Since the end of last year, Blur’s three-season AirDrop has been the focus of the crypto market. Recently, the development of Blur has grown exponentially, even implicating the NFT market that has experienced a short period of silence.
Blur's data is outstanding. Among them, Blur's market transaction volume in the past week (2.13-2.19) was close to 390 million US dollars, which was four times that of OpenSea's transaction volume in the same period (89 million US dollars). Hot discussion in the market: Is OpenSea, which has occupied the leading position in the NFT market track for a long time, really unshakable?
OpenSea took passive defense measures for the first time: On February 18, OpenSea announced that the transaction fee was reduced to 0 for a limited time, and the optional royalty service was enabled. OpenSea said frankly: "Since October last year, effective transaction volume and users have shifted to the NFT market that does not fully implement creator income. Despite our best efforts, this transformation is still accelerating dramatically." Rarely, OpenSea was briefly forced to Delivering the ability to dominate the rhythm of the NFT market was replaced by the savagely growing Blur.
Earlier today, Blur founder Pacman published his personal photos and resume on social media, so Blur detonated the Internet again in an unexpected way.
Bankless conducted an exclusive interview with Pacman and discussed topics related to BLUR AirDrop, growth strategies, and royalties. BlockBeats sorted out and translated it as follows:
David: Welcome to this very special episode of Bankless. Today we will be talking about the AirDrop that happened recently, as it burned the highest amount of Ethereum ever burned in 24 hours, which I am very excited about. Of course, we are talking about the Token that the Blur NFT trading platform has just released on the market, which has attracted a lot of attention. Some quick stats for you: Blur has surpassed $1 billion in transaction volume, over a billion transactions, and has nearly 100,000 active users. It has been growing in market share since late 2022 and has overtaken Opensea. So we invited Pacman, the founder of Blur, to talk about how Blur positions itself in the NFT world, and who are their target users? Are you a trader or a collector? How do they plan to develop Blur, and how is this recently AirDrop Token organized? What is the function of this token? In addition, there are some copyright disputes that are currently hot topics in the NFT circle.
David: Hello everyone, today we have invited Pacman. Pacman, welcome to the show.
Pacman: Thank you so much for having me.
David: Pacman, we will talk about the Blur NFT trading market, AirDrop and copyright disputes, but Bankless listeners may know that my focus is not on the NFT world, but on DeFi, protocols or the second layer, so I want to start with The most basic question starts this conversation. Can you introduce yourself, why did you start Blur, and how did the idea come about in the first place?
Pacman: No problem, I can tell you about my background. I started in the engineering field about 8 years ago in Silicon Valley. I started out as an engineer and soon started a business. In 2016, I participated in the accelerator program of Y combinator. For those who understand the Web 2.0 space, they must know Y combinator, because they have funded famous companies such as Dropbox, Stripe, Airbnb, and Reddit. After that, I really wanted to go to school and ended up going to MIT to study math and computer science, where I met my co-founder Galaga. We hit it off and have been working together since the beginning, initially on some side projects before leaving MIT to start our first company in 2018. We ran the company for three years before selling it at the end of 2021 and immediately started developing the Blur project. The reason is, I personally like NFTs a lot in 2021, bought my first NFT Bloodmap, I am completely hooked on NFT trading, but I am very disappointed with the existing market infrastructure. All existing marketplaces are very retail and very slow and cumbersome. I wanted a more professional NFT trading platform, so we set out to create Blur.
David: So, you positioned yourself as an NFT trader early on, and that's what attracted you, but the lack of NFT trader infrastructure was the main impetus for creating Blur.
Pacman: Yes, indeed.
David: Can you specifically talk about the shortcomings you saw in the field of NFT transactions before developing Blur?
Pacman: As someone who knows more about the Token field, I would like to compare the progress of the NFT trading market to the progress of Token trading. The initial infrastructure, like Mt.Gox or Coinbase, was very crude and retail-oriented. However, as the needs of the industry grow, the development of the infrastructure becomes more complex and financially oriented. We have witnessed the evolution from retail-friendly platforms like Coinbase to more crypto-native exchanges like Binance, OKEx, and BitMax that are more financialized. Likewise, the NFT market has only recently experienced growth, and the infrastructure has not had enough time to develop, even though demand from the industry has been expanding. Our goal is to meet users' needs for specialized infrastructure.
David: Can you explain what segment Blur is targeting in the NFT world?
