1. Competitive landscape of NFT exchanges

(1) Rapidly growing NFT market

As of June 30, 2022, the cumulative transaction volume of the NFT industry has reached US$67.818 billion, and approximately more than 50,000 NFT traders participate in transactions on the chain every day. The figure of $67.818 billion may not seem like much, but what if you were told that a year ago this figure was only $1.3 billion? In just one year, the cumulative transaction volume of NFT has increased nearly 50 times.

(Data source: cryptoslam.io)

(2) Three stages of NFT exchange competition

In such a fast-growing ecosystem, competition among ecological participants is also fierce. The current competition state of NFT exchanges is very similar to the DEX competition state of DeFi Summer back then.

In the first stage, each public chain will have its own NFT exchange, such as Opensea on ETH, Magic Eden on Solana, and Treasureland on BSC.

In the second stage, starting with Ethereum, each public chain will have an endless stream of imitators and challengers competing with leading products. In DeFi, Sushiswap challenges Uniswap; in NFT exchanges, Looksrare and X2Y2 challenge Opensea.

In the third stage, the product that ultimately wins in the respective public chain will move to other public chains. For example, Uniswap has expanded Polygon, and Opensea is also compatible with Solona.

(3) Competitive landscape on Ethereum

It is not difficult to see from the statistics in the figure above that Ethereum is the main battlefield for NFT transactions. I believe that Ethereum will still be the main battlefield for NFT exchanges to compete in the short term. Therefore, the following analysis will mainly focus on the Ethereum chain.

Currently, there are three main NFT exchanges on the Ethereum chain: Opensea, Looksrare and X2Y2. The average trading volume shares in the past month were 85%, 6% and 9% respectively (excluding wash volume). In fact, each company's share will be a little lower than the above data, because only these three companies are counted in the total here. However, the trading volume of other NFT exchanges on Ethereum is not at the same order of magnitude as the above-mentioned ones, so there is no need to discuss it. . It is not difficult to see from the chart that the emergence of Looksrare and X2Y2 has indeed seized part of Opensea's market, but overall, Opensea is still the dominant player, and Opensea's advantage will be difficult to shake in the short term.

(Data source: dune.com/votan/X2Y2-NFT-Marketplace)

2. Competitive development route of NFT exchanges

Both Looksrare and X2Y2 were born in early 2022, when the market started a crusade against Opensea. The reason was that Opensea completed a round of financing at a valuation of US$13.3 billion at the beginning of the year, and then its CFO's remarks were similar to that Opensea was planning to go public, which angered many blockchain users who participated in Opensea transactions in anticipation of airdrops. Users feel stabbed in the back by Opensea. After that turbulent crusade, projects like OpenDAO, Looksrare, and X2Y2 emerged. Under the banner of "For the people, by the people", they attract users by issuing airdrops to early Opensea users, and continue to attract users to participate in transactions by pledging tokens to share transaction fees, transaction mining, and pending order rewards. , and finally grabbed some market share from Opensea.

(1) Transaction mining incentives

1. Trading mining incentives are the most direct and effective way to increase the trading volume of the platform.

Transaction mining uses platform tokens to reward transactions. In order to obtain platform token rewards, users will continue to trade on the platform. The cost of user transactions mainly consists of two parts: transaction fees (platform fees + creator fees) and Gas Fees. As long as the cost is lower than the transaction incentive, there will be room for arbitrage, and arbitrageurs will continue to wash the volume until the room for arbitrage disappears.

The effect of transaction mining is very good. After Looksrare launched transaction mining in January, the transaction volume soared, once surpassing Opensea.

(Data source: dune.com/hildobby/NFTs)

Transaction mining can easily form a positive flywheel in the early stages of launch. After transaction mining is started, the transaction volume of the platform will increase significantly, resulting in a surge in platform handling fees. The handling fees will be 100% captured by token staking users. After the staking income increases, the token price will increase. As the price of tokens rises, the incentives for trading mining increase, so arbitrageurs are willing to spend more to earn trading mining incentives, thus forming a positive cycle. Of course, this cycle in turn is a death spiral. After April, Looksrare's market share dropped significantly. Putting aside macro factors, another core reason is that its transaction mining rewards were halved, which resulted in both transaction volume and currency price. fell.

X2Y2 obviously also discovered that transaction mining is an important means to increase transaction volume in the short term. In April 2022, X2Y2 canceled its own innovative pending order rewards and switched to transaction mining rewards similar to Looksrare. It can be seen that the transaction volume of X2Y2 before April was almost negligible compared with that after transaction mining was adopted.

