What is LooksRare?
Just as the NFT hype was cooling down, an NFT marketplace called LooksRare took the industry by storm. Launched in the cold January of 2022, LooksRare started out with one mission in mind: create the first decentralized NFT marketplace.
Alternatives such as OpenSea or Nifty Gateway had gained considerable market share, with millions of dollars in trading volume. Their secret to success was a user-friendly interface along with killer NFT partnerships. All users needed was a wallet and some spare ETH. Under the mirage of overnight riches, traders did not seem to care about the safety of their funds. Indeed, the cracks of a centralized infrastructure made headlines when OpenSea started freezing funds, or when Nifty Gateway announced their KYC policy.
This is where LooksRare saw the opportunity to offer the same experience with the added benefit of a decentralized structure. Before we dive into explaining LooksRare, let's offer some context.
LooksRare was co-founded by pseudonymous Zodd and Guts, who carefully studied the dynamic happening in the NFT space. They've come to the conclusion that a truly decentralized NFT marketplace won't impose KYC, and it's not going to meddle with users' affairs.
In order to execute on their vision, LooksRare had to start from somewhere. The NFT hype was slowly calming down, and rushing out the project would impose greater risks for the users. Time was of the essence.
The early days of LooksRare were filled with controversy. The marketplace launched with a "vampire attack" on their biggest competitor, OpenSea. So what they did was to airdrop $LOOKS to every trader on OpenSea who transacted at least 3 ETH worth of NFTs over the prior six months.
Vampire attacks are not new to the crypto industry. A similar event happened in the DeFi world, when SushiSwap airdropped $SUSHI to Uniswap users. This resulted in Uniswap losing volume against the newly launched SushiSwap and later forced them to airdrop their own UNI token in response.
The $LOOKS airdrop has a similar effect, with millions worth of trading volume migrating to LooksRare. The NFT wars were heating up, and LooksRare came up with a playbook to sustain the hype. The LOOKS token started out as a governance token. But there was a catch, users would get rewarded in LOOKS based on their trading volume.
To no surprise, degens took over and started wash trading back and forth to pump up the numbers. Since daily rewards are paid out as a percentage of the day’s volume, if whales traded 10% of the day's volume, they were eligible to net $1M in LOOKS.
The growth hack was a tremendous success, and LooksRare was starting to build a solid userbase. Now, it was time for the team to continue work on further decentralizing the protocol. To their credit, LooksRare was built from the ground up using custom smart contracts. And like any piece of code, errors can occur. LooksRare has never been hacked, and their website boasts a full list of auditors for every component of the protocol.
Now, back to the second leg of a decentralized protocol: governance. As previously mentioned, LOOKS is a governance token that gives users the right to vote on adjusting protocol fees, future features, and any other aspect.
As it stands, LooksRare is being managed by the core team. The LooksRare protocol would gradually introduce mechanisms (with certain voting and technical safeguards) enabling any party unaffiliated with the LooksRare team to modify/upgrade the functionality of the smart contracts or protocol, or to participate in other essential task and responsibilities.
For some, this can be a mix between concern and relief. On one hand, LooksRare branded itself as a community-driven marketplace, on the other hand, developers have entire control over the protocol parameters. The code for the NFT marketplace is open-source, and it can be audited by anyone. The wallets associated with the protocol treasury are also publicly viewable, and the marketplace held a good track record when it comes to transparency.
How does LooksRare work?
LooksRare is an NFT marketplace built on Ethereum network. It offers an infrastructure for NFT traders to meet in one place and transact NFTs freely. What makes LooksRare different from other marketplaces is that 100% of the transaction fees go to the LOOKS holders.
In 2023, LooksRare has launched its second iteration of the marketplace in order to compete with players like OpenSea and Blur. LooksRare V2 lowers fees from 2% to 0.5%, and it also comes with the option of buying NFTs in bulk.
The V2 smart contracts are more gas-efficient, allowing users to save 30% on gas fees versus the previous version of the platform. With V2, sellers receive ETH instead of WETH.
How to make money on LooksRare?
On LooksRare you can make money by transacting, listing, or staking your LOOKS token in order to gain a share of the transaction fees. LooksRare collects a basic sales fee of 2% (in WETH) on all NFT sales excluding private sales. Let's see what each earning category has to offer.
To stake LOOKS, follow these steps:
1. Open the LooksRare app
2. Click on the Staking Dashboard
3. Enter the number of LOOKS that you want to Stake and click “Stake”
4. Confirm the transaction
5. Profit!
An important consideration is that by staking LOOKS you are earning as share of the platform fees (paid in WETH). Therefore, staking is the only way to earn WETH!
Users who trade any NFTs on LooksRare earn trading rewards in the form of LOOKS. Both the buyer and seller of an item earn LOOKS trading rewards for their trading volume (except for private sales). Trading rewards are calculated daily and rewarded to users 2 hours after the end of each day. No extra action is required in order to earn the tokens. LOOKS will be automatically sent to your wallet at the end of each day.
Another way to earn LOOKS is by listing your own NFT collection on LooksRare. Before you start unloading your precious art, the platform has some eligibility conditions. The most important condition is that the listed NFT must be one of the top 5 eligible collections ranked by rolling 24 hour volume (ranking updates every 10 minutes).
Price Prediction for LooksRare — Can it hit $1000?
Buying and hodling LOOKS — the native token of LooksRare — is one way of potentially making money on LooksRare.
By looking at its current price, it’s natural to think about the chance of LOOKS hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the LOOKS token by analyzing its tokenomics. LOOKS’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} LOOKS tokens being in circulation today, that means a price of {PRICE} per LOOKS.
How did we come to that calculation? It’s quite easy, the price of a LOOKS token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each LOOKS coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of LOOKS at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for LOOKS to hit that price.
At a price of $1000 per token, that means the current market cap of LOOKS would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. LOOKS’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} LOOKS which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of LOOKS? Taking into account the current price of a LOOKS token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. LOOKS coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a LOOKS token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the LOOKS protocol fully diluted market cap.
These are all crucial details to know when calculating if LOOKS can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of LOOKS depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some LOOKS to your portfolio, the most trusted places to get some are Binance and Coinbase.
