Original author: Jack, Cookie

Original source: BlockBeats

The NFT market is experiencing an "El Niño phenomenon."

Since the NFT market entered a freezing point at the end of June last year, the overall trading volume has not improved much. In early November, the hype of Art Gobblers formed a pulse in the market’s weekly trading volume, and also allowed Blur to achieve its first victory in the battle against OpenSea at the trading volume level. After that, the market's trading volume quickly returned to the average level since the end of June, and Blur eroded more of the liquidity that originally belonged to OpenSea. However, at this time, everyone still felt that Blur still had a long way to go to defeat OpenSea.

Until the launch of the “Bid for Airdrop” incentive mechanism in early December last year, Blur became the “engine” for NFT market liquidity. The last two long lines that suddenly rise in the black box in the picture below tell us that in the past two weeks, the "engine" of Blur has "heated up" abnormally.

Weekly trading volume distribution of the NFT market, the black box part is from the end of June 2022 to the present, the source of the picture is taken from Dune Analytics

Accompanying this sudden surge of liquidity, the NFT market has also seen many unseen "abnormal phenomena." Bid's bid exceeded the floor, NFT prices "drawn the door", and last weekend's "biggest crash in NFT history", the NFT market in front of us actually feels strange. We can't help but re-examine where the current liquidity of the NFT market comes from. Is it the increment of mechanism innovation or the involution of existing funds between platforms?

"The biggest smash in the history of NFT"

On February 25, Nansen researcher Andrew Thurman tweeted that the sell-off that occurred in the past two days was most likely "the largest ever in the NFT market."

Huang Licheng, a Chinese Taiwanese singer, aka "Machi Big Brother Machi Big Brother", executed 136 BAYC sales transactions in one go within 48 hours from the evening of February 24th to February 25th, with the lowest selling price of 58 ETH. After the intensive trading ended, Huang Licheng still had 34 BAYCs in pending orders for sale. According to Nansen statistics, Brother Maji sold a total of 1,010 NFTs during this "smash" period, including 90 BAYC, 191 MAYC, 112 Azuki and 308 Otherdeed, with a total value of approximately US$18.6 million.

Under the dual influence of the drop in money and panic, BAYC's floor price fell by 25.5%, from 75 ETH to 55.89 ETH, MAYC's floor price fell by 11.7%, Azuki fell by 11.3%, and Otherdeed fell by 10%. According to NFTGo data, from February 23 to February 25, the total market value of the entire NFT market evaporated by more than $320 million.

"Moji Flywheel" became "Moji Big Cut"

Although Huang Licheng quickly took back most of the blue-chip assets and still had nearly 7,000 ETH in his Blur Biding pool, this did not change the community's view of this smashing behavior: Huang Licheng once again fell from being the boss of Moji. For the "Maji Great Cut".

Readers who understand the Blur Biding mechanism will naturally know why this transaction is called "passive takeover". To put it simply, Huang Licheng placed a lot of Bid at the average price of 78 ETH, but he may not have expected that someone would suddenly So many monkeys sold. In other words, our brother Ma Ji was "sniped". (BlockBeats note, for more information about the Blur mechanism, please read "NFT Platform Blur: Perhaps the NFT Market Viewing Platform with the Best Experience" and "Analysis of the NFT Market Blur Operation Mechanism, Profit Model and User Experience")

In order to gain more points on the Blur platform, Huang Licheng has been listing a large number of high-priced bids in blue-chip NFT projects such as BAYC, MAYC and Azuki. While siphoning blue-chip assets, he earns BLUR airdrops and has long dominated the Blur standings. Number one. Some people in the community summarize Huang Licheng's strategy as the "Maji Flywheel". The cycle process is summarized as follows:

1. Maji pledged his BAYC and APE in combination and obtained APE income. Magee then converts these earnings into ETH and accumulates them.

2. Maji takes these ETH to Blur to participate in the bid, and the BAYC he receives is also used for pledge and held forever.

