One of the most talked-about NFT platforms of 2022, LooksRare has been described as an early model of a community-first NFT marketplace that puts people above profit. LooksRare aims to transform the NFT market through its unique buying and selling system, which actively rewards users every time they make a transaction.
The LooksRare team has instituted a policy of no trading fees collected, which means that 100% of all revenue is given back to the community. Ultimately, the site aims to disrupt OpenSea’s near-monopoly on the NFT market. While the LooksRare platform has received mixed reviews from the NFT community, it’s become clear that the exchange has set its sights on becoming a leading NFT marketplace.
The largest and most widely used marketplace for NFTs, OpenSea offers products in several categories including digital art, gaming items, collectibles, virtual worlds, and domain names. Because it’s free to use and open to anyone willing to create an account, OpenSea is often the first stop for NFT traders and has amassed millions of users.
For January, OpenSea recorded an all-time high trading volume of nearly $5 billion. And on January 31st, the site had its best single day in months, registering $233 million worth of NFT trading.
The record numbers have led analysts to estimate OpenSea’s market share at about 95%, but the site has been mired in controversy in recent months. Many in the crypto community have pointed to OpenSea’s decision to IPO as further proof that the platform does not care about its core user base.
LooksRare’s new operating model could potentially draw away millions of users from OpenSea who feel the exchange has become stagnant and outdated, allowing the company to cash in on the NFT craze.
LooksRare’s rise to prominence is relatively recent, with the site officially launching on January 11, 2022. Since that time, the platform’s daily volume has exceeded $394 million, and there were several days within the first month of its launch in which trading volume on the platform surpassed that of OpenSea.
Currently, LooksRare lists a total of 14 team members on its website. As all of their identities have been masked behind pseudonymous accounts, the names and backgrounds of the platform’s leaders remain unknown. Two of the company’s most prominent members, who go by the names Zodd and Guts, have been listed from the beginning and are identified as co-founders.
As a new platform seeking to rapidly gain market share and expand its user base, LooksRare initiated an airdrop of its native token, LOOKS, to wallets that had generated a minimum of 3 ETH transaction volume on OpenSea from June 16th, 2021 to December 16th, 2021. As a result of the airdrop, LooksRare gave away 120,000,000 LOOKS tokens (12% of total supply) to 110,000 wallets.
LooksRare’s airdrop as part of its “vampire attack” on OpenSea, a crypto term that describes a platform’s attempt to lure users away from another site by offering better rewards. As a result of airdrops launched by the LooksRare platform, the price of a LOOKS token rose to nearly $7 just ten days after its release.
LOOKS is the platform’s native token that powers the site. As of the writing of this article, one coin is worth $0.63, giving the digital currency a market cap of over $174 million. The token’s supply can be measured in three different ways: circulating supply, total supply, and max supply.
The coins circulating supply is defined as the number of coins that are currently active in the market and are tradeable by the public. As of the writing of this article, LOOKS has a circulating supply of just over 245 million coins.
The vast majority of this circulating supply is held by the LooksRare community, which uses the coin in staking and trading rewards. The developer team also utilizes the coin in ecosystem development and liquidity management.
The LooksRare token can also be measured by its total supply, which is defined as the number of coins that have already been created, minus any coins that have been burned. Currently, LOOKS has a total supply of over 580 million. According to its emission schedule, LOOKS will reach its total supply after two years.
While the max supply of the coin, defined as the maximum number of coins coded to exist in the lifetime of the cryptocurrency, will theoretically reach 1 billion, this will be reduced by burns and other initiatives meant to bolster the value of LOOKS.
Part of the wide-ranging appeal of the LooksRare platform is that there are many different ways for users to earn LOOKS. The two most common ways are through trading NFTs and staking LOOKS.
Trading digital collectibles on the marketplace are the easiest way to earn LOOKS. The site makes it simple – every time a user buys or sells an NFT on LooksRare, they earn rewards.
The amount of rewards a user earns is dependent on their trade volume, which is computed daily from 8 pm to 10 pm. At the end of this period, an individual can claim their share of LOOKS corresponding to their trades.
Keep in mind that users are only able to receive trading rewards from certain NFT collections that have been verified by LooksRare. Only collections that reach a trading volume of 1,000 ETH will be automatically added to the list of eligible collections earning rewards.
