How much is the Blur airdrop worth? NFT Exchange Valuation Analysis
TL;DR
The market shares of Opensea, Blur, X2Y2, and Looksrare are 36.77%, 28.05%, 24.35%, and 7.42% respectively
But the real share after excluding Wash Trading is about 59.1%, 19.5%, 13.2% and 2.9%
Among the currently listed exchanges, X2Y2 is undervalued and Looks is overvalued
Blur's FDV valuation range is about: 382 million - 458 million US dollars
Foreword
Blur will launch platform tokens on February 14th, when everyoneâs boxes and Points on Blur will be converted into tokens. Since Blur has not given detailed Tokenomics, it is not clear what utilities its tokens have. Therefore, this article mainly evaluates Blur from the perspective of comparable company valuation. At the same time, since Blurâs comparable companies (X2Y2, Looksrare) including Blur itself are suspected of trade mining (Wash Trading), this article will deal with its transaction volume to restore the real data.
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1. Industry Analysis
The current competition in the NFT exchange industry is fierce. With the rapid development of the NFT market, more and more exchanges and platforms have begun to set foot in the field of NFT transactions, resulting in increasingly fierce competition in the industry.
Competitors include various types of NFT exchanges, such as large centralized exchanges, decentralized exchanges, exchanges that focus on a certain type of NFT, etc. In order to attract users and maintain a competitive advantage, many NFT exchanges have begun to provide lower transaction fees, higher security, etc.
The competition of NFT exchanges on different chains is different. This article mainly focuses on the valuation of Blur, so here we mainly discuss the industry competition on the Ethereum chain.
The current most popular exchanges on the Ethereum chain include Opensea, Blur, X2Y2, and Looksrare. According to the data of NFTscan, its market shares accounted for 36.77%, 28.05%, 24.35%, and 7.42% in the most recent month.
(Data source: NFTscan: https://www.nftscan.com/marketplace)
As mentioned earlier, Blur, X2Y2, and Looksrare are all suspected of wash trading. X2Y2, Looksrareâs wash trading can get platform tokens, and Blurâs wash trading can get airdrops. Due to the different trading volume logic of each platform, the following two methods are used to process the real trading volume data.
(1) Real trading volume of X2Y2 and Looksrare
Regarding these two exchanges, we all know that trading NFT requires payment of royalties and platform transaction fees, so users who perform brush transactions will mainly conduct brush transactions for NFT Collections that do not have royalties set. For example, Meebits has not yet set royalties. At that time, the wash traders on X2Y2 mainly traded Meebits to gain trading reward. Therefore, for the royalty-free NFT, the transaction from address A to address B, and then from address B to address A is defined as transaction mining. After excluding wash trading transactions in this way, the real transaction data of X2Y2 and Looksrare are as follows:
(Data source: Dune-Votan: https://dune.com/votan/X2Y2-NFT-Marketplace)
The average daily trading volume of X2Y2 and Looksrare in the last month was 3.6M and 0.75M respectively, and the average price of ETH in the 30th day was 1,546. From this, it can be concluded that the real transaction volume data of X2Y2 and Looksare in the latest month are 69,857ETH and 14,553ETH.
(2) Blur's real trading volume
Although Blur is no longer simply measuring airdrop rewards from the transaction volume in the Airdrop 3 stage, there are still a lot of wash transactions on Blur, including but not limited to NFT project conduct wash trading to increase the trading volume (because the cost is only Gas), the Rug project Swipe high transaction volume to attract users to BID to cheat money, pure wash trading to increase three-stage rewards, etc.
Because Blur does not charge royalties and platform transaction fees. Therefore, we can not use the same method as we do in X2Y2. Here we analyze from another angle, the accuracy may be reduced, but it can also provide a reference.
(Data source: NFTscan: https://www.nftscan.com/marketplace)
The above is the transaction volume data of each platform in the past month. From the data comparison, it is not difficult to find that the gas consumption of Opensea is 3.92 times that of Blur, the number of transactions is 5.43 times that of Blur, but the transaction volume is only 1.31 times that of Blur. From this exaggerated data comparison, it is not difficult to find that even after entering the Airdrop 3 stage, there are still a lot of swiping data on the Blur platform.
Of course, because many blue chips cannot collect royalties on Blur, traders tend to trade blue chips on Blur, which may cause Blur's customer unit price to be higher than that of Opensea, but the gap is not that big.
Therefore, when restoring real data, we assume that Opensea's gas consumption per unit and transaction amount per transaction are the average level of the industry. And because many blue-chip NFTs with high unit prices do not charge royalties on Blur, the unit price of Blur will be higher than that of Opensea. Here, I subjectively estimate that the unit price of Blur is about 1.5 times that of Opensea.
On Opensea, Gas per ETH can support a transaction volume of 48.3ETH, and the unit price of each transaction is 0.177ETH From this, the weighted average transaction volume of Blur is about 98,600 ETH ((76,410.6+55,059)*0.5*1.5)
(3) Real market share
At this point, we can initially estimate the real market share of each NFT market. According to the calculation above, the real trading volume data of Opensea, Blur, X2Y2, and Looksrare in the latest month are 299,224 ETH, 98,600 ETH, 69,857 ETH, and 14,553 ETH respectively. Its market shares accounted for 59.1%, 19.5%, 13.2% and 2.9% respectively.
This data is a bit surprising, Blur's real transaction volume data performance is not as good as some statistical websites. I think there are two main factors: On the one hand, my calculation does not strictly eliminate suspicious brushing transactions based on on-chain interactions, and the equivalent calculation based on Opensea data may be inaccurate. On the other hand, due to Opensea's exclusive agreement in the past month, many Blur's transactions have been completed through Seaport, resulting in a decline in Blur's transaction data.