(X2Y2 historical transaction volume data source: Dappradar)

2. NFT transaction mining rewards are a means to acquire customers, not a moat.

Transaction mining incentives were first used in the DeFi field, and dYdX is one of the leaders. However, transaction mining in contract transactions helps improve liquidity and allows prices to be fully discovered. On the one hand, participants in trading mining engage in mining arbitrage; on the other hand, they also contribute liquidity to the platform and become counterparties to real traders. As for NFT transaction mining, the transaction method of miners is mostly left-hand and right-hand transactions between two wallets, which does not contribute to the liquidity of NFT.

NFT transaction mining can be divided into two stages: the first stage, with a large number of participants, and users actively participate in transactions to obtain rewards; the second stage, with the influx of giant whales, several whale accounts conduct several NFT transactions every day with inflated prices Trading squeezes retail trading and mining space.

In the first stage, because transaction mining incentives have just begun, many new users can be attracted to experience the product, similar to activities such as "tens of billions of subsidies" and "10% discount on coffee" on the Internet. If the product does have a good user experience, then There will be an opportunity to retain new users and achieve a cold start of the project. At this stage, not only the trading volume of the platform increases, but also real trading users can be attracted.

In the second stage, when the whales find that the incentives for transaction mining are short-term sustainable and safe, the whales will participate in transaction mining. The way the whales participate in mining is to choose an NFT that has no creator fees (Creator Fees). , then set the pending order price to several thousand ETH, then buy and sell from left to right several times to complete the transaction mining. This process not only does not provide liquidity for NFT, but also squeezes the enthusiasm of retail traders to participate. At this stage, the core function of transaction mining is to maintain the most basic platform NFT transaction volume data and provide stable ETH cash flow for users who pledge to mine.

In the second stage of transaction mining, the essence is that the agreement party sells the tokens unlocked every day in exchange for ETH and then distributes them to the current token pledgers in proportion. At this stage, transaction mining can no longer attract too many new users to the platform. However, through the first phase of customer acquisition, the platform has accumulated a number of users and gained a certain market visibility. The second phase of transaction mining can bring more new users to the platform. The business data of the platform is maintained at a relatively "beautiful" level.

This stage is both a boiling frog stage and a low-key construction stage for the exchange project side. At this stage, even if the project party does nothing, it can maintain the platform data at the previous level, but this is actually a false prosperity. At this stage, both investors and the project party themselves should turn their attention away from pure transactions. The share turns to the actual growth of the number of users and users’ product experience feedback. From another perspective, the project side does not have much performance pressure at this stage, and the platform data can basically cope with investors, so it is also a good time to calm down and polish the product.

The duration of this phase mainly depends on the design of transaction mining incentives. The day when the incentives drop is the day the second phase ends. Looksrare’s second phase obviously ended in mid-May this year. Transaction mining After the reward was halved, the trading volume of the platform dropped rapidly, resulting in a drop in staking income, which in turn led to a drop in currency prices, realizing the "Davis Double Click."

When the frog is about to be boiled to death, Looksrare seems to have discovered that it is the frog swimming in warm water. Therefore, users who have been paying attention to Looksrare recently will find that they have finally begun to iterate and optimize their products, and have launched some new features that are quite sincere. . But obviously they missed the most golden period of optimizing the product. The best way to stop the death spiral is not to let it start turning. For X2Y2, its transaction mining will last for 2 years, and the rewards are always constant, so the cycle of the second phase will be longer. Can you make good use of this time to polish the product, improve the user experience, and try your best to Capturing more traffic and users is the key to the future development of X2Y2.

In general, transaction mining incentives cannot be generalized in the blockchain industry. DeFi transaction mining can bring much greater value to projects than NFT transaction mining. Therefore, if NFT exchanges want to develop in the long term, they must not regard transaction mining as their own moat, because after transaction mining enters the second stage, the source of income mainly comes from the sale of newly unlocked tokens, which is not sustainable in the long term. Transaction mining incentives can attract many real users in the early stage, but it is by no means a moat for a project to sit back and make money without worries.

(2) Rewards and incentives for pending orders

Listing Reward means that NFT holders list best-selling NFTs on the platform at a reasonable price. They can receive listing rewards even if the NFT is not sold.

1. Exchange incentive change path

Regarding the pending order rewards, the competition path between Looksrare and X2Y2 is particularly interesting.