3. Moji will convert half of the 1.84 million BLUR obtained in the first airdrop into ETH as soon as the airdrop is received, and participate in Bid again.

Picture source comes from the Internet

In fact, Moji’s strategy is similar to that of most players participating in Blur Bid. In other words, this is the basic logic behind Blur’s continuous liquidity. But perhaps because of the initial success, the most abundant liquidity will always be calculated by others. Brother Maji is eyeing Blur points, but unexpectedly others are eyeing the ETH in Magi’s hands. Let’s take a look at the entire process of how “Maji Flywheel” was sniped.

The whole story of Brother Maji being sniped

Since the Blur airdrop points entered a white-hot stage in early February, our brother Maji has been placing high-price bids and slowly raising the BAYC floor, and has also taken over some BAYC sell orders sporadically along the way. But as you can see from Blur’s trading charts, Magee didn’t invest much liquidity during this time. For example, around February 8, after the price of BAYC rose above 70 ETH, the transaction density immediately became very dense, but the Bid wall near this price was not thick enough, so the floor was quickly smashed down again.

Image source cut from Blur

But after the first round of Blur airdrops were released on February 14, Maji immediately sold $600,000 worth of BLUR Tokens. Then we can clearly see that the Bid wall above 70 ETH has thickened. Even though transactions are more intensive than before, there is always sufficient liquidity to maintain the floor price of BAYC because of the wealth creation effect of BLUR. As the number one player in Blur’s standings, Moji is naturally the main force in BAYC’s liquidity.

It can be seen that during the period from February 14th to 22nd, BAYC’s floor price has been very stable, and even reached a recent high. Mando and OSF saw this, so they decided to cash out a large amount of BAYC in their hands at this moment when prices and liquidity were at high levels. You will obviously find that between February 20 and 22, BAYC’s transaction density increased rapidly, but the floor price remained relatively stable. This is the data that snipers such as Mando and OSF are quickly eating up the Moji Bid wall. Performance.

It was not until February 22nd that Moji took over 71 BAYC at once, and Mando and OSF cashed out nearly 9 million US dollars, and the entire community began to notice this matter. During the entire day of the 22nd, there were a total of nearly 300 BAYC. was sold. Mando later posted directly on his social media that he chose to sell BAYC after careful consideration and decided to use the current NFT liquidity to make a profit.

Perhaps because he had too much BAYC and was afraid of causing panic in the community, Brother Maji immediately deposited 3,900 ETH into Blur, hinting to the community that he would not sell off these blue-chip assets and end his "Maji Flywheel." Of course, the final situation was that Moji sold off on a large scale in the next two days. The blue-chip project lost its "Moji liquidity", the Bid wall was instantly broken through, and the liquidity of the entire NFT market also collapsed.

In the season of high liquidity, only $19 million shook the entire NFT market. We have to rethink, how much money is there in the NFT market? Does the current liquidity come from over-the-counter funds, or from the rolling of existing funds between platforms?

Robots and evil dealers, various forms of NFT under "hormone liquidity"

After the Blur airdrop appeared, the NFT market was like a shot of chicken blood, with a surge of liquidity that smelled of hormones. What followed were various "hormonal side effects". In addition to this "moji big cut" incident, there are many similar situations where NFTs were received in batches at Bid prices higher than the floor price. We will also frequently see some NFT projects increase transaction volume at high prices, and there are more and more cases of "painting the door" at floor prices. There was even a post on the Reddit Ethereum forum questioning the Blur team’s use of robots to farm BLUR airdrops. For a while, the NFT market in front of us even felt a little strange.

New Business! The Great Migration of Robot Strategies

Bots have become very common in the Web3 field. From trading bots, front-running bots to contract bots, they are almost everywhere in the crypto field, and the same is true in the NFT field. One bot strategy developer told BlockBeats that in their opinion, the entirety of Web3 is almost entirely bots. "If you click on a popular NFT collection on OpenSea, most of the offers are those bidding robots buying and selling NFTs. They usually place an order every 30 minutes. Many times the price is driven by these robots. This robot drops 0.1 ETH, and that robot drops 0.1 ETH. It will also drop by 0.1 ETH, so the price will slowly come down, and the same goes for the Offer price increase."

