LooksRare attacks OpenSea with a vampire attack

Undeterred by the recent drops in crypto prices, the NFT market continues to explore its limits of growth. OpenSea, NFT’s flagship marketplace, just hit a record volume of nearly $5 billion in January with over 540,000 active traders. As the top dog consolidates its monopoly position, smaller platforms are unlikely to assert themselves in the Ethereum-based NFT market. However, LooksRare seems to have found a way – with the so-called vampire attacks.

What is a vampire attack?

Vampire attacks are a common practice to lure users and therefore liquidity from one platform to another. Rewards serve as an incentive: for switching, newcomers usually receive an amount in tokens. So, a vampire attack is basically a platform hack that lures users in with a bonus system. Not illegal and not a stroke of genius, but a powerful method, as evidenced by LooksRare’s growth figures.

LooksRare has topped OpenSea’s daily trading volume since breakeven. At its peak on January 19, the fledgling platform achieved sales of over US$840 million. OpenSea earned less than $200 million on the same day. Until now, LooksRare represented only 6% of active users on OpenSea. If you consider the short time since the launch of the platform, serious competition could be imminent.

A gift horse…

Vampire attacks may have contributed significantly to the rapid ascension. Users who reached a trading volume of at least three ethers on OpenSea between June 16 and December 16, 2021 received a certain amount of the native LOOKS cryptocurrency when LooksRare was dropped. Depending on the volume of transactions, payouts were between 125 and 10,000 LOOKS tokens.

It was worth it: LOOKS price is up 200% since the drop. With a market capitalization of around $1 billion, the token that can be traded via Uniswap has now climbed the ranks to number 95 among the biggest cryptocurrencies – along with SafeMoon, Dash and Synthetix Network – proof that attacks vampires can have a major short circuit. term effect.

LooksRare tasted blood

But LooksRare wants more, and nothing less, than “setting a new industry standard for NFT marketplaces.” According to its own statements, it is the “first NFT marketplace that actively rewards dealers, collectors and creators for their participation”.

No empty marketing promises: Unlike OpenSea, which charges a 2.5% trading fee, LooksRare only charges a 2% fee in Wrapped Ether (WETH), which is paid out in full to LOOKS bettors. Trade rewards in the form of LOOKS tokens are also available for NFT purchases and sales.

Fewer costs, more revenue

There are also no fees for private sales, i.e. NFT transactions processed directly between resellers and buyers. Royalties for resales are also paid immediately, not after two to four weeks like with OpenSea, which makes a lot of money on license fees.

With the reward system, LooksRare wants to ensure long-term user loyalty. Three-quarters of the total quota of one billion LOOKS tokens is to be distributed to the community through airdrops, staking rewards, and trading rewards.

However, the strategy is not entirely altruistic. 10% and therefore 100 million tokens are reserved for the founding team. And it’s a mystery. Because none of the twelve alleged team members gave real names on the homepage.

OpenSea smells like the vampire bite

Vampire attacks are not an invention of LooksRare. As early as October last year, the NFT Infinity marketplace tried to poach OpenSea users with an airdrop. However, after a brief rush, success fell by the wayside. The highest daily turnover was $2.2 million in December.

However, LooksRare’s numbers are of a whole different caliber. In terms of transactions processed, the platform already has the second highest market share, ahead of Rarible or SuperRare. OpenSea, which has also built its monopoly position through such large collections as CryptoPunks and Bored Ape Yacht Club, and pushed through a centralized business model in a decentralized ecosystem, is likely to feel the pressure.

Also because all collections are transferable to LooksRare. The marketplace indexes NFT collections on the Ethereum blockchain, which means that in principle all Ethereum-based NFTs available on OpenSea can also be traded on LooksRare. The dubious but legitimate practice of vampire attacks may have reshuffled the cards in the NFT market.

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