The Thucydides Trap in the NFT Market: OpenSea Counterattacks and Starts A Fee War

Key Points: The emerging NFT market Blur is waging war against the field’s behemoth.
Blur had issues with OpenSea’s use of a “blacklist” in order to stop it, but with very little success.
Blur’s rapid growth made OpenSea’s concerns worse, and the battle heated up.
Graham Allison, a Harvard University professor, proposed the Thucydides Trap. It states that a new rising power must challenge an existing power and that the existing power must respond to the threat so that war is inevitable. The Thucydides trap was applied to Blur and OpenSea, two NFT market giants. On February 15, Blur’s native token BLUR went live for trading. In less than 24 hours, the transaction volume surpassed $1 billion. Blur took advantage of this momentum and began to challenge OpenSea in a new chapter in the NFT royalty battle. Blur released an official announcement on February 16 recommending that users block OpenSea. Users can still enjoy full royalties as long as they don’t use OpenSea. NFT projects can set optional royalty settings. NFT projects can collect royalties on both platforms if OpenSea repeals this policy. Blur stresses that NFT project creators can’t collect royalties on both platforms at the moment. They can only collect royalties on OpenSea and Blur. OpenSea announced in November 2022 that to enforce full creator fees on its platform, individuals who created NFT smart contracts after January 2, 20,23, must take on chain actions to make royalties enforceable. OpenSea now requires creators to use on chain tools to prevent the sale of NFTs on platforms that don’t have royalties for creators. This is an obvious move against Blur which is a royalty-free platform, where creators can ban NFTs from Blur and still receive full royalties on OpenSea. If this is not done, OpenSea will automatically set the royalties of these NFT collections to “optional,” which in turn affects creator income.Blur took issue with OpenSea’s use of a “blacklist” to suppress it, claiming that creators should decide where and how their products are sold – not companies – but had little success, and then also had to use the Seaport agreement Bypass restrictions.However, OpenSea’s wishful thinking did not succeed in suppressing the rapid development of Blur but caused users to defect. Below is a comparison of the single-week transaction volumes of two platforms. OpenSea has given up OpenSea gave upIn the early hours on February 18, OpenSea announced that it had launched a time-limited, 0-fee transaction. It also offered an optional copyright service with 0.5% minimum and applicable to all NFT Series that do not enforce royalties.
“In October, we began to see significant volume and users start to move to NFT markets that don’t fully enforce creator incomes.
Today, this shift has been dramatic despite our best efforts.
We have worked to protect creator earnings on ALL collections, when others did not. We believed that on-chain enforcement was the best way to ensure creators’ revenue streams from ongoing resale.
We believed we could facilitate widespread enforcement of creator earnings. We hoped other solutions might be found. This has not happened.
OpenSea’s concerns have been exacerbated by the rapid growth of Blur. Dune Analytics data shows that the platform’s transaction volume has exceeded 1,000,000 ETH, reaching 1,028,378 Ethereum, which is approximately $1.75 billion, according to the current market price. The total sales volume has also surpassed 200 million ETH. 10,000, which currently stands at 2,027,752. Blur currently has 2,027,752 users. As shown in the figure below, the number of users on OpenSea is almost double that of Blur. This means that they have a strong user base. Also, OpenSea has not yet released its own governance token or platform. It is likely that Blur’s currency issuing strategy will have an impact on NFT market structure. Blur’s top traders have used wash sales to obtain airdrop tokens. This shows that their relationship with OpenSea is not as strong as it once was. However, Blur’s updated royalty policy gives them the option to not block OpenSea or block Blur if they don’t set blocking. Blur will charge 0.5% royalty (sellers may choose a higher royalty). OpenSea is an optional royalty. If Blur or any other NFT projects are blocked in the zero-royalty/royalty market, transactions and listings can still be done on Blur subject to a minimum 0.5% fee.
Blur clearly uses their influence to get OpenSea to cooperate with them. Time will tell if Blur’s strategy will work. But both in terms metrics and products, they are the most successful OpenSea competitor.
Galaxy researchers also said in a Friday report:
Blur has two main issues. First, Blur’s market share can be retained as long as their BLUR token has liquidity. Second, trading volume. Blur’s trading volume will not drop significantly in the short-term because of their token incentive plan. However, it is worth examining whether this model can be sustained long-term.
As the turf war between the NFT marketplaces heats up, the competition in NFT market will only increase. Perhaps, after the battle is over we will be able find a development path that is most appropriate for NFT creators or traders. We encourage you to do your own research before investing.Join us to keep track of news: NewsTags: BlurNFTOpenSearoyaltiesThucydides