Nouveau riche NFT marketplace LooksRare airdropped its $LOOKS token to NFT traders on January 9 and it is working well.
Since the platform launched ten days ago, more than $5B worth of NFTs have been traded on the market, consistently outpacing NFT market leader OpenSea. (Source: @hildobby Dune Analysis )
$LOOKS briefly traded above $7 on Jan. 20, giving the project a fully diluted valuation of $7.1B. Since then, the token has fallen to $5, in line with a broader market sell-off.
OpenSea is closed Latest Series C A round of funding was raised at a valuation of $13B.
In less than two weeks, is LooksRare really worth half as much as the industry leader? Or could something else be going on here?
Let's dive into the water.
OpenSea has established itself as the dominant NFT marketplace, with the largest share of overall NFT users and transaction volumes.
Despite its success, OpenSea has often come under fire for its centralized corporate structure and reliance on venture capital funding.
LooksRare has taken full advantage of these obvious shortcomings and positioned itself as a " Community First ' NFT Market.
In contrast to OpenSea, which retains a 2.5% share of sales on its platform, all of LooksRare's transaction fees (currently 2%) are paid to $LOOKS pledgers.
Pledgers also receive additional $LOOKS tokens in the form of emissions, a combination that has achieved triple-digit gains since the program's launch.
All about incentives
"Tell me the incentive and I'll tell you the result" – Charlie Munger
Since its launch, LooksRare has seen almost three times the trading volume of OpenSea.
However, comparing the number of users and transactions over the same period paints a completely different picture.
The data shows that a small number of users are making high-value transactions on LooksRare, and for good reason.
LooksRare encourages trading on its marketplace. Buyers and sellers earn $LOOKS tokens based on their share of the total daily trading volume on the platform.
For the first 30 days, there were $2.87 million in daily LOOKS allocated to trading rewards. At the current price of $5, the daily rewards are close to $15 million.
If we look at the most traded collections on LooksRare, we can see that the leading collections are the zero-royalty collections.
Many of these NFTs changed hands at ridiculously high prices, apparently Cleaning transactions Execute to increase trading volume and earn rewards.
NFT terminology for purge transactions refers to buying and selling items between wallets that you control.
For example. MiBIT #8319 The same two wallets have been "traded" between multiple times in the past day. Defiant reached out to LooksRare via Twitter DM for comment, but has not yet received a response.
Twitter user El Yogui shared a Electronic Forms Analyze the profitability of cleaning transactions at different volume and price levels.
Higher volumes mean higher transaction fees for $LOOKS pledgers, and the resulting revenue attracts more buyers into the "flywheel" effect that has worked so well to date.
Is it sustainable? It's too early to tell, as LooksRare is only ten days old.
Trading and pledge rewards will be halved on February 10, so it will be interesting to see how the tokens and platforms perform in the run-up to the event.
Earnings aggregator Pickle Finance has launched New Strategy Buy and pledge more $LOOKS tokens using the WETH received from the trading bonus. This may be of interest to $LOOKS longs.
For the more conservative farmer, using perpetual contract hedging is another option, as $LOOKS is listed on various centralized exchanges. By betting on $LOOKS in the futures market and holding an equivalent short position, it is possible to earn a handsome return on the bet (minus the cost of funding the short position) with no price risk. Note Funding rates It has been negative, so this could have been a crowded deal.