A Detailed Explanation of the Blur Airdrop and Token Economic Model

Author: Misty Sea, PANews

The highly anticipated Blur airdrop finally concluded at 2:30 AM Beijing time on February 15, 2023, with 360 million Blur tokens distributed to the NFT community and Blur users. According to feedback from the community and social media, many users received hundreds of thousands of Blur tokens in the airdrop, and even non-heavy users of Blur products who did not aim for the airdrop received amounts ranging from thousands to tens of thousands of dollars, creating an unprecedented wealth effect from the airdrop.

++Dune Analytics data++ shows that as of 1 PM on February 15, 80.15% of the Blur airdrop had been claimed. Among them, 35.8% of the airdrop amounts were between 100 and 1,000. 39.6% of addresses received between 1,000 and 10,000 tokens, while 7.8% received between 10,000 and 100,000 tokens. The top three wallets in the airdrop claim rankings received 3.2 million BLUR ($2.46 million), 2.97 million BLUR ($2.28 million), and 2.5 million BLUR ($1.92 million) respectively.

According to information from the Blur official website, this airdrop was aimed at all trading users, care package holders, and creators from October 19, 2022, to February 14, 2023. Additionally, users who joined the waiting list or participated in the private beta in May 2022 will automatically receive an additional allocation of Blur tokens. The claim period for this airdrop is 60 days, after which unclaimed tokens will be forfeited.

Furthermore, this airdrop is only the first round issued by Blur to the community, and the second round of the airdrop cycle has already begun. From now until March 14, users who bid on collectibles and list NFTs on the Blur platform will earn double points. Therefore, users who missed the first round of the Blur airdrop can now participate in the second round. This article from PANews will detail the launch and process of the first round of the Blur airdrop, as well as its economic model, governance, and market capitalization.

The Launch and Process of the First Round of Blur Airdrop

Before the Blur airdrop was issued, several centralized exchanges, including Coinbase, OKX, and Huobi, had announced their listings, creating high market expectations. Currently, Binance is the only major exchange that has not released a listing announcement. Meanwhile, community users actively dug into the Blur token contract address and found the official contract before the launch. According to Etherscan data, the cryptocurrency market maker Wintermute's multi-signature wallet received 15 million Blur tokens before the airdrop went live. Therefore, the community speculated that Blur had entrusted its market-making business to Wintermute.

The official launch of the Blur token airdrop, originally scheduled for 1 AM on February 15, was delayed to 2:30 AM. After the official launch, the price of Blur tokens on the centralized exchange OKX surged from $0.1 to $8.3, while on Huobi, it jumped from $4 to $10. Due to user overload, the airdrop claim page on the Blur official website crashed, preventing users from accessing the claim interface normally, and it took over half an hour after the launch time for it to function properly.

The Ethereum network's gas fees also skyrocketed to around 1,000 Gwei. According to the ultrasound website, in the past 24 hours, contracts claiming the Blur airdrop burned 980 ETH, ranking first across the network.

According to official information from Blur, by the time of the airdrop claim, a total of 146,823 users had traded NFTs on Blur, and the Blur protocol had processed over $1.18 billion in GMV since its launch, excluding fraudulent transactions.

Economic Model

According to official documents from Blur, the BLUR token is issued by the foundation as a utility token, granting the community control over the DAO. Token holders can manage key parameters related to value accumulation and distribution within the Blur protocol through their votes or delegated votes. The total issuance of BLUR tokens is 3 billion, which will be fully released over 4-5 years. Of this, 51% is allocated to Blur community members; 29% is allocated to past and future core contributors, with a release period of 4 years; 19% is allocated to investors, also with a release period of 4 years; and 1% is allocated to advisory members, with a 4-year release period.

The BLUR tokens allocated to core contributors and launch partners will vest according to the same schedule, with an additional 4-month cliff. The BLUR allocation for advisors will vest over 48 to 60 months, with a cliff of 4 to 16 months. The release rate is specifically set at 40% of the total supply in the first year, 30% in the second year, 20% in the third year, and 10% in the fourth year.

12% of BLUR tokens were distributed to the community in the first round of the airdrop, and an additional 39% of BLUR tokens will be allocated to the community through contributor grants, community initiatives, and incentive programs. Of this 39%, 10% has been allocated to the incentive budget for the next release of incentives. If all the incentive budget is used up, more incentive budgets can be allocated through voting.

Additionally, the Blur official will propose a protocol fee rate (up to 2.5%) after 180 days, which will be decided by the community.

It can be seen that the BLUR token economic model aims to guide platform liquidity through continuous incentives, avoiding a decline in liquidity after a one-time release of incentives. Through multiple stages of incentives, it encourages users to develop long-term usage habits, enhancing platform stickiness and influence. According to defillama data, before the first round of the airdrop, users believed that Blur would only have this one round of airdrop, leading some users to propose ETH for the Blur Bid bidding pool. Once the official airdrop was launched and the second round was immediately opened, there was a significant inflow of ETH into the Blur Bid bidding pool. The current pool is valued at $40 million.

Moreover, the largest group of BLUR token allocation is the community, which aligns with the Blur foundation's concept of operating the protocol under DAO control. This somewhat avoids the situation where some projects claim to be DAOs while most voting rights remain centralized. Additionally, the vesting period and cliff time for the tokens allocated to core contributors and advisors have been increased to benefit community members.

