[Feature] Discussions on Blur Part II: What Have We Learnt from the Blur Project?

Compiled By: Coinlive
Author: Mint Ventures Jessica Shen

Web3.0 Entrepreneurship
The multiple details in product design of Blur demonstrate the team's deep understanding of pain points in the NFT market and a clear understanding of user needs. Blur's user-friendly product design has attracted a large number of frequent NFT traders and whale users. Its accurate marketing incentive model and airdrop expectations for NFT liquidity have also focused the attention of many non-NFT crypto users. The continuous airdrop expectations and functional updates constantly signal Blur's ambition to further "change user habits" and overthrow the centralization platform of OpenSea.

A clear understanding of market demand and creating products that truly solve market pain points
Blur officially launched on October 19, 2022, and has since received rave reviews. In addition to other trading markets and aggregators' airdrop expectations, mining mechanisms, etc., Blur's main product features are speed, 0% transaction fees (which may be increased later), and Collection Bidding. Extremely simple product details have raised the efficiency of the NFT trading market at the product level. The combination of multiple product details and the early Go-To-Market operating strategy has made it look like Blur's competitors have never truly understood users and the market.

Speed: Blur's speed advantage mainly lies in the UI interface's refresh rate for (1) transactions in progress (Pending) and (2) the refresh rate for listings. This simple feature is Blur's killer move to stand out in the crowded NFT trading market.

This seemingly ordinary feature is extremely important for professional traders and frequent traders, and it is also the key to winning users for Blur. In the FT token trading market, price refresh speed is no longer a sensitive point for users because we assume that the data update speed of each exchange is similar and will not cause significant arbitrage differences. However, in the NFT trading market, the market has to accept the slow quote information from several existing trading platforms.

Michael Lewis's "Flash Boys" describes how high-frequency traders on Wall Street spared no expense to lay fiber optic lines for higher-level information transmission speed. The importance of speed to trading profits is self-evident. Although ordinary NFT trading has not yet developed into the internal competition stage of high-frequency trading, NFT MEV and NFT robots have already proven that information flow speed can create huge value. Therefore, when Blur emerged with the fastest information flow speed, it brought a trading experience that overwhelmed other platforms to users (especially professional-level users with strong demand for bargain hunting), and frequent trading NFT players and whale users switched their trading market usage habits quickly and naturally. Blur can be said to be the first platform that truly recognizes the importance of information flow speed for NFT trading, and therefore quickly wins the market.

Cost: Blur also strives to provide users with the lowest trading cost environment. Reducing costs is one of the most direct ways to solve liquidity issues. Transaction fees, royalties, gas fees, and the price of NFTs themselves make up the main costs for traders. In addition to liquidity, users are also highly sensitive to trading costs, and the market will vote with its feet and choose the platform with the lowest costs. This article focuses on discussing transaction fees and royalties.

Trading Fees (Currently 0%)
Since its launch, Blur has been promoting 0% trading fees, which is a powerful blow to OpenSea's 2.5%, X2Y2's 0.5%, LooksRare's 2%, and SudoSwap's 0.5% trading fees. While sellers can pass on the fees to buyers through the NFT's price, reducing trading fees itself plays a role in facilitating trades and bringing buyers and sellers closer together. In the future, Blur may raise the trading fees based on community consensus, but for the short term, it will maintain this level.

Royalties (Initially at a minimum of 0%, later adjusted to a minimum of 0.5%)
When Blur was launched publicly in October 2022, it did not enforce creator royalties. Sellers could set the royalty minimum to 0% or adhere to the existing creator royalty scheme. However, for buyers paying a 0.5% royalty, Blur made it clear that they would receive more airdrops to encourage this behavior. This means that Blur supports creators but also understands that reducing royalties is a key factor in facilitating trades. Later on, Blur adjusted the royalty rules to set the minimum at 0.5%. Although the standard increased, it did not cause as much controversy in the community as X2Y2's repeated changes to royalty rules.

After the token was launched, Blur quickly announced new royalty rules to counter a series of "sanctions" policies imposed by OpenSea from the perspective of attracting creators.

Background:

In November 2022, OpenSea launched a Blocklist tool for their trading marketplace (including several non-mandatory royalty enforcing marketplaces such as Blur). NFT creators can choose to use this tool to block trades on non-royalty-enforcing platforms. The benefit of using this tool is that OpenSea will enforce royalties for NFT collections that use it. However, NFT collections that do not use this tool can still be traded on multiple marketplaces without enforced royalties for buyers. This measure has left many creators in a dilemma. If they choose to use OpenSea's Blocklist, they are guaranteed royalty income but will sacrifice the opportunity for their NFTs to circulate on marketplaces such as Blur and X2Y2. If they choose to prioritize the circulation of their NFTs on multiple platforms, they will have to sacrifice some royalty income.

