- From the start, the marketplace Blur has sparked controversy.
- In 2022, it wrested control over the NFT market share from OpenSea by abandoning creator royalties, to lure traders away from OpenSea. It worked. Now, near 0% creator royalties are standard on both Blur and OpenSea for NFTs created before 2023, which include most of the blue-chip and midcap collections. (See our prior post on the exact % of royalties, and respective policies.)
- As we predicted, this race to the NFT bottom came at the expense of creators, who were left with no royalties. This week, Nansen reports that creator royalties for NFTs have hit their lowest level in 2 years. No surprise.
Backlash against Blur
- For whatever reason, Blur largely escaped scrutiny. That is, until this week. In past 48 hours, we’ve seen a flurry of news media and NFT influencers openly scrutinizing and criticizing Blur.
- So what changed?
- Last week, the NFT market crashed with a broad sell-off of major pfp collections. The initial sell-off was caused by Azuki’s disappointing reveal of a second-generation Elementals collection, which caused the OG Azuki collection to fall over 50% from 17.5 ETH to below 6 ETH at one point.
- But the Azuik sell-off led to a broader sell-off of other pfp collections, including the vaunted Bored Ape Yacht Club, which fell to below 30ETH for the first time in 2 years and down from a high of 135 ETH.
- As the entire NFT market for pfp collections saw a blood bath, the news media started to investigate the possible reasons for the crash.
- Many experts and commentators pointed to the same culprit: Blur.
- The criticism: Blur’s creation of artificial incentives to trade NFTs in order to receive $Blur tokens through “farming” (placing bids on NFTs) and through Blend loans with NFTs used as collateral distorted the NFT market, and made it more susceptible to a crash because the volume of trading was artificially created by $Blur tokens, and not dependent on the underlying artworks for the NFTs.
- In other word, Blur “farming” and loans made NFT trading no longer about NFTs. Instead, it was about accumulating $Blur tokens.
List of negative media coverage of Blur in past week
- Did Blur Really Crash the NFT Market?, (Decrypt).
- Could Blur Token Farming Tank the NFT Market?, (nft now).
- Bored Ape Yacht Club Prices Crash to Two-Year Low, Down 88% From Peak, (Yahoo! news).
- Blur Founder Responds to Criticism Over NFT Market Floor Price Crash, (Be(in)crypto)
- Blur founder denies NFT exchange drags down prices, (Protos).
- NFT royalties fall, market cap slumps but who takes the blame, (AMB Crypto).
- Did Blur Kill the NFT Market?, (CryptoDaily).
- Blur’s Founder Responds to Accusations: Debunking ‘Bad Takes’ on NFT Market Crash, (NFT Evening)
- NFTs Are Crashing (Again). Here’s Why (nft now).
NFT influencers and wales also openly question Blur
- And it’s not just the news media scrutinizing Blur.
- We are witnessing a number of prominent NFT influencers speaking out against Blur.
NFT Stats’ (Sam’s) view on the effect of Blur farming, liquidation of Blend loans
- Sam aka NFT Stats explains how the incentives on Blur, especially farming of points, distort the NFT market: “The basic idea uh was that really over the weekend we went from you know we’ve gone from 4 000 at Peak to to 2700 nfts that were on blend so a lot of liquidations. There now what do liquidations mean it means that the NFTs go into the hand of airdrop Farmers. Airdrop farmers are the main lenders and they’re the and tend not to be kind of diamond-handed holders. Once they get those NFTs so that’s just more than needs to get dumped.”
Will an SEC investigation of $BLUR be next?
- Some of you may be wondering, How is Blur offering its platform $Blur tokens without SEC regulation?
- Securities typically must be registered with the SEC before their offering to the public, must file a disclosure statement setting forth the risks of the security, and are subject to regulation, such as rules prohibiting insider trading and wash trading. (Check out the SEC’s summary here.)
- At least initially, Blur said it would exclude US residents from receiving the token.
- That’s what the bankrupt FTX also attempted to do–to exclude its platform token FTT from US residents–but that didn’t stop the SEC from classifying it as unregistered security and charging FTX with a violation of US securities law.
- So, the jury may still be out whether $Blur is a security. The SEC’s increased enforcement actions against 68 cryptocurrencies and tokens, including platform tokens used on NFT platforms (e.g., SAND, MANA, and FLOW) is ominous.