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About LooksRare
LooksRare is a new NFT marketplace that launched in January 2022 and aims to compete with OpenSea, the dominant player in the NFT trading space. LooksRare brands itself as a community-centric marketplace that shares 100% of its trading fees with LOOKS token holders. It has rapidly gained significant trading volume and provides an alternative platform for buying, selling, and minting NFTs.
Launch of LooksRare
LooksRare launched in mid-January 2022 after months of anticipation within the NFT community. Within the first week, it generated over $394 million in trading volume and reached as high as $740 million in volume in the initial month. This explosive launch demonstrated strong demand for a new NFT marketplace to challenge OpenSea. The LooksRare team gained the support of major NFT projects and influencers prior to launch.
LooksRare Tokenomics
The LOOKS token plays a central role in LooksRare’s tokenomics and governance. 100% of trading fees are distributed to LOOKS stakers, providing an incentive to hold the token. Users must stake a minimum number of LOOKS to receive fee rewards. The token also confers voting rights for protocol changes.
The total supply of LOOKS tokens is 1 billion coins, distributed as follows:
- 44.1%: Volume rewards
- 18.9%: Staking rewards
- 12%: Airdrop
- 10%: Founding team
- 10%: Treasury
- 3.3%: Strategic sale
- 1.7%: Liquidity management
LooksRare’s Trading Fees
A novel aspect of LooksRare is its fee structure. The protocol charges a 2% fee on all transactions, compared to 2.5% on OpenSea. However, LOOKS stakers can boost their reward earnings by choosing to charge 0%, 1% or 2% fees. Users are more likely to trade on listings with lower fees. This structure incentivizes stakers to charge low fees to attract trade volume.
Decentralized Governance through LOOKS Token
LooksRare uses the LOOKS token to enable community-governed decisions. LOOKS holders can vote on protocol changes, new feature implementation, resolving disputes and the distribution of the treasury funds. For example, the community recently voted to increase the staking minimum from 100 LOOKS to 250 LOOKS. This governance mechanism aims to give the community control over the platform’s future direction.
Controversies and Criticisms
LooksRare has faced criticisms from some in the NFT community. Some have accused LooksRare of artificially inflating trading volume through wash trading. The platform has rewarded users with LOOKS tokens for trading on the platform. The team maintains that wash trading is prohibited by the protocol, though it is difficult to enforce.
Community and Governance
Despite the critics, LooksRare has fostered a vibrant community of NFT traders by emphasizing governance participation and rewards. Traders are constantly proposing and debating new policies in LooksRare’s Discord channel to collectively determine the marketplace’s future direction.
Strong communal engagement is a positive sign that LooksRare is creating an NFT marketplace for the users, by the users. If the community continues growing at its current pace, LooksRare has a chance to establish itself as the leading community-run NFT trading hub.
Competitors to LooksRare
OpenSea, the incumbent NFT marketplace giant, has taken notice of LooksRare’s explosive launch. While OpenSea still generates significantly more volume, they lowered their fees in February 2022 to stay competitive with LooksRare’s 2% fee structure.
LooksRare’s surge in trading activity demonstrates the NFT community’s pent-up demand for lower platform fees and community governance. Competitors hoping to retain market share will need to consider reducing fees and decentralizing governance to stay competitive.
Outlook and Future Developments
In the short term, LooksRare is focused on rolling out new features, fixing bugs, and improving the trading experience. The roadmap includes plans to integrate layer 2 solutions to reduce gas fees, build out mobile apps, and launch new incentive programs. Longer term, LooksRare aims to be a fully decentralized, community-run marketplace as governance capabilities expand. Competition in the NFT space is intensifying, but LooksRare’s novel incentives and governance structure give it a fighting chance to establish itself as a major NFT marketplace.
