[Feature] Discussions on Blur Part III: Web3.0 Investment

Compiled By: Coinlive
Author: Mint Ventures Jessica Shen

The Urgent Need for Mass Adoption in Web3.0 is not Users, but Outstanding Entrepreneurs and Developers.
NFT was born in 2017 when Dieter Shirley, the founder of CryptoKitties, proposed the concept of non-fungible tokens (NFT) to differentiate CryptoKitties from ERC20 tokens and introduce the idea of NFT to the market.

OpenSea was established in 2018, followed by Gem at the end of 2021, and X2Y2 and LooksRare in 2022.

In May 2022, the market capitalization of NFT reached its highest level of $34.6 billion. However, the most basic buy order aggregation feature was not introduced in NFT trading platforms until the fourth quarter of 2022, when Blur launched it to the market.

This made me, a cryptocurrency investor, realize that the industry lacks outstanding entrepreneurs, and what is urgently needed for mass adoption is not users, but excellent entrepreneurs and developers.

Recently, the founder of Blur, @PacmanBlur, revealed his past experiences and education background.

Based on various interviews and public information, we learned that @PacmanBlur has an engineering education background, and his first startup in 2016 was one of the projects in Y Combinator's 2016 winter batch.

During his time at MIT studying mathematics and computer science, he met the co-founder of Blur. In 2018, they started the Blur project while still studying at MIT, and successfully sold the company in 2021.

After their previous startup ended, they quickly started the Blur project because @PacmanBlur was fascinated by NFT trading in 2021 but felt that the market lacked trading platforms and NFT infrastructures designed from the perspective of traders.

The 10-person Blur team is also talented, including 7 engineers who previously worked for Citadel, Five Rings, and Twitch, as well as a designer from Square and Brex.

Overall, the Blur team has experience in trading companies in traditional finance, large-scale streaming platforms, and renowned companies' design experience, providing a good foundation for Blur to launch user-friendly products.

The two founders' past entrepreneurship and collaboration experiences also lay a solid foundation for their teamwork, management, and financing.

A product that solves real pain points in the industry is not afraid of competing in a crowded market.
The Blur team was established in January 2022, began internal testing in May, and opened up public testing in October, with the project launching its coin after about a year.

The project's pace may not be considered very fast in the cryptocurrency industry, but it can be seen that the team had a clear product idea from the beginning and has maintained a rhythm of developing products and launching new features in the bear market environment. Although many NFT trading markets had already seized the market before Blur went live, the pain points in the industry persisted and were not yet solved by existing competitors.

For startup teams, competition in the market is one aspect to consider, but based on first principles, the focus should be on "solving industry pain points."

If the product is good enough, it can change the original competition pattern of the market, accumulate strength and eventually lead industry trends and developments.

They say that success requires "timing, location, and people."

Blur did not choose to launch its product during the perfect time (bull market), and it did not even wait for the bull market to come to launch its coin.

But from the results, Blur has already achieved a phased victory, even becoming a project that manufactures narratives during the bear market.

For sufficiently excellent products and teams, the difference between launching during a bear market or bull market may not be significant, but for ordinary projects, the difference can be huge. This is the confidence that the author has observed in all successful startup teams.

Team cognition determines the product's ceiling.
The Collection Bidding feature fills in the information gap in the market.

Blur's Collection Bidding feature is a key feature that enhances liquidity and fills in the huge information gap in the NFT market.

Previously, NFT traders faced a problem where supply was clear but demand was unclear. Users could only understand the order status in other trading markets/aggregators, but they could not grasp the pricing demands of NFTs.

It was like a trader only seeing sell orders on the order book.

Blur's Collection Bidding feature is nothing special, but it provides users with an intuitive and clear view of buying demands.

When the information gap is filled, users' desire to trade fundamentally increases. This feature also greatly facilitates users with a large amount of NFT hot money (whales, frequent traders, professional traders, market makers) to buy low and sell high.

Tokens incentivize "liquidity," not "trading volume."

In multiple Twitter Spaces and interviews in which @PacmanBlur participated, he mentioned that the difference between Blur's token economy model and that of some other trading markets is that Blur incentivizes "liquidity" rather than "trading volume."

The latter often leads to incentives for wash trading, which artificially inflates trading volume. As an NFT trading market, the definition of "good liquidity" is that sellers' orders can be quickly sold, and buyers' bids can be quickly purchased.

Blur's solution is to incentivize orders and bids close to the floor price, i.e., those that help "match trades" in the market.

It can be understood as encouraging more users to concentrate funds on "buy one" and "sell one," and when the price fluctuates, trading will naturally occur.

Liquidity incentives will ultimately be transmitted to trading volume, but it is obviously more "organic" than directly incentivizing traders.

In the early stages, emphasis was placed on growth, and monetization was not a big problem for good products.

Regarding the 0% transaction fee resulting in zero revenue for the protocol in the short term, @PacmanBlur's response was that the project early on placed greater emphasis on user growth and polishing the product, similar to Alibaba's early strategic approach of first benefiting users and then considering monetization methods after the project has achieved an absolute advantage.

The founder's "growth first, monetization later" strategy may not apply to all entrepreneurial projects and teams, but it demonstrates their patience and confidence in building long-term projects.

Investment is a process of mutual selection and mutual growth.
One of the reasons why many people are optimistic about Blur is the impressive backing of Paradigm, but I believe that this combination is based on "mutual selection" and "mutual growth."

The team's vision of prioritizing growth over revenue, consistent with Paradigm's long-term investment style, is like the combination of two "long-termists."

In terms of token economic model design, Blur also collaborated with Paradigm, and I believe they drew on Paradigm's previous token design experience in other projects such as Uniswap. Two excellent teams can play to their respective strengths, help each other grow, create value for each other, and achieve mutual benefit.

This process is worth learning and emulating for practitioners.

In reflecting on the work of researching Web3.0 Tier-1 projects, two extreme stories are often heard: (1) a well-known cryptocurrency fund competing for a share in project A; (2) project B with no interest and no successful fundraising for several months.

In the stage of mutual selection, stories of pursuing and being pursued are common, but there is no "most correct" choice, only the "most appropriate" choice at present.

In this market with asymmetric and insufficient information, investors and project parties need to weigh their own value and needs carefully.

For investors, it is important to determine their investment track and direction and improve the additional value they can provide to projects and industries, so as to match targeted projects more accurately.

For entrepreneurial teams, each unit of financing brings different leverage effects, and choosing investors who share the same values can avoid many unnecessary disputes on the long road of entrepreneurship.

In reflecting on post-investment project tracking, there is still room for improvement. Overall, practitioners in the cryptocurrency industry are young, and it is difficult to say whether entrepreneurs or investors have more experience and cognition.

However, both parties need to have a long-term belief and patience in the industry, remain calm in the face of market noise, make independent judgments, constantly polish their understanding of the industry, and create value that they can afford for users and the industry. I believe that this market will not let down everyone who works hard in the right direction.