Looksrare: Transaction Mining → Transaction Mining + Pending Order Rewards

Looksrare started transaction mining when it went online on January 11, and then changed its incentive strategy on April 20, allocating part of the original transaction mining revenue to pending order rewards.

X2Y2: Rewards for pending orders → Transaction mining

When X2Y2 went online on February 15, it innovatively proposed a reward for pending orders. Due to some loopholes in the rule settings at the beginning of the launch, the promotion of NFT transactions was not obvious. After a series of corrections, X2Y2 launched on April 1 The pending order reward was cancelled, and the income originally allocated to the pending order reward was allocated to transaction mining.

2. Are the rewards for pending orders effective?

The logic of the order reward is to encourage NFT holders to list NFT on the platform through the order reward. When a mall has a rich and diverse range of products, shoppers will of course be attracted to the mall for shopping.

First of all, make sure that the main purpose of various incentives provided by the platform is to increase the number of users and thereby promote transaction volume. Therefore, the most intuitive way to see whether there is any effect is the trading volume. Go back to the graph of the historical trading volume of X2Y2. You will find that when the platform adopted the pending order reward mechanism, the trading volume of the platform was very low.

X2Y2 historical trading volume data

(X2Y2 historical transaction volume data source: Dappradar)

The reason is that we divide users who participate in order rewards into two categories.

One type is users who really have a need to sell NFT. The core demand of this type of user is to sell NFT as quickly as possible at the price they want. Therefore, they will not just list NFT just because X2Y2 or Looksrare has an order reward. For these two exchanges, he will definitely place orders on Opensea at the same time. Then, due to Opensea's traffic, his pending orders had a high probability of being filled on Opensea (this has improved after the emergence of aggregators, as detailed below), so X2Y2 and Looksrare gave the pending orders in vain, but did not increase the trading volume. At the same time, because the core demand of users is to sell NFT as soon as possible, the time for pending orders will not be very long, so the corresponding rewards will not be very high. For some users who are not price sensitive, even if they know that a certain platform has pending order rewards, they may You will only choose to place orders on Opensea.

The other type is users who don’t want to sell NFT, but want to make profits through placing orders. The core demands of this group of users are: (1) The NFT will not be bought by others (2) The longer the order time is, the better.

In order to restrict these users from profiteering, the platform will design a series of rules. For example, the order price must not exceed a certain proportion of the floor price. For example, only series with a transaction volume exceeding a certain level can receive order rewards. Under such rule restrictions, what speculators do is to set a maximum price within the specified range to ensure that their NFT will not be bought. This indeed increases the number of NFT pending orders on the platform, but the promotion of transactions is not obvious.

Seeing this, you may wonder, since the effect of pending order rewards is not very good, why does Looksrare adjust its incentive model and switch to pending order rewards? This question will be answered later.

(3) Competition on transaction fees

There are two main handling fees in NFT transactions. One is the transaction fee charged by the exchange, which will be referred to as the "transaction fee" below, and the other is the creator fee (Creator Fee) charged by the NFT creator. It should be noted that there is no one-stop agreement for the setting of creator fee collection ratio, which means that creators cannot set it up once and apply it to all platforms. Often, for some new exchanges, creators need to go there specifically. You need to set up the other party’s website, otherwise it will not be collected.

In any fully competitive market, there will be a price war, and the price war among NFT exchanges revolves around the above two handling fees.

1. Transaction fee price war

Let’s talk about transaction fees first. Opensea, as the leading exchange with a monopoly, charges the highest transaction fee of 2.5% in the industry, and basically sets a cap on fee collection for latecomers. As latecomers, Looksrare and X2Y2 has set lower transaction fees to compete for the market, and there are many exchanges in the market like Blur and Alienswap joining this price war under the banner of 0% transaction fees.

There is a very interesting phenomenon here. Even though other platforms have obvious price advantages over Opensea, they have not captured much market share.

A simple concept is introduced here called switching cost, which is roughly the implicit cost for users to switch from using product A to using product B.

For users of NFT exchanges, the migration cost is extremely low, and the learning cost of the new platform is also very low, because the front-end pages of different exchanges have very little difference. So in theory, when the handling fee of one exchange is one-fifth of another, rational traders will choose to trade on the exchange with the lower fee. Especially with the emergence of aggregators like Gem, which solves the traffic entrance problem of small exchanges, the rate advantage will become more obvious. But now there is a huge difference between theory and practice, so what is the problem?

One of the reasons must be the information gap. Many traders do not know that a low-fee exchange exists, and naturally they will not go to trade there.

