1. How Blur solves the NFT century-old problem - liquidity

#crypto2023 #ETH #BTC #Binance#fil#blur

In the past year, there have been a lot of NFT lending platforms that want to solve the biggest problem in the market: liquidity, such as the trading mining method of looks and x2y2, fragmented AMM, and similar to Blur, which divides the reward range based on the distance from the transaction price, and concentrates the idea of ​​liquidity, such as Abacus, which has a rich game mechanism.

Coincidentally, none of them worked out for three reasons:

① The biggest reason is the bear market, Blur caught a good time

In the deep bear market where black swan events frequently occur, it is difficult for market makers to bid rashly in the NFT market. Therefore, it is expected that its liquidity and trading volume will also shrink significantly in the bear market, but this cannot be falsified at present;

② Focusing on the buyer’s market, Blur draws on the model of traditional DEX order book

Similar to the liquidity provided by staking a single currency, the NFT market is different from the FT market. The inherent properties of NFT determine that the transaction volume cannot be comparable to that of FT. Low transaction volume means that the yield of staking mining cannot be increased.

Adopting the traditional dual token pledge in the FT market (xNFT+ETH as LP), the bilateral pledge in NFT may not catch up with the unilateral pledge yield of ETH in DeFi, which will sacrifice the potential yield of ETH and have a high opportunity cost. The Bid bid proposed by Blur and the focus on unilateral buyer liquidity are very suitable for the NFT market, solving the embarrassing situation of insufficient yield and no one providing liquidity.

③ Solutions similar to X2y2 that provide liquidity cannot provide liquidity

First, mining is mainly to incentivize liquidity providers, and the anti-brushing mechanism is imperfect. More often than not, studios inflate the transaction volume, which is a costly output for mining coins. Selling off to recover costs is inevitable. In the absence of actual empowerment of tokens, Ponzi schemes are unsustainable and false transaction volume has no meaning for liquidity.

Secondly, liquidity is a potential transaction rather than a real transaction. There should be potential capital accumulation behind it. Therefore, the visualization of the capital pool formed by potential buyers and sellers is the source of liquidity. The order book of CEX and the AMM of DEX are both visualized, while on platforms like x2y2, liquidity providers can only buy and sell with their eyes closed. Without forming a real capital pool, real liquidity cannot be achieved naturally. Other reasons are ① ②

2. Blur’s potential space: diverse narratives with the ceiling opened

① NFTfi Summer finally waited for liquidity

NFT can only be played with liquidity. Without liquidity, it is a false proposition. Blur solves the core problem of the industry's expandable boundaries - liquidity. Based on this, lending, derivatives, income aggregators, etc. have room to play. Blur can be regarded as a pioneer in the NFTfi industry, driving the entire sector to form a larger wealth-creating effect

② The subsequent chain effect

1. Blur's subsequent development will be similar to DeFi Summer and LSD. Blur's rise as a midstream player will gradually drive the narrative of upstream and downstream NFTfi

2. The market generally values ​​Blur through transaction volume, fee income and other models. The maximum ceiling is OS’s 13 billion valuation. However, Blur has the buff of aggregator + NFTfi leader + lending and NFT exchange + industry reshaping. The actual valuation should be higher than OS, focusing on differentiated competition with OS.

3. It is good for NFT blue chips, similar to DeFi, and the possibility of liquidity gradually spreading from advantages to long-tail assets

4. 51% of the tokens are distributed to community-led projects. From the perspective of interests, they will inevitably take the route of real returns, shrinking supply, or even self-production and sales of veCRV. There is no need to worry about the long-term token empowerment, but the recent considerations are

5. Regarding timing, the biggest uncertainty comes from #Binance

Therefore, excellent product logic: transaction speed, professional trader viewing experience, non-mandatory royalties, etc., are the foundation and basis of NFT exchanges, and are also the most concerned points in the market. Therefore, market expectations are not fully explored, and benchmark valuation is not only OS

③ Potential risks

1. Compared with the FT market, the indivisible attribute of the NFT market determines that the transaction volume itself is not as active as the FT market. When the NFT market increment is not greatly expanded, the amount of mining funds and the size of APR are mutually exclusive. Therefore, Blur is also inseparable from the paradigm of "short-term mining prosperity to attract speculative users, medium-term reliance on market and product experience, and long-term focus on user experience to form liquidity precipitation". Blind boxes indirectly delay users' perception of expected returns and help complete the user's mental education process.

2. Most of the current market holdings come from airdrops and retail speculators. There is no strong reflexivity between tokens and products, that is, token consumption is enabled through a certain link, which in turn promotes the spiral rise between liquidity and price. Therefore, in a market dominated by speculation, although the narrative ceiling is high enough, there is a lack of multi-party power game. Currently, 1.1 million tokens are released daily. The subsequent token economy proposal may be an important watershed for Blur.

3. In summary, Blur is in a game of too high a short-term risk-return ratio and huge long-term narrative potential. The views in this article come from 7updao member @cheng_shutong