Interpreting the success of the Blur airdrop model from the perspective of user retention data
The Blur airdrop model has successfully retained users through: 1. Gamification: The model turns the process of earning rewards into a game, which motivates users to keep using the platform. 2. Community building: Users are encouraged to participate in discussions and join the community, which creates a sense of belonging and strengthens their connection to the platform. 3. Transparency: The model is transparent about how rewards are allocated and distributed, which builds trust and confidence among users. 4. Incentivization: Users are incentivized to complete tasks, such as inviting friends or completing surveys, which increases engagement. Overall, the Blur airdrop model has retained users by being fun and engaging, fostering a strong community, being transparent, and incentivizing participation.
Author: Ally Zach Compiler: Hu Zishu Community
Key Insights
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Blur’s progressive token incentivization airdrop model has proven to be very successful, making it an industry leader by promoting user acquisition and retention.
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Among high-volume traders, the retention rate 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.
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After Blur’s success, some imitator projects appeared, but for these projects to achieve growth and market dominance, they need to go beyond Blur, introduce unique features, and adapt to changing user needs and market trends.
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Token incentives play an important role in attracting and retaining users. Blur promotes the use of an active airdrop system. Unlike traditional one-time airdrops, the active system promotes long-term participation by combining future airdrops and token issuance with customer loyalty programs. This move has pushed Blur to the industry leader position, changing the paradigm of user acquisition and retention.
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Although the success of token incentives has played an important role in driving Blur’s rise, in the entire cryptocurrency industry, this incentive has not been universally converted into significant later retention effects. Indeed, the mode of maintaining loyalty and continuous incentives seems to be a promising progress in promoting persistent customer participation. However, there are still questions: 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 use the rate of new user additions to determine the attractiveness of the Blur 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 program (or “reward season”). So far, two such airdrop seasons have been conducted. The first season started at the same time as the debut of the Blur platform in October and continued until the token release in mid-February. During this period, users could accumulate reward points by actively placing orders and bidding for NFT collections. The second ongoing airdrop season has expanded the scope of eligible activities, including providing lending services on the newly launched Blend NFT lending platform. In essence, the acquired 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 to other users. At the end of each season, users receive BLUR tokens based on their reward point ratio. At its core, Blur’s token incentive model is similar in structure to many airline reward programs: the more you travel with a particular airline, the more miles you accumulate, incentivizing you to continue choosing 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 above case study shows, these incentive programs need to be strategically selected and executed. Without a 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 lasting value proposition. Users can actively track their point accumulation, providing them with the motivation to continue interacting with Blur.
Blur’s Performance to Date
Within less than a month of its release, Blur established itself as a leader in the Ethereum NFT space with its innovative professional trader feature and well-publicized airdrop. It quickly became the market of choice for high-volume NFT traders. At one point, it surpassed major competitor OpenSea in weekly trading volume and averaged a 63% market share over the past month. While Blur has not captured the majority of Ethereum NFT traders, its market 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 in late 2022, user engagement for these competitors gradually declined.
Sudoswap chose a different strategy, compensating early liquidity providers on its platform about six months after its release. Unfortunately for Sudoswap, delayed token releases coincided with Blur’s rise to prominence. None of the aforementioned markets, even at their peak, were able to capture more than a 5% user market share.
One-time token distributions offer users free rights in exchange for their early loyalty, thus creating long-term growth and intrinsic incentives to participate in a project. However, as the case study above shows, these incentive programs need to be strategically selected and executed. Without a compelling user experience to promote platform loyalty, one-time token distributions may not produce effective results. On the other hand, Blur’s innovative loyalty feature serves to create a unique and enduring value proposition. Users can actively track their point accumulation and are therefore incentivized to continue engaging with Blur.
Looking ahead, Blur plans to continue with airdrops and incentivize various aspects of the platform. While ongoing airdrops played a critical role in attracting new users, its true success should be measured by its long-term sustainability and impact on user retention and engagement.
User Retention on Blur
In the first airdrop season, users accumulated points by consistently placing orders and participating in auctions on the platform. These points were then converted into token rewards, and higher trading volume on Blur led to larger token distributions. Therefore, since token distribution 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, comprising about 72% of airdrop recipients, had relatively low participation in trading. These users typically redeemed 1,000 BLUR tokens or less and showed the lowest retention rate since the token’s release. The relatively small token distribution may have caused these users to lose confidence in participating actively in subsequent airdrop seasons, thus affecting their ongoing engagement.
In contrast, traders with medium to high trading volume who received over 100,000 BLUR in the first airdrop had a retention rate at least 10% higher than low trading volume traders. These traders, who received 5 to 6-digit token distributions, are likely to be incentivized to remain active and participate in the upcoming reward season. This finding is consistent with the observation that while Blur may not dominate in terms of user share, it still maintains over 50% of trading volume, largely due to a small number of high-volume users.
After the release of the BLUR token, the number of daily active users on the platform surged, doubling the previous figure. This growth was mainly due to an influx of new traders. The allure of massive token distribution, coupled with the start of the second airdrop season, created a meme effect that attracted new users. Currently, this segment of users accounts for the majority (51%) of Blur’s total user base and more than 60% of the user base of NFT lending platform Blend.
According to the roadmap, Blur plans to continue with consecutive airdrops. However, the drop in the number of recipients in the first quarter of the airdrop has raised concerns about the platform’s future. The plan successfully attracted new users but faced challenges in retaining them. If this pattern continues after the next token distribution, given the limited number of potential users in the existing market, the potential for Blur to attract new users may be limited. Therefore, Blur needs to introduce new features in the airdrop to retain existing users and promote participation.
Creating a product that truly resonates with consumers is critical for cultivating long-term loyalty. Like airline reward programs, whose success is based on a persistent demand for travel, an effective product must satisfy a lasting and widely present need or desire. In the case of Blur, the NFT industry is a nascent and inherently volatile industry that has not yet formed stable demand. Therefore, the task of creating loyalty is not only to meet existing needs but also to create a natural demand for the product.
Blur should take a dual approach: attracting new users through incentives and developing features to cultivate sustained participation to optimize growth and retention. For Blur, introducing innovative tools, improving the trading experience, and creating opportunities for high-volume traders are crucial. 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 achieving initial success, a large number of imitative projects emerged in the market. OpenSea launched OpenSea Pro, a professional trading platform that seems to be aimed at attracting users who like Blur’s professional trading interface. In the Solana ecosystem, Tensorswap appeared with almost identical interfaces and similar progressive airdrop models to Blur.
Similar to Blur’s parallel trajectory, Tensorswap has experienced rapid growth and currently accounts for a significant portion of NFT trading volume on Solana, approximately 42% (as of the writing of this article). However, it is worth noting that Magic Eden still holds the majority of user share on Solana.
Recently, Tensorswap ended the initial stage of its reward distribution, although it has not yet launched its own token. Tensorswap’s user adoption pattern may reflect Blur’s pattern of steady growth prior to token release, followed by a surge and eventual return to pre-token release levels.
Tensorswap’s imitation of Blur indicates recognition of the platform’s functionality and incentive measures. While replicating a validated model can bring initial success, long-term sustainability and market share retention depend on innovation and adaptability. Just as Blur differentiated itself from numerous platforms through its pioneering professional trading interface and free transactions, TensorSwap and other market entrants 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 cannot solve the user retention problem 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, there is a possibility of user fatigue due to repetitive patterns with the upcoming token distribution.
Furthermore, our evaluation highlights that cultivating sustained user engagement requires ongoing improvements to airdrop programs, responsiveness to user feedback, and introduction of new platform features. Other platforms such as TensorSwap have achieved success 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.