The deeper reason is that in the current NFT trading market, a large number of traders are not price sensitive. Under the high fluctuations in the price of NFT itself, the 1%-2% handling fee is not so intuitive, because there are "doubling the cost" and "returning to zero overnight" everywhere. In the face of such gains and losses, many Most people don’t care about the difference in fees.

However, NFT traders will not always maintain low price sensitivity. Now everyone is not sensitive to handling fees. On the one hand, the NFT price itself fluctuates violently as mentioned above. High price fluctuations make handling fees seem less important. On the other hand, NFT is now mainly focused on PFP, which is more like an art category. Traditional art auction houses like Christie’s charge commission fees ranging from 10% to 20%. In contrast, NFT exchanges charge About 2% does not seem so high.

As the market develops and traders gradually mature, traders will gradually realize that the 2% transaction fee is so unbearable. You must know that the transaction fee for traditional stock investment is about three ten thousandths. At the same time, with the rise of GameFi, the transaction category of NFT may shift from pure PFP to NFT in GameFi. At this time, NFT is not just an avatar artwork, it is a means of production, and every fluctuation in handling fees will As a result, investors’ return period will become longer, and the advantages of low-fee exchanges will gradually increase.

In general, I think the price war on NFT exchanges will intensify. Even a giant like Opensea, which is close to a monopoly, will lower its handling fees. You must know that Opensea’s single handling fee income is about 600 million US dollars a year. The extremely profitable industry will inevitably see a large influx of competitors. If Opensea continues to maintain a 2.5% transaction fee, the price advantage of low-fee exchanges will gradually expand.

2. Creator fees

If the price war on transaction fees is an open competition, then the area of ​​creator fees is a dark area. Creator fees are usually set from 0%-10%. As mentioned earlier, this fee requires the creator to set it manually on the platform, which leaves a loophole that is not considered a loophole. Most creators will only set creator fees on Opensea. For some new and smaller NFT exchanges, for various reasons, creators have not set fees. This also leads to the fact that for many NFTs, NFT sellers will receive about 10% more money if they sell NFTs on X2Y2 or Looksrare than on Opensea. So many times you will find that the same NFT may have a higher listing price on Opensea, because only Opensea charges creator fees.

The main reason why it is said to be a dark zone is that no exchange dares to publicly promote its NFT transactions through official channels without charging creator fees (because this obviously harms the rights of creators), but privately it has become a important means of publicity. Of course, NFT exchanges do not dare to offend the public. Generally, creators who take the initiative to set fees on the platform will receive cooperation from the exchange.

Therefore, the price war on creator fees only applies to small exchanges in the early stages of their launch. If NFT exchanges have the opportunity to reach a certain scale, creators will naturally know that there is still such a place where they need to do something. In the future, with the update of some underlying protocols, it may be possible for creators to set up creator revenue sharing at the NFT level. Then the advantage of small exchanges in this regard will no longer exist.

3. The battle for the front-end of exchanges - aggregators

With the emergence of Opensea's competitors, a new product has emerged, the NFT transaction aggregator. NFT transaction aggregators headed by Gem and Genie quickly seized the entrance to NFT transactions with their almost crushing front-end product experience.

Let’s take Gem as an example to briefly introduce the trading aggregator. Gem.xyz is an NFT exchange aggregator. Gem itself does not provide NFT orders and buying and selling services. Gem integrates orders from many NFT exchanges such as Opensea, Looksrare, and X2Y2. , find a series of NFTs on Gem, it will show you all the NFT pending orders of this series on different exchanges, and also has a shopping cart function, you can buy NFTs in batches to save gas fees.

The reason why Gem is so popular is very simple, it is because it is easy to use and very Crypto Native. You can feel that the product manager of Gem must be a senior NFT player, because every iteration of their functions can poke the pain points of users.

This phenomenon is actually a manifestation of the gradual maturity of the industry. In the past two or three years, the core logic of the blockchain industry is whether users or investors can make money. Users do not care much about user experience. A product The quality of the currency is mostly linked to its currency price. The rise of products like Gem means that Web3 users are paying more and more attention to user experience.

If we take a longer-term view, when products like Gem accumulate a large number of users, NFT exchanges such as Opensea, Looks, and X2Y2 may become a pure back-end product of Gem. One day in the future, If you purchase an NFT or conduct a Token transaction on a popular front-end APP, the underlying logic behind it may go through some NFT exchanges or DeFi protocols, but users do not need to know it at all.