In January 2023, Blur used OpenSea's Seaport protocol to cleverly circumvent the blocklist tool policy, meaning newly issued NFTs can be traded on Blur while using OpenSea's blocklist tool. This allows NFT creators to collect full royalties on OpenSea while also trading on Blur.

Blur's latest royalty policy provides three options for NFT creators:

(1) new NFT collections that do not use OpenSea's blocklist tool are subject to a minimum 0.5% royalty protection from Blur;

(2) new NFT collections that use OpenSea's blocklist tool are also subject to a minimum 0.5% royalty protection from Blur (as Blur is currently bypassing OpenSea's blocklist through the Seaport protocol);

(3) if an NFT collection is completely banned from trading on OpenSea, Blur will enforce full creator royalties.

Additionally, Blur ironically provided an as-of-yet unenforceable "option four": if OpenSea stops using the blocklist tool, Blur will enforce full creator royalties together with OpenSea.

The underlying game theory at play seems to be a price war, rather than just a "royalty battle."

When royalty policies are aligned (option four: OpenSea cancels the blocklist for Blur), competition between the two platforms will boil down to transaction fees.

Whichever platform can sustain the price war longer is more likely to gain more users and transaction volume.

Blur's token model incentives and decentralized governance offer more flexibility in NFT community governance, treasury fund allocation, and liquidity incentives, giving it an advantage in attracting NFT creators and community participation.

UI Display: Blur provides NFT users with more comprehensive trading information, reduces the time cost of switching between different platforms, further improves the user experience, and the finely optimized data dashboard provides better assistance for NFT traders' decisions, facilitating the increase of trading frequency.

According to NFTGo's recently released "NFT Annual Report 2023," the habitual patterns of NFT professional traders have changed from discovering projects on social media and then completing transactions on OpenSea to discovering projects and conducting transactions through data analysis platforms and aggregators.

Blur's UI interface, similar to Bloomberg, provides NFT traders with multidimensional trading information, including historical transaction trends, trading depth, order information, price information, and basic information about the NFT collection, including total issuance, royalty ratio, and holder proportion.

The clear UI interface means that traders no longer need to compare information from other trading markets or data analysis dashboards multiple times, nor do they need to jump to multiple pages to obtain the information necessary for judgment of the transaction. In terms of design, Blur's specialized display reflects the team's meticulous understanding of NFT traders.

In comparison, Gem and Genie, both belonging to the aggregator track, have a significant gap in product design.

Traders still need to jump to multiple interfaces to obtain data and information.

The seemingly more comprehensive information display actually has a higher degree of information redundancy, which increases trading friction and reduces trading frequency. Among them, Gem's display interface directly integrates Dune Analytics' data display and Bubblemaps' holder address map function.

The comprehensiveness of the data is good but the intuitiveness is poor, and the authenticity of the data depends entirely on third parties.

In contrast, Blur provides limited information and data, but focuses on key information for NFT transactions, with higher intuitiveness and readability.

Blur's team's understanding of NFT user trading habits and recognition of NFT industry pain points are reflected in the professional and thoughtful product design.

The ambition of Blur to continuously change the NFT industry's trading paradigm can be seen from the recent UI optimization.

The current UI design simplifies the user's trading process, but its business scope currently only covers the trading market, with a focus on secondary NFT trading.

NFT novice users will still initially consider OpenSea as their first stop to enter the NFT world because of its advantages in being more NFT-friendly, multi-chain, and multi-variety.

On February 17, 2023, Blur updated and added the "Trending" feature, where users can directly see the recent hot NFT projects on Blur, including more front-line and early trading signals in the NFT market.

We can see that Blur is moving towards a One-Stop-Shop platform.

After accumulating a large number of users in the protocol, with the gradual development of user habits and cross-selling of different businesses, Blur's influence on the NFT market will further increase.

Collection Bidding: In addition to the features of Sweeping and Bulk Listing that are available on other platforms, Blur has won the hearts of many professional NFT traders with its bidding feature specifically designed for NFT collections. Other platforms only offer bidding for individual NFTs or don't offer the feature at all.

In the context of NFT trading, this means that only sell order information is transparent and clear in the market, while there is no clear channel for traders to understand the demand for a certain NFT collection's buy orders. Blur's Collection Bidding feature fills this crucial market information and feature gap. When designing this feature, Blur also introduced the Stolen NFT Protection feature to prevent stolen NFTs from being bid on and bought.

The Bid feature allows users to directly bid with ETH funds, eliminating the cumbersome process of converting ETH to WETH on some platforms, further saving users' transaction time.

Niche market positioning, mastering the core market users instead
Because of its UI interface that resembles Bloomberg and has a code style, Blur's Pro-Trader-Friendly feature is very distinctive, but this is also related to its initial positioning in the niche market serving NFT professional traders and NFT flippers.

