Press release
PRESS RELEASE. On February 14, the highly anticipated Blur airdrop finally went live. According to Dune Analytics, as of February 15, more than 40,000 addresses claimed the Blur airdrop, with 8.2% of them receiving more than 10,000 tokens. Most users received between 1,000 and 10,000 BLUR tokens, with an average of 7,000 tokens distributed to each user. On CoinEx, the price of BLUR was around $0.8 on the day of distribution. Based on that figure, the Blur airdrop provided users with $5,600 worth of tokens on average, making it another airdrop legend after the Aptos airdrop.
Behind the Blur Rise: NFT’s Blue Ocean
As a newcomer to the NFT market, Blur has been garnering attention over the last year. Since its launch in March 2022, the project has gained a huge following through its airdrop announcement. Meanwhile, its aggregation system, which allows for frequent trading, has gained wide recognition among active NFT traders. In fact, Blur has surpassed OpenSea, which is the number 1 NFT marketplace, in terms of transaction volume, which shows the fierce competition in the NFT market.
The popularity of Blur indicates that while there is high demand for NFTs, the market and its derivative tools remain underdeveloped. NFTGO data shows that the market capitalization of three major projects, specifically BAYC, CryptoPunks, and Otherside, has already reached 2 million. ETHwho is worth over $3.1 billion according to real time ETH price in CoinEx.
That being said, the unique characteristics of NFTs make it difficult for us to accurately capture the value of each NFT. Just like traditional collectibles, different NFTs come with different features, and the attribute preferred by collectors may offer an NFT at a different price. The lack of clear valuation methods makes NFT trading more challenging than FT trading, which also blocks circulation in the NFT market and results in poor liquidity.
Additionally, blue chip NFTs are often expensive and inaccessible to retail investors, making it difficult for the NFT market to develop. Although the #1 crypto Bitcoin is trading at $20,000, retail investors can buy 0.01 or even less on exchanges. However, the minimum price of Bored Ape Yacht Club (BAYC) stands at 67 ETHwhich is worth over $100,000, making it unaffordable for ordinary investors.
The NFT market has continued to explore new ways to address these issues, triggering the emergence of the NFTFi category, which encompasses NFT markets and aggregators, lending, leasing, derivatives, sharding, and oracles.
NFT Market and Aggregator
NFT markets are considered the core of the entire NFT ecosystem. With an NFT marketplace, users can list their NFTs or buy NFTs from others at any time. Additionally, most NFT trading platforms offer multiple sales models, including fixed price sales, Dutch auctions, English auctions, and private transactions. Right now, the trending NFT markets include OpenSea, Rarible, LooksRare, and X2Y2. Except for OpenSea, all of these projects have issued their own tokens and you can always check them out on CoinEx if you are interested in trading these tokens.
In addition to the centralized markets, some decentralized projects are working to solve the poor liquidity of NFTs. For example, Sudoswap introduced the DEX AMM mechanism to the NFT market. This allows users to provide liquidity and benefit from instant pricing through trading comparison on Sudoswap, which addresses the liquidity issue in the decentralized NFT marketplace. However, this method is more suitable for NFT projects ranked in the middle or lower part of the market because the AMM mechanism eliminates the rarity differences. Meanwhile, AMM is not applicable to top-tier NFT projects as they are subject to larger price differences.
In the NFT marketplace, if a seller lists an NFT on OpenSea, users who only use LooksRare will not be able to see that NFT. As a result, when buyers search for their favorite NFT, they may have to switch between multiple NFT marketplaces, significantly increasing the cost of time.
This has led to the rise of aggregators, which have become a major channel for buying NFTs. For example, in addition to its own marketplace, Blur also adds OpenSea, LooksRare, and X2Y2, allowing traders to quickly analyze essential statistics from relevant NFTs on a single platform. For professional traders, aggregators like Blur are much more efficient than regular marketplaces like OpenSea.
Many major projects are trying to implement their own aggregator. Uniswap, a well-known DEX, recently acquired Genie and launched its own NFT aggregator, which supports popular NFT marketplaces such as OpenSea, X2Y2, LooksRare, Sudoswap, Larva Labs, Foundation, NFT20, and NFTX. OpenSea has also acquired marketplace aggregator NFT Gem, adding platforms including OpenSea, Rarible, LooksRare, X2Y2, NFTX, and NFT20.