Going a long way, back to the NFT exchange, it can be said that Looksrare and X2Y2 are now able to grab a piece of cake from Opensea. Gem is indispensable. Gem provides a large amount of traffic to these small exchanges. As long as there is a pending order on a small exchange and the price of the pending order is advantageous, it can be discovered and completed by traders. The traffic problem that plagued small exchanges seems to have been solved.

This is also the reason mentioned earlier why Looksrare still chose to launch the order reward model even though X2Y2 has verified that the effect of order reward is average. Because the emergence of aggregators such as Gem and Genie has solved the pain point of lack of traffic for small exchanges, before this, NFT exchanges not only had to ensure that the platform had enough pending orders or sellers, but also needed to find enough buyers to shop on the platform. . With the emergence of aggregators, the platform no longer needs to find buyers. It only needs to maintain sellers well so that more and more sellers are willing to come to the platform to place orders at reasonable prices. Gem can help solve buyers' problems. This may also be a change for Looksrare. Main reasons for motivating strategies.

4. What is the core competitiveness of NFT exchanges?

(1) Pending order volume (liquidity)

There is nothing new under the sun. In this era where everyone has an Internet mindset, no one can ignore the importance of traffic. Here we break down the traffic of NFT exchanges into two parts: buyer traffic and seller traffic.

1. Buyer traffic

Many people say that there are new solutions for Web3 traffic. For example, the solution for NFT transactions is aggregators. The emergence of aggregation platforms like Gem has solved the problem of buyer traffic for small exchanges. The NFT trading platform does not seem to need to consider whether anyone will buy NFT, because as long as the platform has NFT pending orders, the aggregators will put the pending orders on the shelves.

Aggregators seem to have become the saviors of small NFT exchanges. But do NFT exchanges really no longer need to have their own buyer traffic?

The premise of all this is that Gem can always remain neutral and not abuse its bargaining power after controlling traffic. This is just like when Meituan and Ele.me finish their price war and almost completely take over the market share, the next step is Use your bargaining power to collect returns from platform merchants. Capital is all about profit. If any exchange thinks that it can always make money with the support of aggregator traffic, then this must be the first exchange to be eliminated.

It can be said that the premise for the emergence of NFT trading aggregators is that there are multiple exchanges in the market, and the traffic provided by aggregators is indispensable for small exchanges to gain a foothold in the market. The two are complementary to each other. But once this initial honeymoon period is over, I believe the next step will be for the aggregators to join forces to hunt down the disobedient exchanges. Not to mention, Gem, the largest aggregator on the market, has been acquired by Opensea. When your biggest traffic entrance is the younger brother of your biggest competitor, you'd better not expect that you can always rely on this product to maintain traffic.

2. Seller traffic

If buyer traffic can still rely on aggregators, then seller traffic is the core competitive point of NFT exchanges. After all, Gem and Genie don’t dare to do evil on a large scale now. In theory, as long as there are enough reasonable prices to place orders, NFT’s The trading volume will not be bad.

Apparently, Looksrare recognized this day in time in April and began to implement order incentives to attract NFT sellers to place orders on the platform. Although X2Y2 canceled the incentive for pending orders, it launched an incentive campaign with 0% transaction fee in April and maintained the 0.5% transaction fee in the following months. Let’s take a quick look here. Transaction fees are usually charged to sellers. This means that usually the buyer doesn’t care what the transaction fee is because the price he pays is the price he sees. Sellers will be more sensitive to transaction fees. Therefore, whether it is incentives for placing orders or reducing transaction fees, they are all benefits to sellers. The platform attracts more users to place orders through profit concessions.

In addition to selling profits to sellers, actively promoting and cooperating with NFT project parties and keeping up with real-time hot topics are also important channels for accumulating seller traffic. From "Ganbai" some time ago to "Free Mint" now, hot spots in the NFT market continue to emerge, and NFT speculators are constantly chasing hot spots in the market. If the exchange can actively cooperate with the project party, let the project party cooperate and guide, and let NFT holders go to a specific exchange to place orders, it can play a significant role in attracting traffic if there is a hit.

3. Buying and selling come from the same source

A big difference between the NFT trading platform and the traditional e-commerce platform is that the NFT exchange has the same origin for buying and selling, which means that a user may log in to the website last time to buy NFT, and the next time he comes again, he may go back to the website again. Will become a seller. This is one of the reasons why we emphasized the importance of buyer traffic earlier. If all the buyers on the platform come from aggregators, how can we expect them to choose you when they choose to sell NFT.

