Messari: Interpreting the Success of the Blur Airdrop Model from a User Retention Perspective

Messari: Analyzing Blur Airdrop's User Retention Success

Key Insights

• The progressive token incentive airdrop model of Blur has proven to be very successful, making it an industry leader by promoting user acquisition and retention.
• The retention rate among high-volume traders is 10% higher than other platforms. Blur’s case emphasizes that by providing an excellent user experience rather than relying solely on token incentives, long-term user engagement can be maintained.
• After the success of Blur, some imitator projects appeared, but to achieve their growth and market leadership, these projects need to surpass Blur, introduce unique features, and adapt to changing user needs and market trends.
• Token incentives play an important role in attracting and retaining users. Blur promoted the use of an activity airdrop system. Unlike traditional one-time airdrops, the activity system promotes long-term engagement by combining future airdrops and token issuance with customer loyalty programs. This initiative has pushed Blur to an industry-leading position and changed the paradigm of user acquisition and retention.
• Although the success of token incentives played an important role in driving Blur’s rise, in the entire cryptocurrency industry, this incentive has not universally translated into significant later-stage retention. Indeed, the model that Blur maintains loyalty and continuous incentives seems to be a promising progress to promote persistent customer engagement. However, the question still remains: is this just a step in the right direction, or has the goal been achieved? To measure the effectiveness of the Blur model compared to previous incentive models, we measured user retention patterns for different user segments. In addition, we used the rate of new user join to determine the attractiveness of Blur’s project to the product.

Blur’s Token Incentive Model

Blur’s incentive model seamlessly integrates future airdrops and token issuance with a widely publicized reward plan, or “reward season.” Two such airdrop seasons have been conducted to date. The first season coincided with the first appearance of the Blur platform in October and lasted until the token release in mid-February. During this period, users could accumulate reward points by actively placing orders and bidding on NFT collectibles. The ongoing second airdrop season has expanded the scope of qualifying activities, including providing lending services on the newly launched Blend NFT lending platform. Essentially, the obtained points are directly related to the user’s trading volume in various areas of the Blur market.

In each season, users can track their loyalty points on a public dashboard and compare their performance with other users. At the end of each season, users will receive BLUR tokens based on their reward point ratio. At its core, Blur’s token incentive model has a basic structure similar to many airline reward programs: the more you travel with a certain airline, the more miles you accumulate, encouraging continued selection of that airline.

One-time token distribution provides users with free equity in exchange for their early loyalty, creating long-term growth and intrinsic motivation to participate in the project. However, as the case study above shows, these incentive programs need to be strategically selected and executed. If there is no compelling user experience to promote platform loyalty, one-time token distribution may not produce effective results. Instead, Blur’s innovative loyalty feature serves to create a unique and enduring value proposition. Users can actively track their point accumulation and are thus motivated to continue interacting with Blur.

Blur’s Performance to Date

• White hat disclosure: Huobi leaked OTC trading information, big account information, customer information, internal technical architecture, etc. on a large scale in 2021.
• Deep analysis of the latest vulnerability “Hamster Wheel” in Sui blockchain
• Analysis of the technical details and in-depth of the latest Sui vulnerability “Hamster Wheel”

Within less than a month of launch, Blur has established itself as a leader in the Ethereum NFT space with its innovative professional trader feature and widely publicized airdrop. It quickly became the preferred marketplace for high-volume NFT traders. At one point, it surpassed major competitor OpenSea in weekly trading volume, averaging a 63% market share over the past month. While Blur has not captured the majority of Ethereum NFT traders, its share peaked at 33% shortly after its token release in February. The platform’s per-user trading volume ratio has remained consistently high, thanks to its well-designed ongoing airdrop mechanism.

Blur is not the first NFT marketplace to introduce token incentives. Competitors like LooksRare and X2Y2 distributed governance tokens to OpenSea traders to entice them to switch platforms. However, as Blur gained substantial momentum at the end of 2022, user engagement with these competitors gradually declined.

Sudoswap chose a different strategy, compensating early liquidity providers on its platform after approximately six months post-launch. Unfortunately for Sudoswap, delayed token releases coincided with Blur’s rise to prominence. None of the above-mentioned markets, even at their peak, were able to capture more than 5% of the user market share.

Disposable token distribution provides users with free equity in exchange for their early loyalty, creating long-term growth and intrinsic motivation to participate in the project. However, as the above case study shows, these incentive plans need to be strategically selected and implemented. If there is no compelling user experience to promote platform loyalty, one-time token distribution may not produce effective results. In contrast, the innovative loyalty function of Blur creates a unique and lasting value proposition. Users can actively track their point accumulation and are therefore motivated to continue interacting with Blur.

Looking ahead, Blur plans to continue with airdrops and incentivize various aspects of the platform. While ongoing airdrops have played a critical role in attracting new users, their true success should be measured by their long-term sustainability and impact on user retention and engagement.

