Blur is shutting down its website, so why are NFT collectors cheering?
NFT marketplace Blur is shutting down its frontend website and winding down its lending protocol, Blend, a move that has been met with approval from some NFT collectors who criticized its royalty policies.
Intelligence analysis by Gemini 2.5 Flash
Blur, which once surpassed OpenSea in NFT trading volume, announced its website closure and the cessation of new loans on its Blend protocol, though its on-chain marketplace will remain active. This decision has been welcomed by some in the NFT community who blame Blur's strategy of optional creator royalties and token rewards for significantly reducing creator fees and harming the ec…
Imagine a big online toy store called Blur that let people buy and sell digital toys called NFTs. This store became super popular by letting buyers decide if they wanted to pay a small fee to the toy maker, and it even gave out special coins to people who traded a lot. But many toy makers got upset because they weren't getting paid much anymore. Now, Blur is closing its main shop, and some toy collectors are actually happy because they hope it means toy makers will get paid fairly again, even though the whole digital toy market isn't as busy as it used to be.
Analysis
The announcement by Blur to shut down its frontend website and halt new lending on its Blend protocol marks a significant moment in the volatile NFT market. While Blur's on-chain marketplace will continue to operate, the cessation of its primary user interface and lending services has been met with a surprisingly positive reaction from a segment of NFT collectors. This sentiment stems from Blur's controversial strategy, which, while propelling it to the top of the NFT trading volume charts, was widely perceived as detrimental to creators.
Blur's Strategy
Blur launched in October 2022, quickly gaining traction by offering sellers the flexibility to customize royalty payments and incentivizing traders with substantial token rewards for paying higher creator royalties. This aggressive approach, however, coincided with and arguably accelerated a broader trend towards optional creator royalties across the NFT ecosystem. Its rise directly challenged established platforms like OpenSea, which subsequently adjusted its own royalty requirements to remain competitive. The focus on trading volume, driven by token incentives, often meant that traders prioritized quick flips over supporting creators through royalties.
Creator Royalties
The impact of Blur's model on creator compensation was profound and widely criticized. Blockchain analytics from Nansen reported a dramatic decline in effective creator royalty fees, plummeting from an average of 2.5% in 2022 to just 0.6% by July 2023. This significant reduction was largely attributed to Blur's growth and its minimum royalty policy, alongside OpenSea's reactive adjustments. Many NFT collectors and creators viewed this erosion of royalties as a direct attack on the financial viability of digital artists and the long-term health of the creative economy within Web3. The cheering from collectors upon Blur's shutdown reflects a hope that this trend might reverse or at least stabilize.
NFT Market Slump
Blur's decision to scale back its operations also comes against a backdrop of a broader downturn in the NFT market. After reaching a peak of $6 billion in sales across 13.7 million transactions in January 2022, total NFT sales in September 2023 had fallen to $167 million over 2.9 million transactions. This substantial slump has led to other notable closures and withdrawals from the space, including Gemini-owned Nifty Gateway, social collecting platform Rodeo, and Foundation, which ceased operations after a sale fell through. Binance also ended direct NFT support on its exchange. While Blur did not explicitly state its reasons for the shutdown, the challenging market conditions undoubtedly play a role, highlighting the difficulties even major players face in sustaining operations amidst reduced interest and trading activity.
Key points
- NFT marketplace Blur is shutting down its frontend website on November 12, but its on-chain marketplace will remain operational.
- Its peer-to-peer NFT lending protocol, Blend, will also stop matching new loans, with borrowers having until November 12 to repay.
- The announcement was met with cheers from some NFT collectors who criticized Blur's optional creator royalty policies and token rewards.
- Blur's strategy, which helped it overtake OpenSea, contributed to a drop in effective creator royalty fees from 2.5% in 2022 to 0.6% in July 2023.
- The decision comes amidst a significant slump in NFT sales, with total sales in September 2023 far below the January 2022 peak.
The shutdown of Blur's frontend and lending protocol could potentially lead to a healthier NFT ecosystem by reducing the pressure on creator royalties. This might encourage a more sustainable model where creators are better compensated, fostering innovation and long-term commitment from artists and developers in the space.
While some collectors cheer, Blur's partial shutdown underscores the ongoing contraction and challenges within the broader NFT market. The significant decline in overall NFT sales and the closure of other platforms suggest continued volatility and uncertainty, indicating that the sector may still face considerable headwinds.