So the main force in NFT liquidity has actually always been these robots, which achieve profits by flipping NFTs on OpenSea. This is also in line with common sense. After all, the winning rate of algorithms is always better than that of real people, and capital always flows in the direction of maximizing returns. Following this logic, Blur has also created a new business for NFT robots.

"In the past, NFT robots pursued loss-free, sniping those "fat fingers" without losing money (for example, placing a high-price order with a wrong Bid, and the robot bought it at a low price first, and then accepted the Bid at a high price), as well as a high profit-loss ratio. Combined with the previous floor price and recent sales of this NFT collection, software analysis is used to make buying and selling decisions. But it’s different now. Basically all robot strategies have been changed to brushing points. The NFT you buy doesn’t need to lose money, and you can even accept a smaller loss.” The robot strategy developer told BlockBeats that compared with the past, Buying and selling on OpenSea and using airdrops on Blur have higher certainty and return on investment, so from the perspective of development strategy, few people will choose to invest a lot of money in the former.

This is one of the important factors why Blur defeated OpenSea in the liquidity war: they bribed the main forces in market liquidity, and these backbone liquidity made the choice to migrate from OpenSea to Blur.

Nowadays, most of the addresses participating in Bid are robots. "If you click on the homepage of an address at random, if it Bids more than one or two hundred times a day, it must be a robot, because if you Bid manually, the signature alone will be consumed. a long time". So what does the NFT robot’s airdrop strategy look like? In order to protect the profits of strategy developers, BlockBeats only displays some of the eliminated scoring strategies here.

Strategy 1: MEV jump ahead

This strategy takes advantage of the loopholes in Blur’s Bid transaction process to achieve zero-cost brushing. Assume that the current floor price of BAYC on Blur is 70 ETH, and the highest Bid is 71 ETH. At this time, the robot will place a Bid order of 71.1 ETH. Then if someone accepts the Bid, his BAYC will definitely be sold to 71.1 ETH. of this pending order.

From the perspective of trading strategy, this transaction must be a loss because the highest Bid will soon fall back to 71 ETH after the transaction is completed. But Blur’s previous Bid transaction and points mechanism was as follows: Bid is accepted, points are settled for the bidder, funds are removed from the Bid pool, and finally the NFT is transferred to the bidder. This process takes about 5 to 10 minutes. During this period, the robot will use the MEV mechanism of Ethereum to rank the operation of "retrieving ETH from the Bid pool" in the same block as the "Blur" operation in the same block where the Bid transaction is completed. Get out in front of the bidder's funds. In addition, in addition to the on-chain method, the operation of "withdrawing money" can even be completed directly through Blur's API.

In other words, when Blur really wants to withdraw money from the bidder's Bid pool, the funds in the pool have been transferred. In this case, Blur will regard the transaction as failed, but the points have been transferred to Bid. The robot was "prostituted for free". "During the whole process, the cost paid by the robot was only 2U of Gas." A robot strategy developer told BlockBeats that this strategy has extremely high returns on blue-chip NFTs such as BAYC, Doodles, and Azuki, because as long as the Bid order here takes the first place, even if it only lasts for 5 minutes, the points will be earned. Very impressive.

Of course, Blur has officially fixed this points loophole and added an interface for canceling pending orders to the API. If an address cancels pending orders multiple times or rushes ahead, not only will no points be added, points will be deducted, and in serious cases, the account may even be banned.

