Crypto Notebook

LooksRare OP

Disclaimer: original contribution of this OP is on the 💸Tokenomics section and onward. All part before it comes from

Bowen Zhang⁠

🤔 What’s LooksRare?

LooksRare is the community-first NFT marketplace that actively rewards traders, collectors and creators for participating. Why do we need another marketplace. We’re NFT people, just like you. We have a vision for a better world for our community — in fact, it’s our motto: By NFT people, for NFT people.

Oh, and by the way: we’ve built LooksRare from the ground up. This isn’t just some fork of an existing protocol. We’re not messing around: we are looking to set the new industry standard for NFT marketplaces.

🏁 What can you do on LooksRare at launch?

Buy and sell NFTs in ETH, WETH, or a mix of both

Make offers on NFTs in WETH

Make an offer on all NFTs in a selected collection “Collection Offers”

Earn daily trading rewards

Earn a share of the platform’s trading fees

🤫🤫🤫 This one’s a big secret and we won’t tell you so stop asking 🔫🐸

And tons of other stuff.

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https://docs.looksrare.org/blog/the-nft-marketplace?utm_source=Twitter⁠

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https://docs.looksrare.org/blog/the-nft-marketplace?utm_source=Twitter⁠

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🖼👌 By NFT people, for NFT people

This is who we are.

Part of being community-first means that LooksRare rewards, empowers, and gives back to the platform's users and creators.

💎 Get rewarded - Users that buy or sell NFTs from eligible collections earn LOOKS tokens.

🤝 Share the platform fees - 100% of trading fees are earned by LOOKS stakers.

⚡️ Creators get paid instantly - Creators get royalty payments at the moment of sale.

🍴 Not a fork

LooksRare’s smart contracts are custom-built within a modular system that enables new features to be rolled out over time – without compromising security – thanks to standardized signatures that clearly define the execution scope.

This means we can offer new types of interactions, like these (rolling out soon):

Collection offer - Make an offer that covers all NFTs in a selected collection

Trait offer - Offer to buy any NFT with a specific trait in a collection e.g. BAYC w/ Gold Fur

Multi-cancellation - Cancels multiple open orders in one transaction

🦖 Not a dinosaur

From utilizing some of the world’s most powerful search infra, down to implementing on-chain standards like EIP-712 and ERC-2981, LooksRare’s technical architecture (contracts, database, API, front end, search) has been designed from the floor up for scalability, speed and security using the latest and greatest tech.

We’ve also made sure to retain compatibility for deploying on ETH scaling solutions when they're ready for the masses.

💸Tokenomics

Allocation

A total supply of 1,000,000,000 $Looks be available

⁠

LooksRare Token Distribution

LooksRare Token Distribution

Utility

Percentage of Supply

Total LOOKS

Airdrop

12%

120000000

Strategic Sale

3.3%

33083003

Liquidity Management

1.7%

16916997

Volume Rewards

44.1%

441000000

Staking Rewards

18.9%

189000000

Founding Team

10%

100000000

Treasury

10%

100000000

Total Supply

100%

1000000000

There are no rows in this table

⁠

Emission

TLDR: stake-able LOOKS and trade-able LOOKS have different emission schedule. According to the two graphs below, Airdrop and Liquidity Mgmt LOOKS will be available for staking and trading immediately. Strategic Sales LOOKS will be stake-able immediately post-sale but has a 180 day vesting period before it enters trade-able pool (unlocks linearly at decreasing speed between Day 180 - Day 360, and Day 361 forward. Emission finishes at Day 720). All other categories have a linear unlocking with 4 stages of decreasing-speed (decreasing) for staking. Treasury and Team token, when talking about trading, are unlocked across 6 discrete stages; between Day 90 and Day 180 the Treasury token will also experience linear unlocking with two different speed (increasing).

⁠

Note, during the initial setup of the Team and Treasury tokens, there was an oversight in the amount of Pre-minted LOOKS tokens sent to the respective wallets. While this does not affect the current vesting schedule for team and treasury tokens, the team does need to make periodic transfer between the two account, since the Treasury will receive more WETH than intended and the Team will receive less WETH than intended. More detail refer to end of this page

https://docs.looksrare.org/about/looks-tokenomics⁠

⁠

Reward System

1. Platform Fee

LOOKS token staker earn 100% of fee incurred on platform. LooksRare collects a basic sales fee of 2% (in WETH) on all NFT sales excluding private sales (because LooksRare doesn’t take a fee on private sales). All the WETH collected from these fees are consolidated at the end of each recurring 6,500 Ethereum block period (roughly 24 hours) and then distributed to LOOKS stakers in a linear format per block over the next 6,500 block period.

One can claim reward anytime they wish since the reward does not expire, so one could always claim reward at a time when gas is lower.

Note there is an Active Staking and Passive Staking difference on LooksRare. The main difference is that LOOKS in passive staking do NOT earn additional LOOKS while staked.

Active stakers are the majority of stakers, whose staked LOOKS tokens are fully unlocked.

Passive stakers are stakers whose LOOKS tokens are locked for trading but unlocked for staking: namely Team, Treasury and Strategic sale tokens

At the start of each 6,500 block period, a portion of the WETH fees collected from the previous 6,500 blocks are sent to the Passive Staking address. The amount is calculated as:

⁠

Where

⁠

= Total amount of LOOKS staked passively at start of period

⁠

= Total amount of LOOKS staked at start of period (passive + active)

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= Amount of WETH fees from previous 6,500 blocks

The remaining WETH is then sent to the Active Staking Pool and is distributed. For calculation, each user’s amount of staked LOOKS at each block is compared against the total amount of LOOKS staked at each block, with this being done at every block within the 6,500 block period to find the total amount of WETH rewards received. Example below.

