LooksRare – A Vampire Attack to $13b OpenSea NFT Marketplace
What is LooksRare?
Just one week ago OpenSea seemed unchallengeable and was absolutely dominating the NFTs marketplace arena. But last week things took an unexpected turn with the LooksRare launch: the numbers speak for themselves.
The new decentralized marketplace for Ethereum NFTs launched on January 10th with a token airdrop ($LOOKS) and generated nearly $400 million in sales volume in only three days.
LooksRare revealed an extremely aggressive approach against the centralized giant OpenSea: the 120 million $LOOKS tokens allocated to the airdrop (which will only be claimable for a limited time) are indeed reserved for users who have bought or sold at least 3 ETH worth of NFTs on OpenSea between June 16th and December 16th 2021 and have listed an NFT for sale on LooksRare.
In other words, LooksRare is leveraging the full potential of Web3 technology to attract OpenSea’s best and most active customers by simply rewarding them with tokens to try and engage with its platform. Moreover, since the tokens are airdropped, this strategy is not only effective, but also cost-efficient, as all the marketing is directly done by the customers.
Does this ring a bell? All this is reminiscent of 2020, when the decentralized SushiSwap platform executed a vampire attack on Uniswap, by adding “community-oriented” features to Uniswap’s original code, thus succeeding in drawing billions of dollars of liquidity from its competitor.
Numbers and figures
Following last week’s launch, we have been tracking and monitoring LooksRare’s performance metrics to compare them with the ones of their direct competitor OpenSea.
More data is available on Iconium’s Dune Analytics Dashboard.
In just one week, LooksRare generated double the volumes of OpenSea, reaching more than 15k users. With the current daily volumes and a price of 〜$4.7 per $LOOKS, the marketplace is giving away more than $12 million worth of $LOOKS every day.
Even if total users and transactions are still a drop in the ocean compared to OpenSea’s, it is worth noting that LooksRare managed to generate almost twice the fees of its centralized competitor. This astonishing achievement mainly comes from the incentivized trading and the cheaper commission model of LooksRare (2% vs. OpenSea’s 2.5%), but might also be affected by a relevant wash-trading component.
Some traders have indeed tried to manipulate the rewards model. Over the course of the last days, LooksRare saw numerous NFTs trades going back and forth between the same wallets, including a Meebits NFT that sold for about $50 million worth of WETH each time (the floor price of a Meebits is around $12k). That’s $100 million worth of trading volume in two transactions. With this single trade, the manipulator earned a huge portion of the daily platform’s trading rewards, amounting at 280,141 $LOOK ($1.3 million at the current price).
During these frenzy days, this trick helped the platform gain traction, but in the longer term this loophole could threaten the success of the platform itself. We expect an anti-wash trading mechanism to be put in place, in order to prevent malicious users from farming a large portion of $LOOKS. Users will likely ask the governance to come up with a solution to monitor suspicious transactions and vote on whether to allocate rewards to the trades that represent clear examples of wash-trading.
Having said all of the above, one thing is clear: for the past few days, LooksRare has taken over the Ethereum NFTs scene. So let’s take a closer look at this platform.
How it works
On its official blog, LooksRare presents itself in a very straightforward way: “We, the NFT community, are tired of not being taken seriously by market leaders. We’re tired of the deplatforming of creators, and the decision makers who value business over community, seeking IPO instead of benefiting the communities that got them there. So we’re building something better”.
In these few lines we find the essential promise that LooksRare enters the market with, finally giving a voice to the criticism the NFT community has been raising against OpenSea for a long time: being a centralized company which delivers under-qualified products and without a token that would allow the community to get a share of the generated revenues.
That’s where LooksRare’s offering originates: “the community-first NFT marketplace that actively rewards traders, collectors, and creators for participating”.
All of this is made possible by decentralization and a native token:
- 100% of trading fees are earned by $LOOKS stakers, in form of ETH or wETH;
- Creators get immediate royalty payments at the time of sale;
- Users that trade NFTs from eligible collections earn $LOOKS tokens;
- Users can make an offer for an entire NFT collection in only one transaction (collection offer).
In addition, LooksRare will soon implement other new features, such as:
- Trait offer: users can offer to buy any NFT with a specific trait in a collection;
- Multi-cancellation — users can cancel multiple open orders in one transaction.
Why do we @Iconium believe that $LOOKS has a fair chance to take a considerable share of the NFTs market in the future… Or maybe even become a leading force?
With its decentralized structure and its token $LOOKS, LooksRare has undoubtedly disrupted the NFTs Marketplace industry, directly standing up to OpenSea with a real vampire attack.
The grit of this project is outstanding. It fearlessly entered the market right after OpenSea had been valued at $13.3 billions and raised $300 millions in fresh capital.
Was this a reckless move? We’d rather support the case that LooksRare had a strong marketing and strategy plan, which was executed with perfect timing, simultaneously riding a favorable time for the NFTs market and a strong debate period about OpenSea.
Surely, there are many challenges ahead, but we strongly believe that this disruptive project has all the credentials for gaining a considerable space in the market in the long term, establishing itself as a major player and affirming once again the supremacy of decentralization over centralized solutions.