NFT loans
NFT loans have become an essential part of the NFTFi category. Many NFT holders hope to gain temporary liquidity without selling their assets, which has led to a growing demand for NFT loans. At the moment, NFT loans mainly include two models: Peer-to-Peer and Peer-to-Pool.
NFTfi is a typical peer-to-peer lending service provider. This loan model allows borrowers and lenders to negotiate all the terms of the loan, including the amount, term, interest rate, and method of repayment. As such, peer-to-peer lending features smaller interest rate differentials, and since no external oracles are needed, users are not exposed to oracle risks. That said, peer-to-peer lending is subject to high time costs, and borrowers may need to spend a lot of time finding suitable lenders.
Many NFT lending platforms have taken advantage of the AAVE lending model, employing the Peer-to-Pool approach, where the protocol pairs the two parties and makes decisions on behalf of the lenders. This approach is more efficient and allows for quick adjustment, but it lacks capital efficiency and is subject to significant interest rate differentials. For example, if there are 1,000 ETH in the pool, but the borrower only wants to borrow 500 ETH, the interest you paid will be distributed evenly among all lenders, which means that lenders will receive a much lower interest payment. As a result, most of the funds in the common fund are not fully used. Also, under the Peer-to-Pool model, users can run the platform. For example, the well-known NFT lending platform BendDAO experienced a liquidity crisis due to the liquidation of NFTs during a market downturn.
NFT rental
Last year, Ethereum approved the ERC-4907 smart contract standard, which introduced the concept of “expiration” to enable unsecured NFT rental through contracts. Unsecured rental allows NFTs to be wrapped in a way that retains their original characteristics, but the wrapped NFT will be destroyed when the rental period expires. Since the release of ERC-4907, collateral-free renting has become the main focus in the NFT rental market, replacing conventional collateralized renting, and most platforms, including reNFT, have embraced collateral-free renting. . Despite that, NFT rental is still a small market as the demand for blue-chip NFT rental is limited, and most of the application scenarios for NFT rental are in fields including gaming and metaverse.
NFT derivatives
In the financial sector, derivatives are must-have products and NFTFi’s experiments with derivatives have also attracted market attention. Many platforms are working on NFT-based futures and options, despite their lack of popularity. For example, nftperp offers NFT futures, allowing investors to go long or short on NFTs, while NiftyOption offers NFT options. Right now, the NFT derivatives market is still in its infancy, but as the relevant products are updated, investors will be able to hedge against price fluctuations in the NFT market through various strategies.
NFT fragmentation
Since NFTs are indivisible, top-tier NFTs like BAYC and CryptoPunks are extremely expensive, making it difficult for retail investors to join the game. To address the problem, many projects are exploring NFT. sharding, i.e. dividing NFTs into multiple shards that investors can buy and share the returns. Fractional.art, a leading NFT sharding project, offers Uniswap-based trading features that allow users to trade sharded NFTs anytime, anywhere. Despite its advantages, NFT fragmentation also faces challenges, such as potential disputes over the distribution of airdrop benefits.
NFT oracles
Accurately capturing NFT prices has always been one of the biggest challenges in the NFT market because prices affect a wide range of operations, including lending and liquidation. In light of that, NFT Oracles were launched to solve the problem of NFT valuation. For example, Abacus Oracle uses a peer-to-peer incentive pricing mechanism and Abacus Spot’s liquidity valuation to provide NFT pricing services, which accurately capture the value of an NFT. Other platforms like Upshot and Banksea are also exploring their own pricing mechanisms. With a focus on real-time accurate NFT pricing, Oracle projects compete fiercely in the industry.
Conclusion
NFTFi is an essential part of the NFT market, and the NFT segments are striving for a common goal: achieving large-scale circulation of NFTs and making them more accessible. At the moment, many NFTFi projects are still in a nascent stage and can present impressive innovations that will lead to the exponential growth of the NFT market. For example, the third Blur airdrop triggered a rapid increase in transaction volume and price floor for top-tier NFTs such as BAYC and Azuki. Similarly, the advancement of NFT infrastructure will also attract more users to the market.
BLUR and many innovative NFTFi tokens are now available on CoinEx (https://www.coinex.com/), you can go to the exchange to trade the latest NFTFi token at any time. Furthermore, CoinEx has announced the “NFTFi Special Event: Join the Trading Volume Ranking, 5000 USDT For Grabs Promotion”, from February 16 to 22, 2023 (UTC).
Link:https://www.coinex.com/activity/trade-rank/9
image credits: Shutterstock, Pixabay, Wiki Commons
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