Pacman: Existing marketplaces before Blur provided a satisfying shopping experience for newcomers to NFTs, but for active collectors or those looking to buy or sell in bulk, monitor real-time market trends, and make quick decisions in volatile markets For traders, it is not enough. The high volume of orders generated by popular collections caused these platforms to crash. Before Blur, NFT marketplace platforms treated NFT as a shopping experience, which was fine for novices, but it couldn't satisfy advanced traders looking for real-time order books, real-time order velocity, deep charts, fast charting capabilities, and real-time data updates needs of the reader. Blur was designed from the ground up to cater to the needs of professional traders, as evidenced by our early announcements and blog posts.
David: Okay, so you're optimizing for people who are really inclined towards the financial aspect of these NFTs, which are Tokens, so they have some sort of financial aspect. And other people may just browse through Opensea, like "Oh, I think I like that. I think I will add it to my shopping cart", these people are obviously not the target users of Blur, the target users of Blur are NFTs Power users of the industry, am I right?
Pacman: Definitely. When people buy Bitcoin, ETH , or any other token, they are usually looking for its utility. However, the exchange platforms that trade these tokens are mainly to facilitate trading and speculation, which is a common phenomenon in any market. These trading platforms play an important role in serving the needs of traders and speculators. For the Blur protocol and market, our focus is to improve the liquidity and efficiency of the market to promote growth, just as advanced trading platform infrastructure and Token can achieve growth in a wider space.
David: I checked out some Dune Analytics stats before our conversation, and I'll reiterate the numbers I shared earlier: $1 billion in total transaction volume, over a billion transactions, and nearly 100,000 active users. What has Blur developed to attract so much volume and activity? Let's say we intend to create an NFT marketplace highly optimized for advanced users. With that being the case, let's discuss what exactly this is about. What did Blur create that would make these users willing to take advantage of its platform?
Pacman: David, thank you for taking the time to do some research, and it is indeed more than 1 billion, specifically 1.2 billion. Hill Dobby has a nice analysis chart that I can share later, he did a thorough analysis. Imagine the Token trading market, if Coinbase was the only Crypto native trading platform, and other trading platforms, such as Binance, ceased operations, which is what the market looked like when Blur started working 394 days ago. The NFT market, with $4 billion worth of transactions per month at its peak, relies entirely on rudimentary, non-professional infrastructure. One of our products, Blurbidding, integrates UI and protocol, allowing traders to bid with ETH , and the bid order book is displayed directly on the market. While this is a fundamental function in the Token trading space, it has greatly impacted the NFT industry. Now, traders can check the order book and buy NFTs with more confidence and a better chance that their price will hold. Order books were not a fundamental feature in the NFT world until Blur introduced this feature.
David: Blur has rolled out UI and user interface upgrades that allow for better visualization of market states, as well as some on-chain optimizations to how trades are executed. These changes do sound like they will enable users to have more data and tools to refine the financial attributes of NFTs.
Pacman: Before we released Blur Bidding, bidding on NFTs required users to convert their ETH to WETH, which was a confusing experience even for advanced users. We have simplified the process at the protocol level, allowing users to bid by depositing ETH into their own fund pool, which not only realizes bidding, but also realizes the purchase of NFT. This simple concept fills an important gap in the market, and protocols like Uniswap have enabled the growth of the DeFi world by serving an unmet need. Blur's products and protocols are simple, but they fill a previously unaddressed need.
David: As you mentioned, you started working on Blur 394 days ago, and a year and a month later, you released Token. The token AirDrop is the reason for this interview with you, because tokens always generate interest. Can you discuss the story of this token, what stages did it go through before it finally entered the public eye? Can you walk us through how this token was conceived, born and released to the public?
Pacman: All aspects of Token and Blur were planned from day one. The marketplace presents a clear opportunity to build a Crypto-native trading platform, most existing marketplaces fail to consider the capabilities of Web3. DeFi provided inspiration for Blur, as it is impossible in Web2 to give end users control of the platform. In contrast, Web3 allows end users to control the protocol and value accrual, with incentives to participate in the network. NFTs enable decentralized ownership of digital collectibles, yet they are traded on Web2 marketplaces. Despite its obvious adjacency with DeFi and Token, it clearly lacks effective infrastructure and business model consistency. The reason we wanted to build Blur was because we wanted to fix those deficiencies.
David: Your initial concept was to create an NFT marketplace that would have a native token. This is a response to Opensea's limitations due to national regulation and its role as a Web 2.5 platform. Your goal is to improve the trading experience of the NFT market, and at the same time integrate a token from the beginning, so the token was part of the plan from the beginning?
