LooksRare: Will an NFT trading platform that issues tokens be better than OpenSea?

Source: Rhythm Research Institute

OpenSea experienced unprecedented turmoil at the end of 2021, and a single statement from the new CFO caused this unicorn to fall from grace. While there have always been complaints about OpenSea, there was hope for its future evolution; however, the current dissatisfaction with OpenSea has led users to continuously seek a new NFT platform, hoping for a new king to dethrone the old one and break OpenSea's monopoly on the market.

Skin in the game

This is the expectation of users for Web3 applications and the reason for their dissatisfaction with OpenSea. This English idiom translates to "shared interests" in Chinese, and Web3 users hope that applications will reward supporters once they mature.

Taking OpenSea as an example, it is the transactions made by users that have allowed OpenSea to earn substantial fees and boast impressive revenue figures. The choice to go public (IPO) means that the fruits of the collective efforts of Web3 users will become a cake for Web2 residents to share, which explains why OpenSea's IPO plans have faced almost universal resistance from users.

People no longer expect OpenSea to transform into a true Web3 application; instead, they look forward to a genuine NFT trading platform born from the Web3 world to challenge OpenSea.

In the world of Web3, brands and communities are inseparable. Projects that give back to the community provide not only economic assistance but also convey the message, "Thank you for your support; we should share the profits together." Brands are no longer just objects of community admiration; they are the results of collective community efforts.

Will OpenSea be drained?

Recently, OpenDAO "issued tokens on behalf of OpenSea," conducting an SOS token airdrop based on users' trading volumes on OpenSea. Many view this as a vampire attack similar to Sushiswap's token issuance to compete for Uniswap users.

Core contributors of OpenDAO even boldly claimed to invest $100 million to help build the OpenDAO ecosystem, and shortly after the airdrop, OpenDAO released a preview of its NFT platform, which, although not yet launched, has piqued people's interest.

But is OpenSea really that easy to drain?

Larry Cermak, Vice President of The Block Research, once mentioned in response to a user's idea about forking OpenSea that "forking OpenSea is not possible." OpenSea is not open-source, which means starting from scratch with smart contract development and that the foundational work is a massive undertaking.

Of course, you can directly scrape on-chain data to distribute large airdrops to OpenSea users, or quickly deploy staking and mining DeFi plays by copying other open-source DeFi contracts. However, creating a platform with a good user experience is a different story.

As Larry Cermak said, "it will take them months," and if there is no preparation in advance, it will require an even longer development cycle.

Introduction to LooksRare

If OpenDAO was a spontaneous raid, LooksRare is a meticulously planned ambush.

As early as August 2021, LooksRare began preparations to create a better NFT trading platform, one that belongs to the community. After months of waiting, LooksRare finally unveiled its mysterious facade.

As an NFT trading platform, LooksRare has comprehensive basic trading functions, but it also offers features that set it apart from OpenSea, which gives LooksRare the opportunity to become a better, community-oriented NFT trading platform.

First, let's look at the user experiences that LooksRare offers beyond OpenSea.

Overall, LooksRare is not just a simple "fork product" or "copycat"; it was built from the ground up, ensuring that future updates and iterations can maintain optimal autonomy and flexibility.

Next, let's take a closer look at the new features.

(1) ETH and WETH mixed payments

On OpenSea, ETH is used for fixed-price payments, while WETH is used for bidding. Sometimes users need to convert between the two, which not only incurs gas fees but is also quite cumbersome. LooksRare's support for ETH and WETH mixed payments effectively solves this problem.

(2) Instant royalties

OpenSea distributes royalties to creators every two weeks, while on LooksRare, every transaction instantly allocates royalty income to creators. This allows creators to have more liquidity and incentivizes more creators to publish works on LooksRare.

(3) One-click bidding

On existing trading platforms like OpenSea, we are all familiar with the process of listing items for sale, but no platform has supported users in "one-click bidding." With more and more projects issuing thousands of NFTs, these non-fungible tokens are becoming increasingly homogeneous, leading many buyers to care less about the appearance of the NFT they are purchasing and more about which series it belongs to.

For example, many people want to buy a Bored Ape; they do not care what the specific Bored Ape looks like, as long as they own one. This can be seen as an investment, allowing them to sell for profit when prices rise; or owning any one allows them to join the attractive Bored Ape community.

Now, if you want to spend 70 ETH to randomly buy a Bored Ape, what do you need to do? First, you need to convert 70 ETH to WETH, then write a piece of code to batch bid on Bored Apes in the market, and finally wait for a seller to accept your offer.

If you have 140 WETH in your wallet but only want to buy one Bored Ape, after one transaction, you still need to immediately cancel the remaining orders, which incurs significant gas fees. The barrier to writing code is high; if you cannot code, you will need to manually list each order, making the process extremely cumbersome.

LooksRare offers a "one-click bidding" feature that everyone can easily use, and all open orders on the LooksRare platform can be canceled with one click, greatly enhancing the user experience.

Next, let's see why LooksRare is considered a community-oriented NFT trading platform.

As mentioned earlier, in the Web3 era, projects, brands, and communities are inseparable, and LooksRare chooses to share profits with users by issuing tokens.

LooksRare will issue LOOKS tokens, with 75% of the tokens belonging to the community. Part of these tokens will be retroactive airdrop rewards, while the rest will incentivize token stakers and platform traders. The airdrop is already open for collection, and users can claim it on the official website before January 20.

The key to whether all of this can operate healthily lies in whether the LOOKS token can maintain its value in the long term. Tokens go through three stages: utility - exponential - currency.

The first stage requires adding various use cases to the token to provide a solid value foundation; rich use cases will push the token into the second stage, where it can truly reflect the project's development and community vitality. Once the project thrives, the token will enter the third stage.

The most notable use case for LOOKS in the first stage is the proportional distribution of platform fee income to staked tokens. OpenSea's platform fee income becomes a shining number on financial statements.

In contrast, LooksRare's platform fee income will be fully distributed to platform users. Users can stake LOOKS to receive a share of the platform's fee income, and more importantly, the distribution is in WETH, not platform tokens.

As LooksRare's daily trading volume increases, users can earn more and more in fees each day, which will encourage more people to stake LOOKS tokens, further stabilizing the value of LOOKS and creating a positive feedback loop.

Thus, the current challenge becomes how this new platform can take market share from OpenSea.

LooksRare has designed an interesting mechanism: when users claim airdrop rewards, they must complete a listing operation. This mechanism transforms users from "airdrop recipients" into "platform users," significantly enriching the variety and quantity of goods available on the platform in its early stages.

As NFTs are relatively illiquid assets, users will trade on the platform that offers a rich and complete variety of "goods." LooksRare has also designed a "trading mining" mechanism, where users can earn rewards for trading on the platform, greatly incentivizing trading behavior on LooksRare. According to official documentation, LooksRare is also prepared to filter out wash trading, blocking malicious actors at the source.

OpenSea currently holds 97% of the NFT market share, but the site has been increasingly prone to crashes, has multiple unresolved bugs, and has seen a decline in user experience as its user base grows. This has led to a growing anticipation for a brand new NFT platform, providing excellent opportunities for potential newcomers like LooksRare.

We look forward to someone breaking the monopoly and becoming a competitor to OpenSea; healthy competition can create a better environment and drive the development of the entire industry.