Blur’s Airdrop Shaped Inorganic Surge in 2023 NFT Trading: Report
While NFT activity is showing a gradual recovery after the crypto winter, it remains significantly below the robust levels seen in 2021 and 2022, new data revealed.
Trading volume experienced a noticeable increase in the first quarter of 2023, followed by a subsequent decline.
According to a May 18 report by Galaxy Research, daily trading volume on NFT marketplaces experienced a decline after reaching an annual peak of $130 million in late February.
The daily averages for March, April and May witnessed a decline, with figures of $70 million, $35 million and $30 million respectively.
Nevertheless, when considering various metrics, the current state of the NFT market significantly surpasses the lows seen in November 2022.
According to Galaxy, the NFT market battle between Blur and OpenSea has emerged as the most anticipated event in the NFT ecosystem this year, capturing the attention of many.
With a remarkable 361% increase in Ethereum NFT trades, Blur surpassed OpenSea as the NFT market leader in February by using a distinctive token trading approach, treating NFTs more like fungible tokens in its trading focus.
Around the highly anticipated token airdrop on February 14, Blur experienced the height of hype.
Subsequently, Blur’s dominance in trade volume increased to an unprecedented peak, commanding 80% of the market share, while OpenSea witnessed a decline, settling at a 15.5% market share, Galaxy noted.
“This activity was largely due to airdrop framers positioning themselves for Blur’s Season 2 token airdrop,” research analyst Gabe Parker wrote.
The ongoing “Season” 2 airdrop, determined by a user’s loyalty points and listing volume, is expected to conclude with a significant airdrop of over 300 million BLUR tokens.
Originally scheduled to end in April 2023, the air recording was reportedly extended to May 2023, and there is speculation among users that it may be extended further.
Galaxy said a significant portion of NFT trading activity in 2023 has been “inorganic,” heavily influenced by Blur’s airdrops. It believes that Blur’s dominance in trading volumes is expected to persist through the Season 2 airdrop period.
In an effort to offer competitive fees, several NFT marketplaces such as Blur have chosen to make royalty payments optional or eliminate them altogether.
However, this move puts secondary trading markets at risk as it reduces the incentives for NFT creators who rely on secondary royalties for income.
According to Galaxy’s findings, transactions involving royalty fees experienced a sharp decline across major NFT marketplaces from February.
OpenSea and Blur, which previously had notable year-to-date peaks, witnessed a staggering 90% drop in royalty-paying transactions.
The main reason behind OpenSea’s sudden decline in royalty-paying users is attributed to the decision to enforce a royalty fee of 0.5% instead of the usual range of 5% to 7.5%.
Galaxy said that with the two largest marketplaces now operating under a royalty-optional model, it is becoming clear that creators will need to explore new structures or strategies to monetize NFTs.
The extent of control NFT marketplaces have over royalties will ultimately determine the longevity of royalty-based revenue streams.
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