Key Takeaways

• Community-Centric Approach with Growth Potential: LooksRare differentiates itself in the Web3 space with a community-driven model and unique economic incentives, including a low fee structure and LOOKS rewards. Despite a smaller market share compared to platforms like OpenSea and Blur, LooksRare’s focus on community engagement and user rewards positions it for potential growth and wider market reach as it pushes out its suite of on-chain games.
• A Refreshed Tokenomics Model Based on Gaming: LooksRare is innovating with on-chain gaming elements such as YOLO, INFILTRATION, Poke the Bear and Raffles to enhance user interaction and the value of its LOOKS token. INFILTRATION, particularly with its deflationary model and token buyback strategy, exemplifies the integration of gaming and token value enhancement, potentially influencing broader market trends.

A Brief Overview of LooksRare

LooksRare rapidly gained market share as a decentralized NFT marketplace upon its launch in 2021, standing out with a community-centric approach that prioritized user rewards and governance. The platform’s unique features, particularly its innovative reward mechanisms and governance model, have played a crucial role in its growth and user adoption.

Recently, LooksRare has embarked on a strategic expansion, introducing new features and enhancements in its latest version. This upgrade marks a substantial leap in the platform’s capabilities, further aligning it with the needs of the evolving Web3 community. Central to this upgrade is the enhancement of user experience, with a focus on streamlined transactions, new games and improved interface design, making it more accessible and user-friendly.

At the heart of LooksRare’s philosophy is the empowerment of its community, with rewards as a focal point. This approach not only fosters a sense of ownership among users, but also ensures that the platform evolves in line with the community’s interests.

In this report, we focus on LooksRare’s shift towards on-chain gaming in the Web3 ecosystem, a move away from traditional digital asset marketplaces. We examine the integration of gaming elements, their impact on user engagement and platform dynamics, and analyze the performance and reception of LooksRare’s newest games. Our aim is to provide a concise yet insightful view of how LooksRare’s innovative approach is redefining the Web3 space and influencing future digital asset and gaming trends

LooksRare’s Approach: Usability

The LooksRare platform presents a unique ecosystem in the NFT marketplace, characterized by its specialized functionalities for sellers and buyers, a sophisticated market interface, an integrated reward system, and a comprehensive gaming system. This section of the report delves into the technical nuances of building a platform akin to LooksRare, highlighting the key components and functionalities that constitute its core.

Seller and Buyer Functionalities

• Seller Features: Unlike platforms like OpenSea, LooksRare isn’t geared towards the creation of NFTs — rather, it invites users to augment their trading experience with existing assets. Its suite of seller-oriented tools include bulk listings and listing imports from other marketplaces and analytics, all wrapped up in a user-friendly interface.
• Buyer Experience:. At the time of this writing, LooksRare offers fee-free trading on NFTs, and extensive functionality to ensure buyers can keep their edge, such as floor sweeping, a “shopping cart” flow, and a range of filters to help with sorting through collections.

Market Interface

• Database Utilization: The market functionality of LooksRare leverages a robust database system to store detailed information about each seller. Standard industry practices are employed to facilitate effective ranking and searching capabilities through database queries.

Reward System

• Token Rewards and Gamification: The platform’s reward system is designed to maximize user activity and retention. It allows users to earn non-valued tokens (“Gems”) through various games and gamified missions, which can then be exchanged for valued tokens (“LOOKS”). Key user data such as gaming frequency and style are systematically recorded in the database for efficient reward distribution.
• Periodic Monitoring: The system is designed to perform checks every 30 minutes, assessing each player’s gaming history to distribute rewards accurately and timely.

Gaming System

• Gameplay Mechanics: The gaming aspect of LooksRare invites users to participate in on-chain games with a predetermined amount of ETH, LOOKS or NFTs. What makes LooksRare stand out from competitors is that all randomness used within games is generated on-chain, providing transparency to all users, with a focus on user retention and platform dynamism.

System Architecture

Frontend Development

• React Framework: The frontend is built using React, considering its wide adoption and flexibility in creating dynamic user interfaces.
• Wallet Integration: Essential to the platform, the wallet integration feature supports various wallets, facilitating a smooth transaction process.
• Game Interface: This component involves UI design tailored to the gaming aspect, offering an immersive and interactive user experience.

Backend Infrastructure

• API Integration: The backend is equipped with APIs for handling wallet transactions, NFT listings, and user interactions.
• Database Management: A sophisticated database system is in place to manage wallet IDs, track user activities for rewards, and record game outcomes and seller information.
• Service Logic: Business logic embedded within the backend includes transaction processing, reward system management, and game mechanics.

