Undeterred by the recent crypto price crashes, 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 to assert themselves in the Ethereum-based NFT market. However, LooksRare seems to have found a way – with the so-called vampire attacks.
What is a vampire attack?
Vampire attacks are a common practice to draw 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 lures users with a bonus system. Not illegal and not a stroke of genius, but a powerful method as evidenced by LooksRare’s growth numbers.
LooksRare has surpassed OpenSea’s daily trading volume from standstill. At its peak on January 19, the young platform achieved sales of over 840 million US dollars. OpenSea earned less than $200 million on the same day. So far, LooksRare has only accounted for six percent of the active users on OpenSea. If you consider the short period since the platform launch, serious competition could be imminent.
A gift horse…
The vampire attacks may have contributed significantly to the rapid ascent. Users who achieved a trading volume of at least three ethers on OpenSea between June 16 and December 16, 2021 received a certain amount of the native cryptocurrency LOOKS in the LooksRare airdrop. Depending on the trading volume, the payouts were between 125 and 10,000 LOOKS tokens.
It was worth it: the LOOKS price has increased by 200 percent since the drop. With a market capitalization of around $1 billion, the Uniswap-tradable token has now worked its way up to number 95 among the largest cryptocurrencies – along with SafeMoon, Dash and Synthetix Network – proof that vampire attacks can have a big short circuit. 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 its own statements, it is the “first NFT marketplace that actively rewards merchants, collectors and creators for their participation”.
No empty marketing promise: Unlike OpenSea, which charges trading fees of 2.5 percent, LooksRare only charges two percent fees in Wrapped Ether (WETH), which is paid out in full to LOOKS stakers. Trading rewards in the form of LOOKS tokens are also available for NFT buying and selling.
Fewer fees, more revenue
There are also no fees for private sales, that is, NFT transactions processed directly between dealers and buyers. Royalties for resale are also paid immediately and not after two to four weeks as with OpenSea, which makes a lot of money from the license fees.
With the reward 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, stake 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 is a mystery. Because none of the alleged twelve team members gave a real name on the website.
OpenSea feels vampire bite
Vampire attacks are not an invention of LooksRare. Already last October, the NFT marketplace Infinity tried to poach users of OpenSea with an airdrop. After a short rush, however, success fell by the wayside. The highest daily turnover was $2.2 million in December.
LooksRare’s numbers, however, 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 gatherings 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, meaning that all Ethereum-based NFTs available on OpenSea can in principle also be traded on LooksRare. The dubious but legitimate practice of vampire raids may have reshuffled decks in the NFT market.
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