(2) User experience (product iteration capability)

Product experience is a very important moat in Web2, but in Web3 or in a more narrow sense, the blockchain industry is not so valued. When I used Curve for the first time, I thought I was back in the era when the village just got access to the Internet.

The last wave of craze in the currency circle was DeFi. In that round of narrative, the quality of a project or product mainly depends on whether it can help users make money. If it can make money, it is a good project. Even if your front-end is as bad as Curve, it cannot It doesn’t matter how good the front-end experience is for a money-making project.

The emergence of products like Gem indicates that the next round of narrative logic of Web3 will return to the level of product experience, because no matter how good the protocol is, no matter how good the underlying infrastructure construction is, it must be implemented at the user level in the end. To put it simply, it is Someone needs to use it.

The competitive situation in the next stage of the blockchain industry may be that some projects work hard to write contracts to make products, and then be "matryoshka" by an aggregated product with excellent user experience, beautiful front-end design, and strong product iteration capabilities. When making the cake, cut off the largest piece. In fact, this has already begun to show signs of development with the CVX matryoshka doll some time ago.

From the beginning of Crypto Kittiy to today, NFT has entered a stage of rapid development. Every day there are new hot spots, new narrative logic, and new demands are born. Since the development resources of the project side are limited, the project side needs to have a keen sense of smell to discover what are the real long-term needs and consider the ROI behind each new function iteration, so that the product iteration capability can be converted into a good one. Product user experience is the real moat of a project.

Let's take Gem as an example. Under the Free Mint craze, Gem developed a ranking database of Mint data, and directly provided the one-click mint function on the Gem official website, which solved the pain point of users not being able to mint NFT at will and collect data. This is just a small sample of its recent updates, but you can see how a great product uses its own development capabilities to iterate on the product. Opensea, which acquired Gem, also recently launched its own developed Seaport protocol, updated the front-end page that has remained unchanged for thousands of years, and introduced several small features that should have been available for a long time. While first-mover advantage is critical, active and well-directed product iteration is the key to maintaining dominance.

Due to the composability and decentralization of blockchain, the moat theory of Web2 is actually unworkable. The competition in the Web3 industry will be more intense than that of Web2, because here we do not believe in the so-called moat, and the low cost brought by Web3 There is even zero migration cost, allowing users to more freely choose the products they like. If they want to retain users, the project team can only win in the industry by staying vigilant and constantly iterating products, understanding users, and meeting user needs. .

(3) Social attributes

Whoever can build the NFT community into the NFT exchange will have the largest moat.

The social value of NFT has actually not been captured by NFT transactions. The NFT community is mainly concentrated on Discord, and announcements from the project team are mainly distributed through Twitter and Discord. The experience of NFT users is fragmented.

Imagine if there was an NFT exchange with a built-in function similar to Discord. After clicking on an NFT Collection, users can see the daily updates and announcements of the project party. After purchasing NFT, they can automatically obtain an identity in the community. No need to Verify again, the left side of the computer screen is the price trend of NFT, and the right side is the chat box within the community. Of course, this is just my preliminary idea, and future product models are not the focus of today's discussion.

Why is the built-in community the biggest moat? Because in Web3 assets belong to users. NFTs held by users can be listed on any exchange. The migration cost is almost zero. Users can trade on exchange A today and go there tomorrow. B exchange. NFT can be migrated but the community cannot. Even if the user purchases NFT on other platforms, it will eventually be returned to the NFT exchange with the community. So the moat was formed. Coinbase emphasized the social nature of NFT when it launched the NFT market this year, but at that time it only focused on the mutual attention between users and did not pay attention to the construction of the NFT community. However, it is undoubtedly the NFT exchange to capture the social nature of NFT. A worthy attempt.

Conclusion

One of the reasons for writing this article is that I think the future prospects of the NFT market are far more than this. At this point in time, we will feel that Opensea’s position is almost unshakable, but if we extend the time to three to five years, maybe Five years later, another batch of NFT exchanges competed in this market. If you imagine the changes in the competitive landscape of cryptocurrency exchanges over the past decade, what I mentioned above may not be just a horror story.

(This article was written in July 2022. At the current time, many of my previous analysis views have been verified, especially with the emergence of exchanges like Blur.io, which quickly seized nearly 30% of the market share, and Opensea The monopoly position of NFT has also been challenged, which is something that was difficult to imagine half a year ago. The emergence of exchanges like Blur has produced a great "catfish effect". Almost all NFT exchanges have accelerated their product iterations in order to survive in this fierce market. survive in a competitive market.)

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