LOOKS is one of a select few cryptocurrencies that permits staking – a process that actively rewards traders by allowing them to put their tokens to work in the blockchain. With staking, LOOKS holders have the option to put a portion of their money into a “staking pool,” which functions similarly to an interest-earning savings account.
The allocated tokens are then put toward the Proof of Stake consensus mechanism, which is the system whereby transactions are verified and secured on the blockchain.
Currently, LooksRare has incorporated a feature into their staking system in which LOOKS rewards obtained from a user’s staked LOOKS balance are now re-staked (or compounded) into the pool to instantly increase the number of tokens staked.
If a user wants to unstake their LOOKS, both the initial staked amount and the compounded rewards will be withdrawn together.
LooksRare pays its active and passive stakers by charging a 2% sales fee in WETH on all NFT sales (excluding private sales). This WETH trading fee incentives model means that all WETH fees accumulated from sales are combined at the end of every 6,500 ETH block period (approximately 24 hours) and distributed to users who have staked tokens during the next 6,500 block span.
Although LooksRare users can claim their pending rewards as often as they choose, they will have to pay gas fees for each withdrawal. LOOKS token stakers will continue to accumulate WETH rewards as long as their LOOKS tokens remain staked, no matter how often they make withdrawals.
What Makes LooksRare Unique?
The LooksRare marketplace differentiates itself from its various competitors in several different ways:
1.) Culture – LooksRare has instituted a far more democratic and user-oriented culture that makes its community a top priority. This is evidenced by the fact that 100% of generated platform fees go towards stakers.
2.) Rewards – No other NFT exchange has incorporated a rewards model in which users are given cryptocurrency simply for buying and selling NFTs
3.) Trading Fees – LooksRare’s 2% trading fee is vastly superior to most of its competitors, including OpenSea, which charges 2.5% for each trade.
4.) Royalties – The LooksRare NFT marketplace utilizes an instant payout system where creators receive royalty payments at the moment of sale. This contrasts with OpenSea, which often makes NFT creators wait weeks to claim royalties.
Technical Framework – The platform is built on modular smart contracts, making it easier for LooksRare to roll out new features over time.
Going forward, LooksRare plans to leverage its smart contract framework to introduce many helpful features, including:
- Collection offers – This would allow a user to make an offer that covers all NFTs in a selected collection.
- Trait offers – This would allow a user to buy any NFT with a specific trait in a collection. For example, if a potential buyer wanted to acquire every Azuki that carried a sword, they could search and then instantly bid for every Azuki NFT with that trait.
- Multi-cancellation – This would enable a user to save gas fees by canceling multiple open orders in a single transaction.
Downsides of the Platform
Despite the mostly positive reviews, the site has received in its short existence, LooksRare has several areas that the developers will seek to improve in the future:
1.) Public Records – While the platform seems to be finding a niche in the crypto space, it is worth noting that LooksRare has yet to publish any official audit. As certain unaudited smart contract protocols have lost millions in the past, investors should think twice before placing vast sums in a platform that has only existed for five months.
Additionally, many developers have pointed out that LooksRare’s Github page has no public repositories. While this isn’t a huge deal, this means that their codes are hidden from public view – leaving users with almost no way to validate the site’s overall security.
2.) Purchasing NFTs – Although purchasing NFTs from qualifying collections will earn traders rewards, only those with LOOKS can trade NFTs. Currently, there is no way to purchase items on the platform with fiat money (USD) or any currencies besides LOOKS.
3.) Minting NFTs – Unlike larger sites, creators on LooksRare cannot mint their own NFTs on the platform – a major drawback that is significantly limiting revenue.
4.) Mobile Version – Lastly, LooksRare doesn’t offer a mobile version of its exchange, sidelining users who exclusively use their phones to buy and sell NFTs.
Despite the vast potential of LooksRare, no article on the site would be complete without mentioning the allegations that have surfaced in recent weeks regarding LooksRare’s trading volume. Some researchers have accused the site of fostering wash trades, a practice whereby users sell NFTs to themselves to gain more LOOKS. While wash sales help users make more money, the practice deceives the public by bolstering the platform’s popularity and artificially increasing its overall activity.
Recently, Bloomberg reported that an analysis by NFT tracker CryptoSlam found that 95% of trading volume on the site was composed of wash sales – accounting for over $18 billion in trading volume.