Does Blur Have A Branding Problem?
Breaking down the recent shift in collector sentiment towards Blur...
In today’s edition of the Ground Floor we will be breaking the recent shift in collector sentiment towards Blur, the #1 NFT marketplace by transaction volume in 2023.
Does Blur Have A Branding Problem?
Blurs product launch was extremely successful.
What made this launch so successful?
Blur solved the cold start problem - a hurdle two sided marketplaces face in the beginning whereby they simultaneously need to acquire both buyers and sellers, to have either group interested in using their marketplace.
🗺️ The Strategy
By providing the right incentives, Blur was able to attract a growing group of collectors that were willing to list their NFTs for sale on Blur to avoid paying marketplace fees (OpenSea charged 2.5% fees at the time) & to qualify for Blurs first airdrop.
Combined with the lowest creator royalties fees (0.5%), Blur became the best place for collectors to list the NFTs they were seeking to sell.
Prior to, and after Blurs first airdrop when they provided 123,000+ wallets with the opportunity to claim their native token ~ providing many collectors with thousands of dollars in Blur, NFT collectors were collectively celebrating Blurs success.
It's clear that collectors sentiment towards Blur has shifted in recent weeks.
To get a snapshot of what this collector sentiment looks like ~ over 90% of the comments under Blurs most recent announcement are negative.
When Jack Butcher ran this poll, 58% of people voted to remove Checks editions from Blur bids ~ a decision that would disincentivize Blur bid farmers from buying Checks.
The following active poll from Punk9059 also offers insight into current consumer sentiment towards Blur, and their perceived impact on NFTs.
Understanding The Problem
The airdrop farmers that are working to maximize the amount of Blur they can receive from the next airdrop are heavily incentivised to place bids on high volume NFT collections.
This helps collectors sell a large number of NFTs at the same time without an immediate impact on a collections floor prices, however, when a collector accepts Blur airdrops farmers bids, the airdrop farmer will re-list the NFTs they purchase.
What makes airdrop farmers so unique in this market is their willingness to get back liquidity by selling NFTs at large losses.
Since Blur airdrop season 2 began on February 13th, 44 days ago, traders are down an estimated 12,500 ETH on NFT flips ~ $22,565,250.
Over $500,000+ in average daily losses.
✔️ Clarity Required
Whereas once we could say Blur were in the business of providing collectors with the best platform to sell their NFTs, today it's unclear where Blurs primary focus lies.
With an updated incentive problem that rewards the less than 1% of collectors that are interested in airdrop farming the Blur token, Blur has successfully captured 70% of the total transaction volume thanks to the bids from airdrop farmers.
It's my perspective that transaction volume is a vanity metric.
How so? The following graph illustrates the spike in trades for Cryptopunks.
Despite all these transactions, the floor price of Cryptopunks is a mere 0.13 ETH more vs when the collection started trading on Blur 24 days ago.
The impact of Blur airdrop farming:
The average punk (with at least one trade) has traded 9 times already in March.
In the six-year history of punks, this number had never been above 1.7
(1/2 👇) https://t.co/sTLazzrA8C
— NFTstatistics.eth (@punk9059)
Mar 29, 2023
Outside of this artificial demand, the prices of NFTs have also become significantly more volatile as Blur bid farmers are willing to sell NFTs at large losses, further driving down the prices of the NFT collection they are bidding on to earn Blur tokens.
📡 Looking Forward
Blur has made a positive contribution to the Web3 world by eliminating the 2.5% fees marketplaces previously charged collectors.
With its current strategy of offering Blur tokens to bidders, Blur will continue to capture the majority of all transaction volume.
The underlying incentive that's responsible for providing Blur with 70% of total transaction volume is simultaneously causing significant damage to its brand in the eyes of collectors.
What Can Blur Do?
Blur has the opportunity to shift consumer sentiment by addressing the second order impact of its current incentive program ~ an issue that is resulting in many collectors expressing their disappointment with the decisions Blur has made in recent weeks.
Given the success Blur has experienced to date, I'm personally optimistic on the odds that Blur will successfully solve this problem and restore trust in its brand by returning to its roots ~ building the best platform to buy NFTs.
Importantly, the sooner Blur works to solve this problem, the less damage they will do to the Blur brand through the eyes of NFT collectors.
The Ground Floor
See you next week ~ Mattob.eth / OB1👋
This newsletter is for purposes only and does not constitute financial or business advice to any person or entity.