2. NFT Exchange Valuation Analysis
 Currently, the exchanges that already have certain market valuations are Opensea, X2Y2, and Looksrare. Among them, Opensea is the private placement round, and X2Y2 and Lookrare are the token valuations. Due to the lack of a lot of data, we need to make certain assumptions for valuation. The main assumptions of valuation are as follows:
 Opensea completed a private financing of US$13 billion in January 2022. At that time, the average weekly trading volume of the NFT market was about 5 times that of the current one, and Opensea was in an absolute monopoly position in the industry at that time. If Opensea issues token now, considering the valuation of the private round and the current industry situation, I think it is fair to give a valuation of 3 billion US dollars.
(Data source: Dune: https://dune.com/hildobby/NFTs)
It can be seen from the chart that the trading volume of the NFT market in the first half of 2022 is significantly greater than that in the second half of the year. In consideration of the current market environment, we assume that the total trading volume of each NFT exchange this year will be determined by the trading volume of the most recent month. get it. Based on the above assumptions, we can obtain the following valuation data:
Based on the price data on February 6, 2023, we got the P/S values of Opensea, X2Y2, and Looksrare as 0.51, 0.05, and 0.25, respectively. The average value is 0.27; PE are 20.25, 19.04, 16.88 respectively. The average is 15.39.
Through the above numerical calculations, if the factor of inflated transaction volume such as transaction mining is not considered, it is not difficult to see that Opensea has the highest valuation and X2Y2 has the lowest valuation. When we take transaction mining into account, we can find that Openseaâs real PE is 20, X2Y2âs real PE is 25.65, and Looksrareâs real PE is as high as 70.
Since the transaction data is divided into two types: excluding transaction mining and non-excluding transaction mining, the following valuation of Blur will also be divided into two dimensions, and considering that Blur currently does not charge transaction fees, we assume Blur will increase the transaction fee to 0.5% after the token is issued.
Wash Trading is not excluded:
From P/S point of view: Comparing the valuations of Blur to X2Y2, Looksrare, and Opensea, we can get their valuations to be 204 million US dollars, 1.144 billion US dollars, and 2.289 billion US dollars.
From the perspective of P/E: Comparing the valuations of Blur to X2Y2, Looksrare, and Opensea, we can get their valuations into USD 204 million, USD 382 million, and USD 458 million.
Excluding Wash Trading:
From P/S point of view: Comparing the valuations of Blur to X2Y2, Looksrare, and Opensea respectively, we can get their valuations into USD 88 million, USD 494 million, and USD 989 million.
From the perspective of P/E: Comparing the valuations of Blur to X2Y2, Looksrare, and Opensea respectively, we can get their valuations into USD 88 million, USD 164 million, and USD 197 million. Â
Because the sample is only three exchanges, and the venues of their token transactions are also different. For example, Openseaâs valuation is based on its private equity valuation, X2Y2 has not yet listed on a major exchange, and Looksrare has listed on OKX. There are big differences in their valuation data. If you cover up the names, you wonât even feel that they are competing in the same industry when you look at the data.
Therefore, the valuation results we get have a large range and almost no reference, so we need to do some narrowing down. Â
In the first step, do we need to use the method of excluding transaction mining data for valuation?
First of all, we must make it clear that we are in a market with very asymmetric information, and the market efficiency is very poor, which means that a large number of traders in the market do not even realize that the data they see on the data website includes a lot of trading volume .
That is to say, the market price is formed based on data that does not exclude wash trading. Therefore, when confirming the final valuation range of Blur, in the short term, I am more inclined to use the transaction volume without excluding wash trading for valuation.
But this does not mean that our previous practice of excluding mining transactions (Wash Trading) is meaningless. The real transaction data determines its long-term value. After the disappearance of the mining reward mechanism for future transactions, you can know what to expect . Â
In the second step, which is the better valuation parameter, PS or PE?
The transaction volume of NFT exchanges and the final fee income are actually not completely positive linear relationships. Fee income can be disassembled into transaction volume * fee ratio. Opensea, Looksrare, X2Y2, and Blur are 2.5%, 1.5% (Looksrare will lower the handling fee ratio in October 2022), 0.5% and 0% respectively.
Leaving Opensea aside, the rankings of the remaining three exchanges in terms of fee ratios are just opposite to their rankings in terms of trading volume. The market is actually very sensitive to handling fees. If the proportion of handling fees is increased, it will easily lead to a decline in trading volume.
Therefore, the trading volume of the exchange, that is, the fluctuation of S in our value is very large. Compared with transaction volume, the indicator of service fee income is more stable and can better reflect the direct income of currency holders. So I think PE is a better valuation parameter Â
In summary, considering Blur's market popularity, business data performance, and many exchanges have announced that they will list Blur and other factors, I think Blur's valuation should be higher than Looksrare but lower than Opensea. Blur's valuation should be between $382 million and $458 million . Â
3. Risk analysis Â
(1) Blur Token Model Risks
Since Blur has not yet announced its tokenomics, we cannot be sure whether its tokens can capture handling fees like what Looks and X2Y2 do, and we cannot determine its initial offering ratio, the relationship between its MC and FDV. The above-mentioned uncertain factors are important parameters affecting its valuation, so the final calculation results may be different from the actual ones.
(2) Blur competition risk
Due to Opensea's exclusive agreement, Blur's transaction volume has been greatly affected in the past period. Although Blur recently circumvented Opensea's restrictions by using the Seaport contract, if the actual contract where the transaction occurs is Seaport instead of Blur, Blur is not able to apply any utility to its tokenomics based on Seaport. Also, by using seaport as transaction contract, Blur can not generate any transaction fee. Â
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