In the NFT industry, a pattern has emerged that is mainly composed of blue-chip PFP assets on Ethereum, with a large number of mid-to-low tier NFT assets as supplements. The user group has also gradually formed a group of experienced NFT traders, professional traders, and market makers. Although this group is not the frontline force driving NFT "mass adoption," they hold a large number of blue-chip assets, professional experience in NFT trading/flipping, and are the main source of industry liquidity. This niche market is also the most active player in the NFT market. Mastering this group of users also means mastering the most core user group in the NFT market. The NFT user market is difficult to please, and Blur has not chosen a simple and cute UI design that is more friendly to new and novice users. Instead, it has chosen a code-style interface dashboard and entered the professional market, mastering high-value transaction users who are more active, have larger capital, and are more liquid. As the user base grows, new users are also expected to gradually evolve into advanced players.

For NFT whales, high-frequency traders, NFT flippers, professional traders, NFT funds, and NFT market makers, there has always been a lack of a one-stop and easy-to-use tool or product. Blur's appearance solves this pain point for professional players, and its professional design details bring a new user experience, which has gained excellent reputation within the community and received user praise through word of mouth.

Growth-first strategy to quickly conquer territory.
In a public interview, founder @PacmanBlur mentioned that compared to short-term zero protocol revenue, Blur places greater emphasis on early user growth and creating products that bring real value to users.

A good product does not worry about long-term monetization methods, and early use is competed for with lower costs, faster speed, and more intuitive products.

On February 18, 2023, OpenSea announced the implementation of a 0% transaction fee policy for a short period of time, and adopted an adjustable royalty policy for all NFT collections (previously only for new NFT collections), with a minimum royalty level of 0.5% (consistent with Blur's minimum royalty line), and canceled the blacklist tool for Blur.

This behavior is enough to prove that OpenSea feels the huge threat posed by Blur and has to adopt lower fees and more flexible royalty policies to resist. (Note: NFT collections that have already adopted mandatory on-chain royalty collection in the contract are not eligible for adjustable royalty policies.)

In terms of operational tactics, the continuous expectation of airdrops and the rhythm of new product features perfectly match, firmly locking in user and market attention.
Blur's pre-launch operational strategy is also worth learning for all startup teams.

In the cryptocurrency field, the "airdrop culture" has always been able to attract more traffic and attention, but Blur is a relatively successful case that can use token airdrops as a tool and maximize their value.

Certainty: The first season of Blur's airdrops was divided into three rounds, gradually "training" users to use the Blur platform.

Airdrop 1 was given to users who participated in the internal test, Airdrop 2 incentivized users who placed orders, and Airdrop 3 incentivized users who set prices.

Except for the first round of airdrops which was announced after the end of the internal test, Airdrop 2 and Airdrop 3 both announced the rules before the activity, which is more certain and directional for users who usually blindly participate in airdrops.

This can not only achieve the function that Blur hopes users will experience (placing orders and setting collection prices), but also cultivate users' usage habits, allowing them to "earn their keep".

Progressiveness: In the first season's three rounds of airdrops, each one had a larger volume than the previous one (Airdrop 2 was 1-2 times the volume of Airdrop 1, and Airdrop 3 was 10 times the volume of Airdrop 2), providing more incentives for users who joined later.

In addition, when announcing the third round of airdrops, Blur also launched the exclusive "Collection Bid" function, which gave the most incentives to users who used this function, using airdrop incentives for new product feature promotion and user habit reinforcement. "Collection Bid" itself filled a market gap, and the team's operational ingenuity made it easy to promote the feature

It is not to say that "airdrops" are always effective or beneficial, and copying Blur's airdrop model does not necessarily guarantee success.

Blur's operational success lies in the team's deep understanding of users' expectations for airdrops, and their use of expectations to design a good rhythm that matches new features for promotion, which has been solidified into long-term community binding relationships.

The token economics of $BLUR demonstrates the team's long-term commitment to building the project and their vision for DAO governance.
Founder @PacmanBlur has mentioned multiple times on Twitter Spaces that the token economics of Blur were designed in collaboration with investor Paradigm, and drew inspiration from the token economics models of other DeFi projects (including Uniswap, GMX, dYdX, etc.).

From the token economics document, it is evident that the team recognizes tokens as a bridge connecting the community, with the majority of tokens (51%) ultimately distributed to community participants, as shown below:

51% Blur community members = 12% Season 1 Airdrop + 10% Season 2 Airdrop + 29% Other contributors funding/community projects/incentives, etc.
The team places great importance on decentralized community participation in future protocol governance, giving the community 51% of the tokens, and also values rewarding creators, NFT communities, and community contributors.

The token economics also leaves ample incentive space for NFT creators, making it beneficial for the protocol to attract NFT creators and the community during the protocol period.