Key Functionalities

• NFT Management: LooksRare’s approach to NFT management focuses on importing existing NFTs into user wallets, differentiating it from platforms that facilitate direct NFT creation.
• Transaction Processing: The platform is designed to verify wallet balances swiftly and execute transactions with high efficiency.
• Rewards and Gaming System: A unique blend of a reward system and gaming mechanics sets LooksRare apart. The platform tracks user engagement, manages mission completion, and effectively distributes tokens, while offering a captivating gaming experience.

LooksRare vs. Competitors: Contrasting Philosophies

• Market Positioning: Comparative analysis of LooksRare’s market positioning against major competitors.

In this analytical report, we will conduct a comprehensive evaluation of LooksRare’s market position from three critical dimensions: volume, trades, and traders. This analysis is juxtaposed against the backdrop of its competitors to offer a cogent assessment of LooksRare’s current standing in the market. Each dimension will be meticulously examined to encapsulate a holistic view of LooksRare’s performance relative to its peers, thereby rendering a nuanced understanding of its market dynamics and competitive landscape.

Volume Market Share:

• LooksRare: LooksRare is responsible for roughly 0.29% of total NFT volume in recent week — though significant in absolute terms, this statistic suggests that the marketplace operates within the shadow of larger, more dominant platforms.
• Competitors: In a comparative analysis, Blur, a principal player in the market, demonstrates a commanding lead in terms of trade volume, thereby solidifying its eminent market stance. Adopting a strategy akin to LooksRare’s, notably through the utilization of token incentives, Blur has successfully secured greater market share, in part due to assertive airdrop tactics, which distinctly sets it apart from the methodologies employed by LooksRare.

Trades Market Share:

• LooksRare: Capturing about 0.27% of total trades across all platforms in recent week, LooksRare’s lower trade percentage relative to its volume suggests a trend of higher transaction values, albeit with a smaller, less active trading base.
• Competitors: OpenSea exhibits a higher trade count, reflective of its extensive collection and larger user base, thus indicating widespread market adoption. Blur, similar to LooksRare in using token incentives, demonstrates substantial trade activity, potentially propelled by its token airdrop initiatives.

Traders Market Share:

• LooksRare: Securing approximately 0.64% of the market share in terms of traders in recent week, LooksRare’s platform is characterized by a smaller, yet focused and engaged user community.
• Competitors: OpenSea leads the segment with a significantly higher number of unique traders, pointing towards a more diverse and expansive user base. Meanwhile, Blur’s strategic maneuvers have effectively attracted a higher number of traders compared to LooksRare, underscoring the effectiveness of its market engagement tactics.

In comparison to major competitors like OpenSea and Blur, LooksRare’s market share in all three categories — volume, trades, and traders — is relatively small. This indicates that while LooksRare is an active participant in the market, it serves a smaller, more niche community compared to the larger platforms. OpenSea and Blur dominate in terms of volume and trader count, suggesting a more substantial and potentially broader user base. The data reflects a competitive NFT marketplace where LooksRare, despite its incentives and community-focused approach, has significant room to grow in market presence.

Comparative Fee Structure

Fee Structure: LooksRare has recently switched to a zero-fee model (excluding gas) — considerably lower than OpenSea’s standard 2.5% plus gas fees. Rarible imposes a 1% fee on both sellers and buyers, in addition to gas fees, while Blur charges only for gas fees and royalties, with a minimum of 0.5%.

Gas Fee Optimization: LooksRare has optimized Ethereum gas fees, offering up to 50% savings compared to competitors like Blur. This is particularly beneficial given the high gas costs typically associated with Ethereum transactions.

Platform-Specific Incentives: LooksRare offers unique incentives such as Protocol Rewards, which are not seen in Blur’s model (which focuses primarily on token rewards) or OpenSea’s broader feature set. These incentives can attract and retain a specific user base interested in these additional benefits.

Notable Features:

• LooksRare stands out with features like bulk listings, Protocol Rewards, and analytics. The platform also boasts sweeps and lower gas fees compared to some competitors.
• Blur offers fast sweeps, in-depth analytics, and token rewards, focusing more on analytics and trading efficiency.
• OpenSea provides a massive inventory and multi-chain support, making it a versatile platform. Additionally, it offers analytics, sweeps, and drops.
• X2Y2 differentiates itself with NFT loans, buyer rewards, and the option to buy with a credit card.
• Rarible focuses on community engagement features such as following user profiles, live auctions, and free mints, along with live data insights.

In summary, LooksRare’s competitive edge lies in its zero-fee structure and Ethereum-centric approach, coupled with a unique rewards system. While it faces stiff competition from multi-chain platforms like OpenSea, its tailored features and low fees make it an attractive option for Ethereum-based NFT traders and enthusiasts.

Comparative Reward System

LooksRare: Emphasis on Community Participation and Revenue Sharing

• Points System: LooksRare utilizes its native LOOKS token (in conjunction with a points system) to incentivize user participation. This approach rewards users for engaging with the platform its suite of products.
• Revenue Sharing: A significant differentiator for LooksRare is its revenue-sharing model. Fees are redistributed to token holders who “commit” their LOOKS, promoting a sense of ownership and community, and encouraging long-term holding and greater platform engagement.

