What Would the Next Go-to NFT Marketplace Look Like?

Non-Fungible Tokens (NFTs) have been the talk of the town lately, and for good reasons: they not only unlock lucrative opportunities for every investor but make digital art collecting and trading accessible for the masses. The movement is at its dawn, and LooksRare is about to take the lead of a niche.

Views expressed below are the analytical views of the LD Capital and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.

NFTs in a nutshell

Non-Fungible Tokens (NFTs) are unique cryptocurrencies, usually associated with digital art that can’t be duplicated or copied. They are mostly issued on popular blockchains, such as Ethereum and Solana, using smart contracts and a certain amount of cryptocurrency needed for the minting. The best part? NFTs have a wide array of use cases, including trading, collecting, and various metaverse utilities. Popularized recently, this revolutionary concept took the crypto world by storm, with many expecting the movement to become globally adopted in the near future.

LooksRare to take the lead

There are countless NFT marketplaces in existence, but only some stand out from the crowd: LooksRare combines its trailblazing features, such as a reward system, with essential features of a digital art trading platform. According to available data, LooksRare saw $1.6 billion in trading less than 30 days since its launch and managed to outpace the industry standard numbers by a hefty margin. With an average daily trading volume of more than $500M, LooksRare is on its way to becoming the top NFT marketplace, both in terms of user profitability and token offering.

LooksRare one-month performance data, source DappRadar

The Go-To LooksRare Feature

• profit-sharing mechanism
• reward system
• creator's royalty

For an emerging NFT marketplace, everything has to start from scratch. What would be the elements and steps that made LooksRare growing to become so popular and so quickly?

LooksRare is a community-oriented NFT marketplace created by two anonymous co-founders, Zodd and Guts. Based on public blockchain - Solana, the platform issued LOOKS as the native token and supports NFT trading in exchange for ETH and WETH.

Without having a true unique selling proposition  (USP), it will be tough to succeed. For that reason, and to truly set themselves apart from competitors, LooksRare carefully designed the marketplace’s robust reward framework that allows users to earn extra while doing what they are best at trading. Its mechanics are supremely simple. Everyone has three options to choose from - staking, trading, or providing tokens to a liquidity pool. Staking the platform's native token, LOOKS, anyone has the possibility to earn annual percentage yield (APY) after their funds.

Moving on, the easiest way of earning might just be trading; after every single transaction completed with the participating NFTs, the involved users get rewarded. It’s really important to highlight this feature and truly appreciate its groundbreaking idea to solve the current soar point - gas war: in almost every other platform, traders have to pay incredibly high fees without getting any rewards whatsoever. According to LooksRare's recent blog post, as an NFT native platform, the users "are tired of the de-platforming of creators, and the decision-makers who value business over the community, seeking IPO instead of benefiting the communities that got them there. "

Challenging Opensea's Dominance

In the early beginning, LooksRare has positioned itself to target OpenSea by offering its opponent users LOOKS token airdrop. Eligible users are Opensea traders who trade 3 ETH or more between June 16 and December 2021.

In addition, the platform charges offer LOOKS stakers a 2% transaction fee on all NFT transactions, contradicting to OpenSea's 2.5%.

LOOKS holders also have the option to delegate their funds to a liquidity pool on Uniswap V2, where LOOKS tokens are traded. This way, they will not only earn Uniswap’s baseline rewards for providers but also harvest additional rewards from LooksRare’s ecosystem too.

What’s next for LooksRare

After having observed where the platform stands today, we must take a step back and look at the market from a macro level to identify the traits leading to inevitable and sustainable success.

First, the importance of a user-first approach has to be highlighted. Nowadays, we live in the age of digital unity, where countless communities exist with shared thinking, problems, and more power than some nations. However, and most importantly, members of such communities also have shared knowledge, giving them immense leverage when it comes to fighting for better offers. Organizations can no longer afford not to value their customers and provide only their core products without actual benefits on the side. Although the trend of rewarding users for choosing to engage with a certain product or service has been picking up speed lately, it’s still far from masses demanding it as an essential element of every customer journey. For that reason, projects like LooksRare, which manage to implement this vital, yet simple mechanism and use it as a foundational cornerstone, are probably why it could steal some market share from OpenSea.

Risks and Potential - Whale Wash Trading

According to DappRadar, at the time of writing, LooksRare's 24 trading volume exceeded $50.48 million. However, users should be aware of the NFT wash tradings and negativities. Wash trading is a frequently used term in the traditional financial market, where buyers and sellers, in the sake of making up a liquidity illusion and reward incentives, create a misleading market value through artificially inflating metrics by purchasing and selling the asset, in this case, NFTs.

Addressing the Risks and Solution

Lengthy and careful work like doing research and conducting on-chain transaction data analysis would be the sole solution for NFT traders to filter out suspicious activities. Users can also refer to emerging data aggregation sites to avoid falling victim to wash trading.