Based on its successful 2021 performance, OpenSea was probably expecting 2022 to be a year of smooth sailing and swelling profits. However, the NFT marketplace LooksRare swept into the scene like a tidal wave, raising questions about its economy and its place in the NFT industry.
To that end, Coinbase took a deep dive into the rivalry to report back on the younger but rapidly growing NFT giant.
New fish on the block
While LooksRare received quite a bit of flak thanks to allegations – and then proof – of intense wash trading, Coinbase had a slightly different point of view. The exchange’s report acknowledged that a small number of users were making high-value trades to earn LOOKS tokens. However, the report highlighted the success of LooksRare’s non-wash trading volume, its new features for traders, and rewards for early adopters.
After taking wash trading out of the equation, Coinbase’s report said,
“…the remaining legitimate NFT volume is still more than what NFT marketplaces Rarible, SuperRare, Foundation, Makersplace, and Aysnc did in all of 2021 combined.”
Go for the jugular
Coinbase’s report also explored what it called LooksRare’s “vampire attack” – a strategy where a company builds a service to rival an industry leader and provides a clear reward for users who change sides. In this case, LooksRare picked up on a complaint expressed by many of OpenSea’s users. That is the desire for a native token.
Furthermore, both crypto and non-crypto artists have lashed out against OpenSea regarding the way the platform deals with allegations of art theft. The bad press has certainly hurt the ruling NFT marketplace’s rate of adoption outside the crypto sector.
On the other hand, it may not be wise to run into the arms of LooksRare just yet. Coinbase’s report reminded users that LooksRare’s smart contracts were not audited at the time of launch. Furthermore, it added that anonymous teams meant users should be on the lookout for rug pull signs.
In short, those who are new to the metaverse and NFT industry may be better off sticking with the vetted players.
Don’t Look Up
Coinbase’s report also revealed,
“Since daily rewards are paid out as a % of the day’s volume, if, for example, someone can wash trade their way to 10% of that day’s volume, they can net $1 million in LOOKS.”