Strategy 2: Unlimited Bid New NFT Collection

This strategy is to use Blur's trading ban on newly listed NFTs to achieve a certain degree of "unlimited points brushing." Since Opensea will identify stolen NFTs, Blur does not allow newly transferred NFTs to be traded within 3 hours of the transfer transaction in order to prevent Bid participants from receiving stolen NFTs. Therefore, the robots can make Bid bids without any worries during these 3 hours. For example, if the floor price of a certain NFT collection is 1 ETH, then the robots will rush to place bid orders of 2, 3 or even 10 ETH. While the seller cannot accept bids at this time, the bidder is eligible to receive points.

The Blur team also took advantage of the situation and suddenly revised this policy some time ago, adjusting the trading ban for newly launched NFT collections from 3 hours to 1 hour. According to some strategy developers, many people have taken over a large number of NFTs with a floor price of 0.1 ETH at prices of 3 ETH or 5 ETH, and the robot strategy has made serious mistakes.

Of course, strictly speaking, we cannot call the losses caused by the team's change of mechanism a mistake. However, according to some robot players, there are indeed some "clumsy" players in the current NFT robots, and funds have been lost due to loopholes in the strategy. Loss. For example, some bidding robots calculate the Bid range by crawling OpenSea's floor price. However, NFTs on OpenSea sometimes adopt other bidding mechanisms, such as accepting USDC for transactions. However, some robots do not distinguish between pricing units, so 10 USDC mistakenly thinks 10 ETH is used for calculation, which will cause larger losses.

According to a strategy developer, most of the high-priced bulk access to blue-chip NFTs circulated in the community are not mistakes by robots, but because some people think that Blur can bid for rarity like OpenSea. These users placed high bids after filtering for rarity, only to find out they were bidding on all NFTs.

There are also robots that crawl the list from Blur’s official popularity rankings and then calculate a reasonable Bid interval. However, because in the first phase of Blur’s airdrop event, the project team can also get points for publishing projects on Blur, there are many schemes set up by “evil dealers” to increase the transaction volume and increase the price after the project is released, and then destroy it. plate. For those robots that receive "airdrop subsistence allowance" in Bid pool 2 or 3 (i.e., the price range ranked 2nd and 3rd on the Bid wall), it is easy for market makers to take their salary from the bottom of the pot and become "takers."

Yes, robots often become the side dishes of bankers, which also leads to the next topic, that is, in the current NFT liquidity, how do "evil bankers" "harvest"?

Better liquidity = more + worse bankers

While shouting "high and hard liquidity", on the other hand there is the "painting incident" of NFT projects such as Franklin and Concave World. This is the current status of NFT liquidity. We have to admit that Blur’s Bid mechanism and airdrops did bring some OTC funds to the market, but what needs to be seen clearly is that this part of OTC funds is not much. As we can see, the NFT market is harvesting through the false name of liquidity. Retail investors use this to cash out, and project parties use this to prey on the limited liquidity.

Weirdo Ghost Gang founder Sleepy told BlockBeats in an interview that many small NFT projects now use Blur’s mechanism for insider operations. These projects will first increase the transaction volume on OpenSea, and then go to Blur's discord to open an invoice and list their own NFT collection. After having a bottom price on OpenSea, they will start to slowly increase the Bid pending order on Blur and earn points. In this process, some project parties choose to list some NFTs at the same time, so that even if their Bid is sold, the sold NFTs can also achieve partial recovery. Some project parties hold most of the NFTs in the collection, so they can raise the price at will to gain points, and others will not ship to them if they bid.

Of course, the ultimate goal is to attract retail investors or robots to participate in Bid. Retail investors are motivated by the FOMO emotions caused by the rapid increase in floor prices, while robots have climbed to their higher trading volume. After the Bid wall reaches the project party's expected thickness, they will immediately remove their Bid, and then sell the NFT in their hands to these retail investors and robots who bid.

Along with more abundant liquidity, the market has also ushered in a more dangerous trading environment. According to a Bid participant, the above-mentioned projects were very common during the first airdrop of Blur, and he himself was cut off many times. “If the robot is looking for collections to bid based on the Blur popularity list, then when it encounters this kind of The probability of the project is basically 100%. One night I fell asleep without checking the market, and when I woke up, I saw that all the money in the robot was gone.”

