its peak on January 19, the young platform achieved sales of over $ 840 million. OpenSea earned less than $ 200 million that day. So far, LooksRare has accounted for only six percent of the active users on OpenSea. If you think about the short period since the platform launch, serious competition can be imminent.
A gift horse …
The vampire attacks may have contributed significantly to the rapid rise. Users who achieved a trading volume of at least three ethers on OpenSea between June 16 and December 16, 2021, were paid a certain amount of the original cryptocurrency LOOKS when LooksRare was air-dropped. Depending on the trading volume, the payouts were between 125 and 10,000 LOOKS tokens.
It was worth it: the LOOKS rate has risen by 200 percent since falling. With a market value of around $ 1 billion, Uniswap-enabled tokens have now worked their way up to number 95 among the largest cryptocurrencies – along with SafeMoon, Dash and Synthetix Network – a proof that vampire attacks can have a big card- term effect.
LooksRare has tasted blood
But LooksRare wants more, and nothing less, than to “set a new industry standard for NFT marketplaces”. According to own statements, it is the “first NFT marketplace to actively reward merchants, collectors and creators for their participation”.
No empty marketing promise: Unlike OpenSea, which charges 2.5 percent trading fees, LooksRare only charges two percent fees in Wrapped Ether (WETH), which is paid out in full to LOOKS stakers. Trade rewards in the form of LOOKS tokens are also available for NFT purchases and sales.
Fewer fees, more revenue
There are also no fees for private sales, i.e. NFT transactions that are processed directly between dealers and buyers. Also, royalties for resale are paid out immediately and not after two to four weeks as with OpenSea, which makes a lot of money on license fees.
With the rewards system, LooksRare wants to ensure long-term user loyalty. Three-quarters of the total quota of one billion LOOKS tokens will be distributed to the community via airdrop, effort rewards and trade rewards.
However, the strategy is not entirely altruistic. 10 percent and thus 100 million tokens are reserved for the founding team. And it’s a mystery. Because none of the alleged twelve team members gave a real name to the website.
OpenSea feels like a vampire bite
Vampire attacks are not an invention of LooksRare. Already in October last year, the NFT marketplace Infinity tried to poach users of OpenSea with an airdrop. After a short hurry, however, the success fell by the wayside. The highest daily turnover was $ 2.2 million in December.
However, LooksRare’s figures are of a completely different caliber. In terms of processed transactions, the platform already has the second highest market share ahead of Rarible or SuperRare. OpenSea, which has also built its monopoly position through such prominent collections as CryptoPunks and Bored Ape Yacht Club, and has pushed through a centralized business model in a decentralized ecosystem, is likely to feel the pressure.
Also because all collections can be transferred to LooksRare. The marketplace indexes NFT collections on the Ethereum blockchain, which means that in principle, all Ethereum-based NFTs available on OpenSea can also be traded on LooksRare. The dubious but legitimate practice of vampire attacks may have reorganized tires in the NFT market.
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