Some context on airdrops
Airdrops are a popular crypto term for distributing free tokens to the community to decentralise token supply and market its new product.
Introducing new tokens in the market is a great way to scale marketing and awareness; it is a popular way to reward early adopters and dedicated community members.
While airdrops are not a guarantee for successful results, those projects that implement a successful go-to-market strategy or ride hype waves will see large activity and following over a short period. An example of a project capitalizing on its branding is $APE. The token affiliated with the BAYC ecosystem rewards BAYC holders who saw massive trading activity upon its airdrop to the public.
While airdrops may seem successful on paper, whether they provide impact is largely up for debate. On top of airdrops sparking initial levels of interest, it will bring greater competition to the market, people will move, and there will be shifts within the market.
At the start of 2022, Opensea was under pressure amongst other NFT marketplaces, where its market share dropped 25-35% following the airdrop launch of LooksRare. However, when the initial hype of $LOOKS died, Opensea regained the market share it lost and closed the year, retaining the crown of the biggest NFT marketplace in the space.
You would think 2023 would be easy, but they are met with a new competitor.
BLUR’s stellar performance
Within less than two months into the new year, BLUR took the NFT marketplace by storm and is currently the leading marketplace in volume. BLUR’s airdrop clearly instigated this rise to fame, but how long will this initial hype last?
Find out how effective airdrops are here.
On 15 Feb 2023, BLUR dropped 360M $BLUR to loyal users and farmers, accounting for 12% of the total airdrop supply. Over 90% of users claimed $BLUR airdrop within the first 24 hours, and among the top holders, 60% have either partially/completely sold their tokens.
BLUR going neck and neck with Opensea on the leaderboards made the NFT marketplace competitive rather than a single entity dominant sector. We see the two edging each other out in the fight for users and trading activity.
In terms of volume, the success of BLUR has multiple folds in popularity. It surpassed Opensea in total volume, putting the king of the NFT marketplace a run for its money.
$BLUR Airdrop success
The team at BLUR has devised one of the most innovative airdrop mechanism designs thus far. Their airdrop is the hook that brought in the users (mainly from competing platforms), and now their offering will make people stay, but more on this a little later.
Typically, how an NFT marketplace will “win” heavily depends on how sticky a platform can get in incentivising users. Hosting airdrops initially works well, but when you do it every month, you’re attracting the wrong target audience, those who chase free money instead of that users who utilize the product.
On 15 Feb 2023, BLUR dropped 360M $BLUR to loyal users and farmers, accounting for 12% of the total airdrop supply. Over 90% of users claimed $BLUR airdrop within the first 24 hours, and among the top holders, 60% have either partially/completely sold their tokens.
This tactic has been successful thus far, as we see BLUR going neck and neck with Opensea on the leaderboards, making the NFT marketplace competitive rather than a single marketplace dominant sector. In the two metrics below, Opensea (blue) currently edges BLUR (orange) in the number of users but falls short in the number of trades.
Going head to head again, this airdrop brought in volume as well. Following the token release, BLUR grew multiple folds in popularity and surpassed Opensea in total volume, putting them in an unfamiliar and uneasy position.
Furthermore, more rewards came differently and not just another airdrop. BLUR’s innovation in this department was something else,
In their second airdrop, they will distribute more than 300M $BLUR to users, representing 77% of the current circulating supply and 10% of the total supply. This is another way they ensure ongoing incentives for new users and engage those interested in using the product.
You would want to incentivize users who tried to engage with the product. Any guesses who these users would be?
The way BLUR dropped their airdrops wasn’t the typical airdrop into your wallet model. Instead, they gamified it through the use of care packages. The rarer the care package, the more tokens you will receive.
Incentivizing liquidity over volume
“Our goal was to pull traders away from zero royalty (NFT) marketplaces by giving them a larger airdrop to traders to honour some royalties rather than no royalties.” Said Pacman, the founder of BLUR.
Massive airdrop campaigns are an excellent way to customer acquisition, but that may come at the expense of a mediocre product. Pacman added that this can be seen with LooksRare “competing with Opensea, but at the product level, they were worst.”
Retention is as necessary as getting people in, so BLUR decides to incentivize liquidity over volume, resulting in real users entering the market.
But how do you incentivize liquidity without it being gamed?
BLUR does it through incentivizing listings, but with different rarity tiers within NFT collections, people will likely list items near the floors. This will create massive sell walls, which may not be the result NFT marketplaces seek.
That is where they have incentivising bidding. Their bidding points system was designed to allow for “pro-NFT traders” to get deeper liquidity than on Opensea, where they adopt more of a pending order transaction type model.
Since marketplace fees are still 0%, the team is not making money for themselves, so what is their game plan? Even being backed by Paradigm, revenue streams and liquidity will run dry. Instead, they are banging hard on product experience.
Closing thoughts
BLUR is undoubtedly pushing the limits in competing with Opensea for the top NFT marketplace. The idea of developing a product ready for the market months before the airdrop was visionary. When the airdrop dropped, the product BLUR marketplace offered could meet the market’s demands, and some may argue that it is better than all existing NFT marketplaces.
Their pursuit continues with a heavier focus on retention, which even nudged the knee of Opensea to take action to compete with the 0% fee. An innovative way of executing airdrops and prioritizing liquidity over volume currently gives them a headstart in the NFT marketplace race. However, the next step is most important: how these tie together in one cohesive plan.
As we expect season 2 of airdrops in the coming weeks, we will see how extra incentivization for listings and bidding will propel BLUR and solidify its brand on the walls of the NFT marketplaces.
Also Read: The NFT Marketplace War Between Opensea And BLUR
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
Featured Image Credit: ChainDebrief