Governance

BLUR token holders have governance rights over the protocol, and the Blur foundation assists in promoting community-led governance and participation in the DAO, as well as helping contributors develop and grow the Blur ecosystem. To this end, Zeneca has been promoted to a director of the Blur foundation, and core protocol contributors have also joined the foundation. At the same time, the Blur official has repeatedly emphasized governance and incentives, highlighting its importance.

The governance process consists of off-chain proposals, forum discussions, Snapshot voting, on-chain proposals, and execution. Governance proposals can be categorized into core, process, and informational types. Core proposals require on-chain actions, including financial allocations, and will set proposal thresholds and lock governance rights. Process proposals involve changes to processes or implementations, including changes to procedures, guidelines, decision-making processes, and tools for Blur DAO. Informational proposals provide general guidelines or information suggestions from the community.

Users need to hold a minimum required amount of BLUR tokens (currently 100,000) to initiate an off-chain proposal, and proposals require at least 30 million BLUR votes in favor to enter on-chain execution voting. Once in on-chain execution voting, at least 120 million BLUR votes are needed to proceed to execution.

According to Blur governance information, user governance rights are proportional to the number of tokens held, which somewhat increases the motivation for users to hold tokens, but governance itself remains susceptible to centralization. Most token holders do not care about governance rights and prefer to delegate them to governance representatives, which may ultimately lead to a few representatives controlling more governance rights.

To streamline the on-chain governance process, Blur DAO will manage some operations through committees. Over time, these committees will work to gradually transfer their functions to management departments. Specific committees include the security committee, market committee, and incentive committee. The security committee ensures that proposals follow the established governance procedures, preventing proposals that do not adhere to proper procedures from passing; the market committee promotes upgrades to the Blur market and aggregator contracts and executes governance decisions related to community development, such as royalties. The incentive committee's task is to manage incentives for Blur users. The incentive committee can utilize up to 10% of the total supply for incentive programs.

This flexible governance compensates for overly rigid governance processes, allowing for more comprehensive consideration during community and product updates. For example, the Blur platform's royalty settings allow buyers to customize royalties, which may prevent high-quality creators from receiving corresponding rewards. However, the existence of committees can incentivize the maintenance of high-quality creators.

Market Capitalization Comparison of Blur and NFT Trading Platforms

According to Coinmarketcap data, the current circulating market capitalization of BLUR is $294 million, with a fully diluted market capitalization of $2.428 billion. The current circulating market capitalization of X2Y2 is $25.9 million, with a fully diluted market capitalization of $144 million. The current circulating market capitalization of Looksrare is $130 million, with a fully diluted market capitalization of $280 million. Additionally, based on previous financing news, the valuation of Opensea's primary market is $13.3 billion.

According to NFT data website nftscan, in the past three months, the Blur platform has accounted for 33.54% of the NFT market trading share, Opensea 33.12%, X2Y2 22.39%, and Looksrare 10.55%.

It can be seen that Blur, which holds the highest share of the NFT market, has a fully diluted market capitalization that is only one-fifth of the valuation of the second-ranked Opensea. Even considering that Opensea's valuation is from a bull market cycle, Blur appears slightly undervalued in comparison. Compared to the second-ranked X2Y2, Blur holds 1.5 times the NFT market share and has a circulating market capitalization more than ten times that of X2Y2. This valuation discrepancy is partly due to Blur's backing by leading investment institutions like Paradigm, which enhances its influence and leads to higher market expectations, while X2Y2, having grown within the community, currently lacks disclosed investment institutions, resulting in lower market expectations and a significantly lower valuation. (Recommended reading: 《What Should the Reasonable Valuation of Blur Be as It Is About to Launch?》)

Conclusion

The Blur airdrop has once again brought benefits to users in the crypto community, encouraging more people to start using the Blur platform, achieving a win-win situation. From its token economic model, Blur not only benefits the community through its vesting periods but also allocates more than half of the total token supply to the community, which is rare in cryptocurrency projects. This allocation process distributes tokens through incentives for platform users, aligning with the goal of community governance under Blur DAO.

In terms of its airdrop method, both the Blur official and Optimism officials understand how to guide users and operate platforms through airdrop incentives, maximizing the effectiveness of the incentives. As previously mentioned by PANews, the three cycles of the first quarter airdrop incentivized all NFT community users to become seed users and achieve promotional goals, followed by incentives for sellers, buyers, and creators to encourage comprehensive product usage and improve retention. Unlike other projects that either strictly scrutinize or distribute airdrops in a blunt, average manner, which can be considered "lazy governance." Such non-refined airdrop methods are ultimately detrimental to the project in the long run.

In terms of market capitalization comparison, Blur is currently undervalued relative to Opensea, which has enjoyed the benefits of being a leading platform. However, compared to platforms like X2Y2, which have grown from zero within the community and offer a relatively superior product experience, Blur's market capitalization is somewhat overvalued, partly due to its advantages in investment institutions and team background. Of course, it cannot be denied that Blur's product experience is far ahead among NFT platforms.

The Blur airdrop is still ongoing. According to Coinmarketcap data, the total trading volume of BLUR tokens in the past 12 hours is $702 million, with centralized exchanges accounting for the highest share at $517 million, indicating a high turnover rate. Its secondary market price has also stabilized after an initial surge following the launch. Users hoping to receive the second season airdrop from Blur can bid or list NFTs on the Blur official website.