Sometimes, this happens even with Cool Cats, Art Gobblers and other projects that have a certain community base, such as Franklin and Concave World’s floor paintings and doors. Many Bid participants have suffered losses due to the sudden rise and fall in prices. A lot of ETH. Therefore, before placing a Bid order, users must carefully understand the relevant information of the NFT project, such as the trading activities on OpenSea, the proportion of unique holders, and the Bid activities and trading activities on Blur in recent days. If there is little selling behavior , but the Bid wall continues to accumulate, you need to pay extra attention to the risks

Of course, after volatility intensifies, we also need to start cultivating some new habits, such as paying attention to the price of the NFT floor in real time to prevent ourselves from passively completing transactions on Bid who are "eating subsistence allowances". We can use SnipeNFT on Discord or Telegram. Etherdrops prompts bots for real-time follow-up. In addition, before recharging ETH to the Bid pool, you need to make sure that you do not have a Bid that has been deactivated due to insufficient funds to prevent the previous Bid from being activated after placing ETH and then buying NFT at a high price.

Who is the winner among the retail whales, and is the NFT market getting better?

Data released by NFTstatistics.eth, PROOF’s research director, shows that from February 15 (Blur started its second quarter airdrop) to March 1, the top 10 Blur Bid Farmers all had negative trading returns.

Image source cut from NFTstatistics.eth

Echoing this data, 20% of Blur’s total trading volume is contributed by only 17 wallet addresses, and 50% is contributed by only 292 wallet addresses. In the Blur Bid Pool, the top 1% of wallets that deposit ETH contribute more than 73% of the total amount in the pool. The whales seemed so certain that Blur’s second round of airdrops could cover all the costs they paid in the “Bid War” that @ShaneCultra, a former market maker at the Chicago Board Options Exchange, said, “Traders on Blur said no. Market makers. They just think that the profits from the Blur airdrop will cover their trading losses and turn into a tornado, instead of maintaining a reasonable spread measured in $BLUR in their Bid and List prices."

On projects where whales are active, retail investors have received the "dream package" they have been coveting in the past - a minimum optional royalty of 0.5%, 0% platform handling fee, lower slippage and better depth. It seems that this time retail investors and The whales won together. However, the "Dream Package" is essentially a "paid service" provided by whales to retail investors in the form of transaction wear and tear in order to pursue the potential profits of the Blur airdrop. Will such happiness last long? In addition, @takenstheorem analyzed 100,000 transactions as of February 14, and found that 80% of Blur’s transaction volume was concentrated in the top 24 projects, while 80% of OpenSea’s transaction volume was scattered among the top 90 projects. Blur is making big players and big projects stronger. In response, Maki said, "Don't blame Blur, it's just your project that's rubbish." Is this statement really fair to the vast number of small and medium-sized creators?

NFT having FT-like liquidity is what NFT players dream of, but now are we pursuing better liquidity solutions, or have NFT liquidity been regarded as the greatest value of NFT?

NFT must have an FT-like experience, but it is by no means close to FT in terms of value logic. Liquidity solutions are the “catalyst” rather than the “raw material” for the NFT market. The bubble in the NFT market can be amplified, but it only requires practical application scenarios, solid brand development, and constantly updated development narratives to make the bubble fall steadily.

Are we really making progress in these areas? In other words, are you really cared about? If not, will the bubble generated by the "catalyst" while the "raw materials" remain unchanged, really make the NFT market better? When an NFT infrastructure replaces the attraction of NFT projects with Token incentives and becomes the "engine" of liquidity, and it becomes increasingly difficult for small and medium-sized creators to move forward in this market, we should feel a sense of danger.

(The above content is excerpted and reprinted with the authorization of partner MarsBit, original text link | Source: BlockBeats)

Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.

This article 19 million US dollars smashed through the entire NFT market, re-examining the liquidity brought by Blur first appeared on Blockchain.