Pacman: Of course, the difference between protocols is whether they intend to be decentralized from the beginning, which is the case with most existing protocols today. For example, Uniswap could have been centralized with restrictions and KYC imposed on each user, but instead it was developed to facilitate decentralization. Likewise, after researching existing marketplaces, we found that they were designed with a Web2 approach and lacked a focus on decentralization from the start. Given the importance of network effects in determining a protocol's success, it's clear that protocols controlled by end users will ultimately win. This is the driving force behind our decision to develop an NFT marketplace with user control at its core.
David: The philosophy of Web3 is centered around community ownership and control. While creating a token is easy, actually distributing it to the community in a meaningful way is a different challenge. Can you introduce Blur's strategy for issuing Tokens in detail to ensure that it is distributed to qualified community members?
Pacman: When planning the AirDrop, our priority was to incentivize liquidity rather than quantity. Incentivized trading volume tends to attract sideline traders or arbitrageurs who can profit off a fake trade until it is no longer profitable. Other market platforms that incentivize trading volume also suffer from this problem. In contrast, a successful DeFi platform like Curve incentivizes liquidity on both sides of the peg, which helps maintain the anchor relationship between Tokens. The incentive to trade comes from having good liquidity. We chose to incentivize liquidity and get tokens into the right hands because this brings real users into the space and they maintain the network effect even after the incentives wear off. To test this approach, we sequenced the AirDrop rewards so that the first tranche of rewards is released on Blur and provides sell-side liquidity.
David: Before we talk about that AirDrop period, can you give us a quick introduction?
Pacman: We took an unconventional approach to the AirDrop, very clearly requiring liquidity to be provided to Blur, first the sell side and then the buy side, in order to get the AirDrop. This is because we believe that incentives should incentivize behavior, and purely retroactive AirDrop can be a waste of resources that could be used to grow the protocol. We want to reward early adopters who help build the network effects of the protocol from day one, not users who come in after the network effects are already established. By allocating our capital efficiently, we can foster growth and achieve the ultimate goal of our protocol. We design our AirDrop as multiple rounds until the token is finally issued to achieve this goal.
David: Yes, you did multiple AirDrop, and importantly, you made clear the criteria for accepting AirDrop, which is something other projects simply don’t do because they worry that speculators or arbitrageurs will abuse the system. In my opinion, there is no rule loophole in the criteria for accepting AirDrop, am I correct?
Pacman: Indeed, this is a challenging problem because when incentive systems are clear, they tend to attract people who are trying to find holes. Some of our early investors made their fortunes by figuring out how to leverage the early DeFi summer incentive system in ways creators never even considered. However, incentivized liquidity is less exploitable because liquidity is liquidity, whether from miners or real bidders. By placing a bid on the order book, one takes a real risk and it cannot be easily changed. While there are ways to hack the system, such as canceling bids before they are filled, or manipulating them before they are traded, we focused on creating a mechanism where users can provide liquidity that is difficult to hack. If we can do this, then a well-defined system can work well and bring real value to the network. This solution may not be suitable for all protocols or AirDrop as it is not a one-size-fits-all solution, but for Blur, building a network in a market that competes with platforms already worth tens of millions of dollars Effects and liquidity are critical. Therefore, we must focus our efforts on methods that can evolve the protocol.
David: Okay, so let's talk about the three stages of the AirDrop criteria. Can you walk us through each phase and its goals?
Pacman: Of course. The AirDrop was conducted in three stages: the first stage was a retrospective trading AirDrop based on trading volume for the six months prior to October 19th; People with liquidity will be rewarded; the third stage is bidding AirDrop, and the rewards will completely shift from listing to bidding. Interestingly, after stopping listing rewards, we saw an increase in sell offer volume, indicating that the program was working and bringing real users to the protocol. Our focus is to incentivize liquidity on the buy side to fill the order book. The purpose of this strategy is to create a network effect for the marketplace.
David: Did you accidentally affect the price of any NFTs in the process? What are the side effects of doing this?
Pacman: Blur’s incentives are interesting because when they adjusted the incentives, there was a Twitter thread that went viral. Initially, it was claimed that the incentives hurt the floor price, but when the incentives shifted to the buy side, people still claimed that the incentives hurt the floor price. This is alarming because it usually supports the price of the asset. As the token launch looms, there is speculation that the incentives are coming to an end, and the person who started that thread claims that this will bring the floor price down again. This chain of events reflects the fact that incentives of any kind, regardless of their direction, can have a negative impact on reserve prices.