Let’s assume LooksRare processes 10,000 WETH of non-private sale volume in the first 6,500 blocks after launch, collecting total fees of 200 WETH.

At block #6500, User A stakes 10,000 LOOKS in preparation to start earning WETH at block #6501.

At block #6501,

The amount of passive tokens staked is 10% of the total amount of tokens staked, meaning 20 WETH is sent to the passive staking address.

The remaining 180 WETH is put into the active LOOKS staking pool, with 0.027692 WETH to be earned per block for 6,500 blocks (180 / 6,500).

The total amount of LOOKS staked from ALL users is 1,000,000 LOOKS.

This means that User A will be allocated: (10,000 / 1,000,000) x 0.027692 = 0.01×0.027692 = 0.00027692 WETH at block #6501.

At block #6502,

Assuming User A’s stake does not change, but the total amount of LOOKS staked from all users increases to 1,500,000 LOOKS, then User A will be allocated: \frac{10,000}{1,500,000}\times{0.027692} = 0.000186411,500,00010,000×0.027692=0.00018641 WETH at block #6502.

This calculation each block will then continue for another 6,498 blocks (since our example covers a 6,500 block period), with 0.027692 WETH as the amount to be earned per block.

Total claim-able active staking reward for this 6,500 period is the sum of eligible reward for each individual block.

2. Trading Reward

Users who trade any NFTs on LooksRare earn trading rewards in the form of LOOKS. Both the buyer and seller earn 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. The entire schedule of trading reward emissions will be over 4,686,250 Ethereum blocks (or approximately 721 days, using 6,500 blocks per day), at which point all LOOKS token emissions will come to an end. Only trading volume resulting from orders created by the LooksRare Marketplace is included in the daily trading reward calculation.

Looks token allocated for trading reward are dispersed into 4 stages with decreasing LOOKS per day.

LOOKS token allocated to trading reward

LOOKS token allocated to trading reward

Phase

Length

Looks Per Day For Trading Rewards

195,000 blocks (30 days)

2,866,500.00 LOOKS

585,000 blocks (90 days)

1,361,587.50 LOOKS

1,560,000 blocks (240 days)

537,468.75 LOOKS

2,346,250 blocks (361 days)

286,650.00 LOOKS

There are no rows in this table

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Eligible trading reward on a particular day is calculated according to

⁠

Where

⁠

= User’s Trading Volume on a particular day

⁠

= Total volume on LooksRare on a particular day

R = LOOKS Rewards Per Day (defined in

LOOKS token allocated to trading reward⁠

)

LooksRare platform tackles wash trading with their system design (fixed total Trading Reward per day, 2% platform fee, loyalty fee, and user’s trading volume on a particular day), yielding uncertain return for wash trading. It is obvious that the longer this platform exists, the less profitable wash trading is.

3. Staking Reward

Staked LOOKS tokens are auto-compounded for users that wish to just leave their LOOKS tokens staked.

LOOKS staking rewards will be earned over 4 phases with differing reward rates, based on a schedule of 6,500 Ethereum blocks per day.

LOOKS token staking reward rate

LOOKS token staking reward rate

Phase

Length

LOOKS Per Block

LOOKS Per Day

195,000 blocks (30 days)

189.00 LOOKS

1228500

585,000 blocks (90 days)

89.775 LOOKS

583537.5

1,560,000 blocks (240 days)

35.4375 LOOKS

230343.75

2,346,250 blocks (361 days)

18.90 LOOKS

122850

There are no rows in this table

⁠

Eligible staking reward on a particular day is calculated according to:

⁠

where

⁠

= staked amout of user on a particular day

⁠

= total staked amount on LooksRare

⁠

= LOOKS Rewards Per Day (defined in

LOOKS token staking reward rate⁠

)

4. Liquidity Provider Reward (Discontinued on Feb 15, 2022)

If interested please refer to

https://docs.looksrare.org/about/rewards/liquidity-provider-rewards⁠

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Tokenomics Comment

TLDR: although it looks like the community is the focus on the surface, we actually see the team & early investors still reaps a large amount of money, and the entire system is built on the assumption of LOOKS price inflating.

I think the design is quite standard but I thing I don’t get: are all LOOKS token minted initially and unlocked gradually, or are they minted on upon unlock time? Because on the previous case, early users (e.g. seed backer, airdrop, and team & treasury) will enjoy a significant amount of fee (coming from the 2% fee, and things like wash trade) for quite a while.

Continuing on this assumption, this means early on, although the team & treasury & strategic investors have only ~23% of all token, it is around 2:1 ratio of Team/Investor to Airdrop.

According to twitter, seed price was $0.15. That means roughly 33,083,003 * $0.15 ~= $5,000,000 is raised. Using the example of 200 WETH fee reward per day above, and assume 1 WETH = $3000. Per day, seed investors get around 200 WETH * 66% (from 2:1 ratio) * 13% (from 3:20 total token allocation btw investor to team) = 17 WETH ~= $51,000 network fee reward. That totals to ~100 days of cost-recovering period for early investors, and it has not included staking reward. note this calculation is very, very rough and assumed stable WETH price which is unlikely. Team & Treasury are also emitted gradually so Airdrop and Strategic Investors are definitely getting even more early on.

⏸️Comparison with Opensea

TLDR: You basically see it is still very little on the user count compared to Opensea. Plus, the price of $LOOKS recently slumped 70% and users drastically left the platform; dev team also cashing out a ~10,500 WETH and more (

https://thedefiant.io/looksrare-plunges-team-windfall/⁠

). Overall the platform, to me, feels like on the verge of losing user adhesion. Not sure how this will play out but given the current situation, I think organic growth might need another re-boot.

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