OpenSea: Traditional Model with Focus on User Experience

• Lack of Native Token: As of my last update, OpenSea does not have a native token for user rewards. Its reward system is less direct, focusing more on providing a seamless user experience and a broad array of NFT offerings.
• User Engagement: OpenSea’s strategy revolves around attracting a wide user base through ease of use, extensive listings, and reliable platform performance, rather than through financial incentives.

Blur: New Entrant with Token-Based Incentives

• BLUR Token Introduction: Blur has introduced the BLUR token, aligning itself closer to LooksRare’s model. The token serves as an incentive mechanism, rewarding users for their participation and loyalty.
• Airdrop Incentives: Blur has implemented airdrop campaigns to distribute tokens to its user base, encouraging platform engagement and potentially driving higher trading volumes.

Comparative Analysis:

• User Incentives: While LooksRare and Blur both utilize token-based incentives, LooksRare’s revenue-sharing aspect sets it apart, providing ongoing financial benefits tied directly to the platform’s performance.
• Governance Participation: LooksRare’s emphasis on decentralized governance through token holding offers users a more significant role in the platform’s direction, a feature that is less pronounced in OpenSea and is still developing in Blur.
• Long-Term Engagement: LooksRare’s staking rewards system fosters long-term user engagement, distinguishing it from both OpenSea and Blur, which currently focus more on transactional incentives.

LooksRare stands out in the NFT marketplace landscape with its comprehensive reward system that includes token rewards, revenue sharing, and staking incentives. This approach not only incentivizes immediate trading activities but also promotes long-term engagement and a sense of community ownership. OpenSea, while leading in market share, follows a more traditional business model without direct financial incentives for users. Blur, though adopting a token incentive model similar to LooksRare, lacks the revenue-sharing aspect that characterizes LooksRare’s commitment to aligning user and platform interests. This analysis underlines LooksRare’s unique position in leveraging a multifaceted reward system to enhance user engagement and platform loyalty.

LooksRare’s New Mechanisms

Currently, the LooksRare team is actively exploring innovative strategies to enhance the platform’s dynamics, particularly focusing on the development of novel gaming experiences. These initiatives are primarily aimed at influencing the tokenomics of the LOOKS token and enriching the overall user experience. This approach signifies a strategic pivot towards integrating gamification within the platform’s ecosystem, underscoring a commitment to driving both user engagement and economic vitality. LooksRare has innovated four distinct games: YOLO, INFILTRATION, Poke the Bear and Raffles. Such endeavors not only reflect a deep understanding of the evolving market demands but also exhibit a forward-thinking approach in leveraging interactive elements to bolster the utility and appeal of the LOOKS token.

INFILTRATION

LooksRare’s introduction of the INFILTRATION mini-game represents a strategic and innovative approach to enhance user engagement and impact the tokenomics of its native token, LOOKS.

Game Overview and Rewards: INFILTRATION is a mini-game launched by LooksRare that has significantly captivated its community. The game has distributed over 800 ETH in prizes, illustrating its popularity and success. Within the game, a considerable amount of LOOKS tokens were spent on game activities like healing (10.99 million LOOKS) — a portion of which were burned (2.74 million LOOKS). A substantial amount of ETH (305 ETH) was “stolen”, or won by players.

Deflationary Mechanisms: INFILTRATION is designed to reduce the supply of LOOKS tokens systematically. This is achieved through various game mechanisms that involve spending and burning LOOKS tokens. By decreasing the token supply, the game contributes to a deflationary economic model for LOOKS. In the context of cryptocurrency, a deflationary model is often seen as beneficial for a token’s value as it creates scarcity and can drive up the price due to the reduced supply.

Token Buyback Strategy: A key feature of INFILTRATION is that 50% of the fees generated by the game are allocated to a LOOKS token buyback. This approach serves dual purposes: it reinjects value back into the ecosystem and supports the sustainability of the LOOKS token’s market dynamics. Buybacks are a common strategy used in traditional markets to increase the value of a stock, and in the case of LOOKS, it helps enhance the token’s value.

Market Response: Following the launch of INFILTRATION, the LOOKS token experienced a substantial surge in its price, increasing by 35% within 24 hours. This price movement indicates strong community interest and enthusiasm for the game and the deflationary measures it introduces. The initial mint of 10,000 “Agent” NFT sold out within five minutes (with 70% sold in two minutes).

In INFILTRATION, users paid to “heal” their Agents using LOOKS. With each successive heal, the price was increased.

The volume of Agent NFTs sold over the course of the game.

