Unrepentant from the recent crash in cryptocurrency prices, the NFT market continues to explore the limits of its growth. OpenSea, the leading NFT marketplace, generated a record volume of nearly $5 billion in January with more than 540,000 active traders. As the top dog consolidates its monopoly position, smaller platforms have little chance of asserting themselves in the Ethereum-based NFT market. However, LooksRare appears to have found a way – with so-called vampire attacks.
What are vampire attacks?
Vampire attacks are a common practice to attract users and thus liquidity from one platform to another. Rewards are an incentive: for a change, newcomers usually receive an amount of tokens. So the vampire attack is basically a platform hack that attracts users with a reward system. It’s not illegal and it’s not a stroke of genius, but it’s a solid method, as evidenced by LooksRare’s growth numbers.
LooksRare has surpassed OpenSea’s daily trading volume from a deadlock. At its peak on January 19, the young platform generated sales of over $840 million USD. OpenSea made less than $200 million on the same day. So far, LooksRare has captured only six percent of active users on OpenSea. If you consider the short period of time since the launch of the platform, serious competition may be imminent.
Vampire attacks may have contributed greatly to the rapid rise. Users who achieved a minimum trading volume of three Ethers on OpenSea between June 16 and December 16, 2021 received a certain amount of the original cryptocurrency LOOKS when LooksRare was airdropped. Depending on the trading volume, the payouts were between 125 and 10,000 LOOKS tokens.
IT WAS WORTH IT: The LOOKS cycle has increased 200 percent since the decline. With a market capitalization of around $1 billion, the token that can be traded via Uniswap has now made its way to number 95 among the largest cryptocurrencies – along with SafeMoon, Dash and Synthetix Network – proof that vampire attacks can be It has a major shortcoming. range effect.
Rarely seems to have tasted blood
But LooksRare wants more, not less, to “set a new industry standard for NFT markets”. According to its own statements, it is “the first NFT marketplace that actively rewards merchants, collectors, and creators for their participation.”
No Blank Marketing Promise: Unlike OpenSea, which collects a 2.5 percent trading fee, LooksRare charges only a 2 percent fee in Wrapped Ether (WETH), which is paid out entirely to LOOKS stakers. Trading bonuses in the form of LOOKS tokens are also available for NFT purchases and sales.
Less Fees, More Revenue
There are also no fees for private sales, i.e. NFT transactions that are processed directly between merchants and buyers. Resale fees are also paid immediately, not two to four weeks later as with OpenSea, which makes a lot of money from licensing fees.
With a reward system, LooksRare wants to ensure long-term user loyalty. Three quarters of the total share of one billion LOOKS tokens will be distributed to the community via airdrops, rewards and trade rewards.
However, the strategy is not entirely altruistic. 10 percent and therefore 100 million tokens are reserved for the founding team. This is a puzzle. Because none of the alleged twelve members of the team mentioned a real name on the homepage.
OpenSea feel the bite of a vampire
Vampire attacks are not the invention of LooksRare. As early as October last year, NFT marketplace Infinity tried to poach OpenSea users with an airdrop. However, after a short rush, success fell by the wayside. The highest daily trading volume was $2.2 million in December.
However, LooksRare’s numbers are of an entirely different caliber. In terms of processed transactions, the platform already has the second highest market share, ahead of Rarible or SuperRare. OpenSea, which has cemented its monopoly position with notable groups such as CryptoPunks and Bored Ape Yacht Club, and which has pushed through a centralized business model in a decentralized ecosystem, is likely to feel the pressure.
Also because all groups are transferable to LooksRare. The market is indexing NFTs on the Ethereum blockchain, which means that in principle all Ethereum-based NFTs available on OpenSea can also be traded on LooksRare. The questionable and legitimate practice of vampire attacks may have brought about changes in the NFT market.
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