David: Well, it does sound like something that would happen on CryptoTwitter, often with extreme marketing tactics.
Pacman: I agree, the term "anger marketing" seems to fit the situation well. In my opinion, though, liquidity is primarily about enabling an asset to find its true market price, rather than directly affecting the price itself. If the change in liquidity does lead to a change in price, it means that the previously recognized price is not accurate, and the reserve price, bid-ask spread, and bid price cannot truly reflect the value of the asset. In reality, the price of an asset is not a static number, but people tend to anchor around a specific number. Liquidity incentives provide a different perspective on the true price of an asset, but it is still a limited view. Ultimately, liquidity is only one aspect of an asset's true value.
David: The momentary price of an asset provides only a fleeting glimpse into the big picture. Also, I would like to know more about the current state of the token. Specifically, how many people received the AirDrop, what is the current token supply, and how does it compare to the issued token supply? Could you please talk about Token's indicators in detail?
Pacman: The total supply of the token is 3 billion Blur, and AirDrop account for 12% or 360 million Blur. A considerable number of AirDrop have already been claimed, and the remainder can be claimed within the next 60 days. The structure of Blur tokenomics is similar to Uniswap, with simplicity and clarity. Blur is an NFT trading platform protocol, and Uniswap is a Token trading platform protocol. From a higher perspective, they are essentially the same. In the bear market, in the case of returning to the basic value, the direct tokenomic design is more favored than the complicated design of protocols such as Curve and GMX . While these complex designs are powerful in a bull market, they are less than ideal in a bear market. The Blur protocol is flexible, allowing the community to vote and use vault tokens for future tokenomics designs. The token will be empowered to the holder, providing a clear picture of the value of holding the token.
David: Now that the AirDrop is over, I would like to ask some details about the Token price. The current transaction price on CoinGecko is 70 cents, and the total supply of Token is 3 billion, which is equivalent to a market value of 2.1 billion US dollars. If my calculations are correct, the value of the 12% AirDrop to the community is about $250 million, and this is only for the first season, because the second season has already started. Can you talk about the user reaction to the $2 billion market cap and the distribution of $250 million to the AirDrop?
Pacman: I also think that protocols and tokens should provide value to the community. Furthermore, we believe that tokens make sense because the value of commercial activities that take place on secondary markets such as Opensea is concentrated in the founders and a small number of funds, rather than the community. The power of the protocol lies in its ability to hand over Tokens to the community. If we execute this strategy effectively, we can bring billions of dollars of value to the community. As an end user, I would choose to use a protocol that pays me to control it. To be able to distribute $240-250 million worth of value in the first quarter is incredible. Not only that, but Blur's token works with the community to distribute more value to them, which will ultimately be in the protocol's best interest. Capital allocation is important when it comes to protocol governance and the distribution of tokens through governance. We must allocate capital to productive use cases to further the development of the protocol. We will continue to contribute in this direction and ensure its value. If the community distributes tokens efficiently, it will bring high returns to members. What we are doing today is just one attempt.
David: I have one final question, as we discussed, Opensea has equity, and all the value of that equity is away from the Web3 world. I looked at some transaction volume data, and it seems that Blur has started to approach Opensea's transaction volume. Blur has a secret weapon, that is Token in the Web3 world. This tool is not available in Opensea. Do you think this tool will make Blur the number one in the NFT market and overthrow Opensea?
Pacman: You're asking a very good question, and as someone who is meticulous about metrics, I'd like to point out that Blur traded about 30% more than Opensea in the past week. However, we must maintain this trend for a long time to finally succeed. I think there are several layers to this, one of which is that Blur serves an area of the market that has not been properly served before, namely professional traders. The value of the token is an incredible tool to realize a huge potential that was not possible before. When you consider the players who may want to gain exposure to the NFT space, these include not only NFT traders or users of the space, but also bystanders who are keenly aware that the space is growing. While FTX and the institutions we depend on for our liquidity collapsed, all the growth Blur has achieved has been sustained in the worst bear market we have ever seen. The NFT space has shown its persistence and stickiness, once people are in, they are hooked. Previously, gaining exposure in the NFT market was difficult, especially for large funds looking to gain $100 million in exposure. However, with Blur's leading market share in this space, it has effectively become an index on NFTs, and more specifically, the fastest growing segment of NFTs, namely professional transactions. This index is an important development that will allow more participants to acquire NFTs in a way that was not possible before.
