Blur founder: The incentive mechanism of Blur actually introduces the concept of "market makers" to the NFT space

Author: Pacman, Founder of Blur

Compiled by: Babywhale, Foresight News

Recently, the anticipation of the second phase airdrop from Blur has led to an unprecedented surge in trading within the NFT market. However, this increase in trading volume driven by "airdrop farming" has raised concerns about its sustainability and market manipulation. In response, the founder of Blur believes that the incentive mechanism of Blur actually introduces the concept of "market makers" to the NFT space and further propels the development of the NFT industry:

1/5 The vast majority of trading volume in traditional markets and token markets comes from a small number of market makers (in fact, less than 10). The trading activities of market makers are completely different from those of collectors. I've seen many misunderstandings on this topic, so I will clarify.

2/5 Before Blur, there were few market makers in the NFT space. Franklin and Machi Big Brother (Huang Licheng) were among the earliest "market makers" with a certain trading scale (relatively speaking), akin to Jump Trading and Jane Street in the NFT field. As this space matures, you will see more and more market makers.

3/5 It is important to understand that market makers are not wash trading participants. They provide liquidity and profit from the spreads around the true value fluctuations of assets. Every trade they execute pays royalties to the creators.

4/5 Their trading activities are different from the trading habits of NFT enthusiasts. However, their participation allows more players to enter this field. The liquidity they provide makes purchasing new collectibles safer, leading to higher trading volumes and increased creator revenue.

5/5 With the momentum brought by improvements in infrastructure and liquidity, the world of tokens is experiencing explosive growth. In the future, NFTs will also see massive growth, and the involvement of market makers is just the beginning.

In addition to the above tweets, Pacman also cited some views from Sugar Shane, who previously worked as a market maker at the Chicago Board Options Exchange. Sugar Shane believes that traditional market makers profit by buying low and selling high, providing liquidity to newly established trading platforms, which requires professional trading strategies to achieve.

However, Sugar Shane also stated that, for Blur, the large number of traders on the platform over the past few months cannot be considered true traders, as their bids and asks do not set reasonable spreads; these users are merely looking to obtain more token airdrops. Ultimately, whether maintaining a reasonable profit margin is more profitable than merely "airdrop farming" can only be determined when Blur's next round of airdrops is distributed.

Overall, Pacman believes that the operational strategy of his project has introduced market makers to the NFT market, resulting in higher liquidity, but this liquidity is likely to shrink rapidly with the end of the airdrop activities. Whether Blur can establish a stable market maker mechanism and user habits in such a short time remains to be seen.