Strategic Significance: The introduction of INFILTRATION aligns with the broader trend in the NFT market, where platforms are continuously seeking innovative methods to engage users and enhance token value. By integrating gamification with deflationary strategies, LooksRare positions itself as a forward-thinking entity in the NFT space.

Impact on Crypto and NFT Landscape: INFILTRATION sets a notable precedent in the intersection of NFTs and gaming. It offers an interactive and engaging user experience while simultaneously contributing to the economic sustainability of the LOOKS token. This innovative approach could influence how other platforms in the crypto and NFT space consider integrating gamification and economic strategies to enhance user engagement and token value.

YOLO

Mechanics: Operates as a transparent, fair game on the Ethereum blockchain using smart contracts. Participants enter rounds by making deposits (ETH/ERC-721/ERC-20), with winners selected at the end of each round. The chance of winning is proportional to the share of the total pot deposited.

Impact on LooksRare and LOOKS Token:

• User Engagement: Increases user interaction and time spent on the platform.
• Asset Utilization: Encourages the use of various assets (ETH, ERC-721, ERC-20 tokens).
• Economic Activity: Generates economic activity on the platform, which may positively affect the overall ecosystem, including the LOOKS token.

Raffles

Mechanics: A decentralized application on the Ethereum blockchain for creating, managing, and participating in raffles. Winners are chosen through a provably fair mechanism using Chainlink’s VRF.

Impact on LooksRare and LOOKS Token:

• Increased Participation: Provides a fun, engaging way for users to participate in the ecosystem.
• Platform Diversity: Adds another dimension to the platform, making it more appealing to a broader audience.

Poke The Bear

“Poke the Bear” is a game of chance and strategy, where participants take turns poking a virtual bear. One player will inevitably awaken the bear, leading to their virtual “mauling”. The game’s allure lies in its simplicity and the high stakes involved. Participants who outlast their counterparts split the eliminated player’s entry fee, creating a thrilling incentive structure. This game model cleverly balances risk with potential reward, engaging players in a high-adrenaline environment.

Reward Structure: The reward mechanism of “Poke the Bear” is straightforward yet compelling. Survivors earn the entry fee of the eliminated player, less a nominal fee retained by LooksRare. This not only incentivizes participation but also introduces a competitive element, balancing the risk of elimination against the lure of winning.

Abitrum Launch: To reduce gas fees and increase speed, LooksRare later launched Poke the Bear on the Arbitrum network. This iteration proved popular with players as, unconstrained by Ethereum fees, it lowered the barrier to entry and increased the speed of rounds.

In summary, YOLO, INFILTRATION, Poke the Bear and Raffles each contribute uniquely to enhancing user engagement, diversifying economic activities, and influencing the tokenomics of LOOKS on the LooksRare platform. This innovation not only benefits the platform’s growth and sustainability but also potentially impacts the value and utility of the LOOKS token.

Conclusion

• LooksRare, as a decentralized NFT marketplace, stands out with its community-centric approach and unique economic incentives. Despite holding a modest market share compared to giants like OpenSea and Blur, its competitive edge is underscored by a fee-free structure (excluding gas fees) and rich rewards offerings. This positioning indicates a strong commitment to fostering a dedicated user base and aligning platform growth with community interests. However, its niche market presence suggests potential areas for expansion and growth.
• The introduction of groundbreaking gaming mechanisms like YOLO, INFILTRATION, Poke the Bear and Raffles signifies a pivotal shift for LooksRare, marking its transition from a traditional NFT marketplace to a dynamic, gaming-oriented platform. This strategic evolution greatly enhances user engagement and significantly impacts the economics of the LOOKS token. INFILTRATION, in particular, with its distinctive deflationary model and token buyback strategy, exemplifies an avant-garde approach within the NFT sphere, greatly contributing to the economic viability of LOOKS. These innovative features not only augment the overall user experience but also firmly establish LooksRare as a progressive and influential entity in the rapidly evolving NFT market. This transformation underscores LooksRare’s ability to adapt and lead in the face of changing market dynamics and user interaction trends, marking a notable paradigm shift from conventional NFT trading to an integrated gaming experience.
• All LOOKS tokens are already fully distributed according to the token distribution schedule.

Disclosure

All content was produced independently by the author(s) and does not necessarily reflect the opinions of BTX Research also thanks to the Looksrare team for providing an accurate product expression and data. Author(s) may hold cryptocurrencies named in this report. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research and consult an independent financial, tax, or legal advisor before making any investment decisions. Nothing contained in this report is a recommendation or suggestion, directly or indirectly, to buy, sell, make, or hold any investment, loan, commodity, or security or to undertake any investment or trading strategy with respect to any investment, loan, commodity, security, or any issuer. This report should not be construed as an offer to sell or soliciting an offer to buy any security or commodity. BTX Research does not guarantee the sequence, accuracy, completeness, or timeliness of any information provided in this report.

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