The entrants of several new NFT marketplaces over the past year have upended the status quo and challenged the market dominance of existing players.
Blur, a relatively new NFT platform, has moved up the leadership board barely two months after their launch in mid-Oct. We analyzed their rise and attributed it to competitive strategies relating to their product, token incentive, airdrop design, and the team. It remains to be seen whether Blur will be able to sustain their lead when incentives taper.
Given the fluidity of the market and the general lack of platform loyalty, the marketplace war is far from over. Notably, OpenSea has turned up the heat in their latest move to eliminate trading fees to compete with Blur. Nonetheless, the lack of token incentives (when $SEA?) makes it challenging to incentivize usage of the platform as OpenSea has to figure out other non-monetary ways to do so.
Our view is that the next critical move in this fight for market share relates to royalty policies. While optional royalties increase price competitiveness of platforms, creators have been caught in the crossfire of this NFT marketplace battle. Optional royalty policies are not beneficial for the industry, nor sustainable for creators in the long run.
In the ideal scenario, marketplaces, creators, and market participants should work out a middle ground that is beneficial for all - balancing considerations involving monetary incentives, fostering creators’ creativity, and long-term growth. Perhaps a decentralized marketplace is a potential solution that can allow for social consensus to be built and to align the interests of different stakeholders in a democratic manner.
About Binance Research: Binance Research is the research arm of Binance, the world's leading cryptocurrency exchange. The team is committed to delivering objective, independent, and comprehensive analysis and aims to be the thought leader in the crypto space. Our analysts publish insightful thought pieces regularly on topics related but not limited to, the crypto ecosystem, blockchain technologies, and the latest market themes.
General Disclosure: This material is prepared by Binance Research and is not intended to be relied upon as a forecast or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities, cryptocurrencies or to adopt any investment strategy. The opinions expressed are as of the date shown above and are the opinions of the writer, they may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Binance Research to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Binance. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is intended for information purposes only and does not constitute investment advice or an offer or solicitation to purchase or sell in any securities, cryptocurrencies or any investment strategy nor shall any securities or cryptocurrency be offered or sold to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction. Investment involves risks.