Overview of OpenSea's New Challenger X2Y2: Incentivizing NFT Listings to Solve Supply and Demand Issues

Author: Karen

As the leader of the NFT market, OpenSea held a dominant position of about 90% for a long time last year. However, rumors of going public, centralized management, and frequent service outages have made OpenSea a subject of controversy. Because of this, the market, which has been nearly monopolized for quite some time, still leaves "a window" for newcomers.

Last month, LooksRare, which gained significant popularity through innovative marketing strategies such as airdrops, trading dividends, and staking incentives, made notable breakthroughs in trading volume and user growth in a short period.

However, since about 87% of LooksRare's trading volume meets CryptoSlam's wash trading standards, and within the three months starting from the evening of February 9, daily LOOKS trading rewards will drop to less than half of the current amount, the reduced attractiveness of LooksRare's trading and the resulting changes in token staking yields and potential selling pressure cannot be ignored.

While LooksRare's predicament illustrates that artificially inflating trading volume is not a sustainable strategy, its rapid rise offers valuable insights. Can the newly launched NFT marketplace platform X2Y2, which has garnered considerable attention through an innovative public offering mechanism, "complement each other's strengths"? What unique features does its product have? This article will explore.

What is X2Y2? What is its progress?

X2Y2 aims to build a truly decentralized NFT marketplace platform that shares profits with users. Last week, X2Y2 launched its Beta version on Ethereum, allowing users to trade NFTs with zero transaction fees and zero royalties during the testing phase. The currently available testing features include fixed-price sales, bidding, and series bidding.

X2Y2 will subsequently upgrade existing features and continuously add new ones, including instant push notifications for buying and selling, auctions, bulk listings, bulk purchases, rarity rankings, bulk sending, and more. The official version of X2Y2 will charge a 2% transaction fee for users, but all fees will be distributed to token stakers.

Unlike LooksRare, which stimulates user trading by offering considerable trading rewards, X2Y2 does not set trading rewards. Instead, it primarily encourages and urges users to list NFTs to address the supply and demand issues on the platform, whether through airdrop claiming rules for OpenSea users or staking rewards.

Among them, the total NFT listing rewards are more than twice the token staking rewards, and it will also provide platform transaction fees (2%) and token rewards to token stakers.

According to information revealed in a previous AMA, the X2Y2 team is anonymous, and its marketing partner is Winkrypto, a crypto marketing company based in Singapore. X2Y2 will not conduct private placements.

To eliminate the suspicion of running away, all ETH collected through the ILO (Initial Liquidity Offering) will be added to liquidity on Uniswap, and this portion of LP tokens will be permanently destroyed. The specific details of the ILO will be explained in the next section.

X2Y2 Token Economic Model

The total supply of X2Y2 is 1 billion tokens, roughly distributed as follows:

• 65% for staking rewards (token staking rewards and NFT staking rewards, released over 720 days);
• 12% for airdrops (not locked);
• 10% allocated to development and team (released 2.5% every 180 days, with the first release after 180 days, completed in 4 releases);
• 10% allocated to the treasury and ecosystem (released 1.25% every 90 days, completed in 8 releases);
• 1.5% for presale (released linearly over 360 days according to block);
• 1.5% for liquidity management (1% will be used to form LP tokens with the 1500 ETH raised through ILO and destroyed, and another 0.5% will be used as LP staking rewards).

In terms of the largest share of token distribution, the staking rewards, X2Y2 has divided the 65% staking rewards into two parts: X2Y2 token staking rewards (20%) and NFT staking rewards (45%).

The NFT staking rewards are primarily aimed at incentivizing users to list their NFTs for sale at reasonable prices, with the rewards obtained related to the proportion of their staking value to the total staking value.

Of course, considering factors such as the types and prices of NFTs, the specific NFT staking rewards users receive are also related to multipliers and the probability of their staked NFTs being sold. The latter's calculation factors include the recent trading frequency of related series, the difference between listing prices and historical prices and floor prices, whether the listing is taken down after being listed, whether it belongs to a blue-chip NFT series, and the duration of the listing.

X2Y2 will distribute all rewards over 720 days, with the highest rewards in the first 30 days, releasing 1,235,000 tokens daily, and then decreasing to about 48% of the original amount over the next three months. Additionally, token stakers can also receive the platform fees from the previous day. NFT staking rewards are distributed equally each day, with nearly 625,000 tokens distributed daily. The specifics are as follows:

Regarding airdrops, according to the Litepaper, X2Y2 will distribute airdrops to over 860,000 OpenSea users (the snapshot was completed at block height 13916166). To reduce the whale effect, X2Y2 will distribute 1000 X2Y2 tokens to whale users who have traded more than or equal to 30 ETH on OpenSea, while users with trading volumes below 30 ETH will receive airdrops based on their trading volume proportion.

Of course, X2Y2 has also set claiming conditions for the airdrop amount that users' accounts can claim. For example, users who can claim more than 1000 tokens in airdrops need to list at least 50 NFTs across more than 5 series on the platform. It can be seen that both the NFT staking rewards and airdrop rules indicate that X2Y2 is trying to incentivize users to list more NFTs to increase the tradability of the platform as an NFT marketplace.

Regarding the ILO (Initial Liquidity Offering) on February 14, X2Y2 will open a whitelist for 1000 Beta version trading users and community users (via a lottery), selling 15 million X2Y2 tokens (1.5% of the total supply) divided into 1000 portions, each priced at 1.5 ETH. These tokens will be unlocked linearly over 360 days according to blocks.

As mentioned earlier, the 1500 ETH raised will be added to Uniswap to provide liquidity, and the LP tokens formed will be destroyed on February 15. Additionally, whitelist users can also claim a X2Y2 Genesis NFT.

From the overall token release plan, 12% of the total supply will be released as airdrops on the first day, followed by the first release of 2.5% for the team before the 180th day.

The main components are the two types of staking rewards and the liquidity presale portion released according to blocks, where the daily release amount in the first 30 days includes daily rewards for X2Y2 token staking (1,235,000), NFT staking (nearly 625,000), and daily unlocking of 41,666 from the liquidity presale, totaling over 1.9 million tokens released daily.

How does it differ from OpenSea and LooksRare?

In terms of product experience, X2Y2's current layout is similar to LooksRare, relatively simple, but the functionality still needs further development and improvement.

Regarding platform transaction fees, both X2Y2 and LooksRare charge 2% (slightly lower than OpenSea's 2.5%), and neither has account opening fees. Both will return all transaction fees to token stakers.

In terms of platform incentives and user attraction, LooksRare, which launched last month, has divided rewards for trading users and (LP) token stakers into trading rewards, token staking rewards, and LP token rewards, encouraging users to "trade-stake-trade," thereby enhancing user activity, transaction volume, and token staking conditions.

In contrast, X2Y2 does not set trading rewards at all; rewards are primarily distributed to token stakers and a broader range of NFT listing users. Perhaps X2Y2 believes that the success of an NFT marketplace platform largely depends on whether there are more NFTs available for trading and purchase on the platform. As long as there are more and richer listed NFTs compared to other platforms, it can attract users to trade.

In other words, both X2Y2 and LooksRare ultimately aim to attract users to trade and stake on the platform, but the difference lies in their incentive methods. The former focuses more on the fundamental supply and demand issues of NFTs, while the latter hopes to "spend heavily" in the early stages to directly encourage users to form trading habits.

Token rewards will eventually decrease and run out. When that day comes, the key to growing and strengthening will be who can better solve the supply and demand issues. In the short to medium term before that day arrives, attracting users to trade, the appeal of staking, the choices of project parties, and the product experience are equally important.