User retention on Blur

In the first airdrop season, users accumulated points by continuously placing orders and participating in bidding activities on the platform. These points were then converted into token rewards, and higher trading volumes on Blur led to larger token allocations. Therefore, since token allocation and participation on Blur are almost synonymous, we segmented Blur users based on the amount of tokens they received from the first airdrop to evaluate their historical performance.

The majority of Blur traders, about 72% of airdrop recipients, had relatively low trading volumes. These users typically redeemed 1,000 BLUR tokens or less and showed the lowest retention rates since token release. The relatively small token allocation may have made these users lose confidence in actively participating in subsequent airdrop seasons, affecting their continued engagement.

In contrast, traders with medium to high trading volumes who received 100,000 BLUR or more in the first airdrop had retention rates at least 10% higher than those with low trading volumes. These traders who received five to six-figure token allocations are likely to be motivated to remain active and participate in the upcoming reward season. This finding is consistent with the observation that although Blur may not dominate in terms of user share, it still maintains over 50% of trading volume, mainly due to a small group of high-volume users.

After the release of the BLUR token, the number of daily active users on the platform surged by a factor of two, with most of this growth coming from new traders. The massive token distribution and the start of the second airdrop season created a meme effect that attracted new users. Currently, this user base constitutes the majority (51%) of Blur’s total user base and more than 60% of the user base on the NFT lending platform Blend.

According to the roadmap, Blur plans to continue with consecutive airdrops. However, the drop in the number of airdrop recipients in the first quarter has raised concerns about the platform’s future. The plan has successfully attracted new users, but faces challenges in retaining users. If this pattern continues after the next token distribution, considering the limited number of potential users in the existing market, Blur’s potential to attract new users may be limited. Therefore, Blur needs to introduce new features in the airdrop to retain existing users and promote engagement.

Creating products that truly resonate with consumers is crucial for fostering long-term loyalty. Just like airline reward programs, whose success is based on a persistent demand for travel, effective products must satisfy a persistent and broadly existing need or desire. In Blur’s case, the NFT industry is an emerging and inherently volatile industry that has not yet formed stable demands. Therefore, the task of creating loyalty is not just about meeting existing needs, but requires creating a natural demand for the product.

Blur should take a dual approach: attracting new users through incentive measures and developing features to cultivate sustained engagement to optimize growth and retention. For Blur, introducing innovative tools, improving the trading experience, and creating opportunities for high-volume traders are critical. By understanding the behavior and motivations of different user segments, Blur can tailor its strategies to maximize user retention and maintain competitiveness.

Market Comparison

After Blur’s initial success, a large number of imitating projects emerged on the market. OpenSea launched OpenSea Pro, a professional trading platform that seems to target users who like Blur’s professional trading interface. In the Solana ecosystem, Tensorswap appeared with a nearly identical interface to Blur and a similar progressive airdrop model.

Similar to Blur’s parallel trajectory, Tensorswap has experienced rapid growth and currently accounts for a significant share of NFT transactions on Solana, about 42% (as of the time of writing). However, it is worth noting that Magic Eden still occupies the majority of user share on Solana.

Recently, Tensorswap has ended the initial phase of its reward distribution, although it has not yet launched its own token. The user adoption pattern of Tensorswap may reflect that of Blur, that is, steady growth before the token launch, followed by a surge and eventually returning to the level before the token launch.

Tensorswap’s imitation of Blur demonstrates recognition of the platform’s functionality and incentive measures. While copying a validated model can bring initial success, the key to achieving sustained growth and market share in the long term lies in innovation and adaptability. Just as Blur differentiates itself from many platforms through its pioneering professional trading interface and free trading, TensorSwap and other entrants to the market need to implement unique value propositions to retain existing users and attract new ones.

Final thoughts

The progressive token incentive model has been successful in attracting and retaining certain user segments, but it does not solve the user retention issue alone. Instead, it is part of Blur’s broader strategy to balance user incentives and feature enhancements in the overall trading experience. The innovative progressive airdrop model not only drives user acquisition but also appears to achieve higher retention rates than other distribution methods. However, with the upcoming token distribution, there is a possibility of user fatigue due to repetitive patterns.

Furthermore, our evaluation highlights that cultivating sustained user engagement requires ongoing improvement of airdrop plans, responsiveness to user feedback, and the introduction of new platform features. Other platforms such as TensorSwap have succeeded by imitating Blur’s model, once again proving its effectiveness. However, the future of these platforms depends on their ability to adapt to changing market dynamics and cater to diverse user preferences. Time will reveal whether the progressive token incentive model can achieve long-term loyalty and provide important insights for tokenless applications in the entire crypto ecosystem.

Original article link: https://messari.io/report/blur-s-token-incentive-model?referrer=all-research

Translation : Terry | Huzigua Coin

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