David: How is Blur Token doing? While market forces generally dictate this, what governance privileges does this token provide to the Blur platform? How do you think the financial world will accept it, what will people think when they see this token? Does it only offer broad access to NFTs, or will it be able to pick specific NFT winners?
Pacman: Views on Blur Token vary from participant to participant. For active NFT traders, the token is a means of gaining access to protocol growth and rewards. For others, especially those who find the field challenging, it may offer a passive opportunity to gain exposure to a fast-growing market. The potential of NFTs is huge, especially for the next generation of consumers who have grown up in the age of digital goods. Blur offers these users a way to passively participate in the NFT marketplace.
David: So, let's talk about season two. What's in Season 2? You said that the second season has started, so can you give us some details?
Pacman: Season 2 will not have the initial 12% AirDrop as that was earmarked for Season 1. However, it still has a sizeable treasury size that the community can vote on for future rewards or other initiatives. These could include translation services, new secondary DAOs, or other projects, not just bounty projects. A big reason for continuing to offer incentives is that while listing incentives stopped in the first quarter, listings still increased. Continuing to allocate heavily to listing incentives may not make sense when considering efficient capital allocation. Looking at the current NFT infrastructure, it is still somewhat rudimentary and lacks many advanced financial primitives. Since NFT is a different asset class, it is not just a transaction, but more of a combination of shopping and trading. While the token infrastructure has developed, there is still room for greater growth and specialization in the NFT space. Given this potential for growth and development, it makes sense to continue offering rewards in Season 2, as new behaviors and products are likely to be introduced, not only from core contributors, but also from the community. The community has already shared with us some exciting ideas that could continue in the next season.
David: The overall idea of the first season is to distribute tokens in the community, and the goal of the second season is to use tokens for governance so that the community has a say. This means that the second season will not only incentivize users to use the agreement, but also incentivize the community to participate in the management of the agreement, is this true?
Pacman: Yes, the Incentive Committee has a specific allocation of up to ten percent of the rewards that can be used in the second season or later. However, anything above that ratio can be exploited through governance. For example, the recent Optimism AirDrop distributed to those participating in governance highlights the value of such participation. To further increase the value of the protocol, we will facilitate growth by decentralizing the staker base and the entire decision-making process. The malleability of the Blur protocol presents a huge opportunity, and the large pool of funds can be used to distribute incentives to promote the development of the protocol.
David: Governance is indeed difficult to control at will, so there is no such thing as "governance farming". I think the third season is too far away at the moment, because it may only be determined by the governor who appeared in the second season, is that right?
Pacman: I think so.
David: I have one last question about the NFT royalty battle. While this is a topic that needs to be discussed in more depth, I wanted to talk to you briefly. From my DeFi perspective, it seems like Opensea and Blur are in a tug-of-war over how to enforce royalties, with Blur prioritizing optimizing the transaction experience while Opensea focuses on artists and royalties. Do you have any thoughts or insights to share about this ongoing conflict?
Pacman: That's an interesting question. We have different ideas about what will work in this space. About two to three weeks after launch, Opensea released a new policy requiring collectible creators to have a filter for Blur in order to earn royalties on their platform. We've adopted this policy to enforce royalties on collectibles with filter blur, as it temporarily blocks transactions that do not honor royalties. The problem is that other platforms, such as NFT-based AMM and zero-royalty Web 2.0-style marketplaces, do not enforce royalties and thus attract the attention of many traders. As the market tends towards lower fees over time, enforcing royalties across the board can create an incentive for new players to enter the market without charging royalties in order to grow. We are trying to design a system that reaches a steady state and is sustainable. We take full royalties on all collections that include filters, but we know that won't work in the long run. We also enforce a minimum royalty of 0.5% on existing collections to increase royalty enforcement without driving traders away. We wanted to avoid the dangerous tendency toward centralization, so we took a more gaming approach. We forecast a plateau within five to ten years, and we're working towards that. When we rolled out the auction and the incentives, some felt that Blur was hurting the floor regardless of the incentives, suggesting that the market doesn't always come to the same conclusions as we do. We are trying to fulfill our responsibilities as an operator in this field and continue to guide the market in the right direction.
David: Of course, I really appreciate your willingness to share your thoughts, which are very in-depth. You have deployed a very complete strategy and are actively executing it. Thank you for all you do to move the field forward, and I'm looking forward to seeing what the future holds for Blur.
