OpenSea Ready for Competition, LooksRare Vampire Sucks Up Trade Volume

NFT Market OpenSea totally dominates the NFT trading market with a market share of more than 90 percent in trade volume. Yet just two days after its release, LooksRare, a “vampire raid” or decentralized clone of OpenSea, seeks to give the dominant player a fight.

A vampire attack is a clone of an existing service with some minor code changes to distinguish the clone from the original. Typically, a vampire attack aims to undermine the trading volume of an established protocol through superior incentives.

Open source code is easy to fork

Perhaps the most famous vampire attack in crypto to this day is Sushiswap, today a renowned decentralized exchange that started as a vampire attack on Uniswap. Vampire attacks make it very difficult for established open source services to relax, regardless of their current success and dominance, because the code is easy to fork.

In recent days, it seems this is what is happening to OpenSea, the dominant market for NFT. The first two days of operation of the LooksRare vampire attack prints staggeringly high trading volumes, actually higher volumes than OpenSea itself.

On its first day, January 10, LooksRare posted trading volumes reaching 1,465 ETH or $ 4.5 million; However, the next day, the volumes increased to 101,222 ETH or $ 325 million. During the same days, the volume of operations in OpenSea reached 169.6 million dollars on January 10 and 176.5 million dollars on January 11.

Although it is too early to draw clear conclusions from the past few trading days, OpenSea’s trading volumes are down from the 90-day high of $ 161.7 million set on January 9.

Does the volume come from natural demand?

However, there is a big question mark surrounding the trading volume at LooksRare. Is all this trade coming from natural demand? Given that the trading fee on LooksRare is 2.5 percent, Tuesday’s trading volume should have given the platform 613 ETH, almost $ 2 million, in fees. These fees, in turn, and in stark contrast to how things work in OpenSea, are distributed among LOOKS token holders.

LooksRare is launch into the air a total of 120,000,000 LOOKS to Opensea users. Users who have traded at least 3 ETH on OpenSea between June 16, 2021 and December 16, 2021 are eligible to claim up to 10,000 LOOKS tokens. Market-wise, LOOKS surged 180 percent in just a couple of days, trading at $ 4.15 at the time of writing.

As some observers have pointed out, a large chunk of LooksRare’s volume is likely generated from so-called laundering trading, referring to wallets controlled by the same entity “selling” assets back and forth.

Currently, based on the volumes traded, the LooksRare protocol is gratifying traders with 2,866,500 LOOKS per day, and will continue to do so for the next 30 days before phasing out emissions.

When token, OpenSea?

As of now, OpenSea is tokenless, which is one of the many criticisms OpenSea has received since the platform took off last year and quickly reached its current dominance in the market.

Many users are upset by the 2.5 percent platform fees funneled to the OpenSea team and not its users. Others have pointed to OpenSea’s enforcement of intellectual property claims and de-listing of hacked or exploited items, the latter also affecting Signal founder Moxie Marlinspike, who in turn cares about the fact. that basically all Ethereum wallets, including MetaMask, are dependent on the OpenSea API to be able to display NFT in wallets.

Posted in: Ethereum, NFT

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