For years, the most popular place to buy and sell non-fungible tokens (NFTs) was OpenSea. As the original large-scale NFT marketplaces, OpenSea benefited from first-mover advantage and the meteoric rise of NFTs throughout 2021 and into 2022. Its early competitors like Rarible and SuperRare barely made a dent in its huge market share.
However, in late 2022 a new NFT marketplace arose and began to process significant volumes of NFT transactions. Blur first “flipped” OpenSea in weekly volume in December 2022, and it didn’t turn back. The community-governed platform that promised to focus on “pro traders” with no marketplace fees drew increasing attention from users wanting to trade their CryptoPunks and Mutant Apes.
By January 2024, Blur was processing more than three-quarters of all NFT trading volume across the crypto world. The platform further built on its foundation by making NFTs into collateral assets, fueling a borrowing/lending economy that expands on those found in other decentralized finance (DeFi) platforms.
Blur is governed by a decentralized autonomous organization (DAO) made up of holders of its BLUR governance token. These community members can propose and vote on proposals according to the BLUR they hold.
How was Blur developed?
Blur was co-founded by developers going by the online monikers Pacman and Galaga. Although they were originally pseudonymous, the two founders were ultimately revealed to be Tieshun Roquerre (Pacman) and Anthony Liu (Galaga). The two men met while studying at MIT, and when Liu graduated in 2018, Roquerre dropped out of college (having already dropped out of high school years prior) to co-found the crypto domain name company Namebase. After selling Namebase to a competitor, the two created Blur.
Based in San Francisco, Blur was introduced in the early months of 2022, with the developers announcing that they have received $11 million in seed funding led by investment firm Paradigm, which also backed Namebase. It claimed to be targeting pro traders as a userbase, incentivizing high-volume trading by promising zero platform fees.
Blur formally launched in October 2022. As its trading volumes grew, the platform also introduced its peer-to-peer perpetual lending protocol called Blend in May 2023.
How does Blur work?
Blur is an NFT marketplace that also supports crypto lending using NFTs as collateral. These two functions feed into each other, supplying incentives for platform engagement.
Blur: an NFT marketplace
The basic function of a marketplace is to provide traders with a way to connect with each other. OpenSea was the first such marketplace for NFTs, setting community standards for facilitating the sale of these digital assets—including everything from the aesthetic appearance of listings to the fees users must pay to the platform.
When a user connects their Ethereum wallet to Blur, they can list their NFTs for sale or place bids on other NFTs for sale. However, this is only the most basic of Blur’s functionality. It has both “collect” and “trade” modes, with the latter offering detailed charts, tools, and ways of displaying transaction data. For instance, traders can see the depth of a specific market (i.e. how many NFTs in a collection are available at a given price) and track trades over time. The platform also makes it easy for traders to “sweep the floor” by selecting multiple, low-priced NFTs to purchase at one time.
Blend: a perpetual lending protocol
Blend (Blur lending) is a peer-to-peer perpetual lending protocol that allows borrowers to collateralize loans with their NFTs. In decentralized borrowing/lending—a model that has become popular through DeFi—collateral is vital for ensuring lenders can retrieve their funds. This assurance incentivizes an active economy. By enabling their use as collateral, Blend creates the opportunity to take advantage of NFTs’ monetary value.
Potential borrowers can list NFTs as collateral, and the protocol helps them choose a price and interest rate to offer to prospective lenders. A lender can accept the terms of the contract, and the NFT is placed in a vault when they transfer the loaned funds (e.g., ETH) to the borrower. This loan does not have an expiration date, which is why it is called perpetual.
Borrowers can repay the full value of the loan any time, which allows them to reclaim the NFT they used as collateral. Lenders can also choose to terminate the contract, which triggers a refinancing auction. This results in the contract itself being offered for sale in a Dutch auction, in which the refinancing (interest) rate starts at 0% and rises over time.
If the terms of the new contract appeal to other economy lenders, they can buy the contract. The new lender then pays the old lender (who is made whole) and takes over the contract with the borrower at the new rate. If there is no new lender, then the borrower has a chance to pay the loan back in full. If they cannot do so, the lender may liquidate the borrower and claim the NFT collateral.
How is the BLUR token used?
The Ethereum-based BLUR token is used by holders to participate in community governance through a decentralized autonomous organization (DAO). Owners of the BLUR token can propose and vote on proposals that guide the direction of the platform, facilitated by the Blur Foundation.
Token economics and distribution
There were 3 billion BLUR tokens minted at genesis. Of that total supply, 51% were allocated to community members, 29% to Blur’s contributors and developers, 19% to investors, and 1% to advisors. From the community allocation, 12% of the total supply was released to NFT marketplace traders in the form of an airdrop, and the remaining 39% became a treasury—part of which was designated for incentive programs. The non-community tokens were subject to vesting over the course of 4-5 years, through February 2027.
Conclusion
- Blur is a marketplace for the trading of non-fungible tokens (NFTs) that emphasizes functionality for professional and high-volume traders.
- The platform’s NFT marketplace is paired with a perpetual lending protocol called Blend, which allows borrowers to use their NFTs as collateral.
- The BLUR token is used for community governance through a decentralized autonomous organization (DAO).