Blur Improvement Proposal 1 (BIP-1) - Blur Fee Switch & veBLUR Tokenomics

Proposals
1

Summary

The Blur NFT Marketplace protocol has had 0% marketplace fees with limited guidance on the role of the BLUR token and the flow of potential protocol revenue.

This proposal aims to add a framework for adding protocol fees and redirecting fees to vote-escrowed BLUR (veBLUR) tokens.

Fee Switch

The Blur NFT marketplace is the largest NFT marketplace on Ethereum, with daily trading volume consistently between $2-4m and a consistent market share of 60-70%.

Blur is currently in its 4th season of incentives, with 500m BLAST allocated to Season 4, received from the Blast Foundation. The current value of those rewards are approximately $4.5m. These are the lowest rewards of any of the past Blur seasons by a wide margin, and yet the trading activity and Blur’s market share have been unaffected, showing Blur’s clear product and liquidity moat.

To date, the Blur NFT marketplace protocol has had 0% marketplace fees while enforcing 0.5% minimum creator royalties. We propose to remove enforced creator royalties and add a 0.5% protocol fee on every trade.

We also propose the creation of a fee council that can change the protocol fee rate to be able to make quick adjustments based on market circumstances and the competitive landscape.

veBLUR Tokenomics

We propose to change the $BLUR tokenomics to use two tokens to manage Blur’s utility and governance, similar to that of Aerodrome’s (source):

$BLUR — ERC-20 utility token of the protocol
$veBLUR — ERC-721 governance token in the form of an NFT (non-fungible token)

$BLUR is distributed to traders and liquidity providers through Blur’s ongoing Season incentive campaigns, starting with the current Season 4. We propose to add 1% of the total BLUR supply (30m BLUR) as rewards to the current Season 4. This will be distributed to Blur users based on their total points at the end of the season.

$veBLUR is used for governance. $BLUR holders will be able to vote-escrow their tokens and receive $veBLUR (also known as Lock or veNFT) in exchange. Additional tokens can be added to the $veBLUR NFT at any time.

The lock period (also known as vote-escrowed period, hence the ve prefix) can be up to 4 years, following the linear relationship shown below:

  • 100 $BLUR locked for 4 years will become 100 $veBLUR
  • 100 $BLUR locked for 1 year will become 25 $veBLUR

The longer the vesting time, the higher the voting power (voting weight) of the underlying locked balance.

Additionally, Blur Locks (veNFTs) can be set into Auto-Max Lock, which are treated by the protocol as being locked for the maximum duration of 4 years, and their voting power does not decay. The Auto-Max Lock feature can be turned on and off for each Lock (veNFT).

$veBLUR Voters are rewarded (proportionally to locked amounts) for their votes with 100% of the protocol trading fees every epoch.

An epoch is a 1-month period. It starts the first day of every month at 00:00 UTC and ends the last day of every month at 23:59 UTC. Votes, emissions, fees, and incentives are calculated for each epoch.

Every epoch $veBLUR voters can vote on a collection multiple. Daily points allocated towards specific collections will increase based on the respective multiple that is voted on during each epoch. Every collection has a base multiple of 1x. Voting is determined based on $veBLUR votes for a respective collection / total $veBLUR votes placed. The resulting percentage is multiplied by 100x and added to the base multiple to determine the new collection multiple. Example:

During Epoch 1, 100 $veBLUR is used to vote on increasing collection multiples. 10 $veBLUR of that is used to vote on Azukis (10% of all votes). 10% * 100 = a collection multiple increase of 10x, resulting in a new collection multiple for Azukis of 11x. The result will be more rewards going to Azuki traders and liquidity providers, resulting in superior bid and lending liquidity.

We propose adding voter incentives during Season 4 for $veBLUR voters in the form of rebasing $veBLUR. $veBLUR holders receive a rebase proportional to $BLUR emissions and voters pro rata $veBLUR balance. We propose to distribute 3% of the total $BLUR supply (90m $BLUR) to $veBLUR voters for the remainder of Season 4.

Looking Forward

While this proposal suggests turning on protocol fees and the mechanism of distribution of those fees to $veBLUR holders for the remainder of Season 4, there needs to be ongoing discussion of rewards and emissions after Season 4. This proposal does not aim to suggest a specific mechanism for future rewards and emissions. Questions that should be actively discussed and considered by the community include:

  • How long should seasons be after Season 4?
  • Are monthly epochs the appropriate duration of time?
  • Should $BLUR rewards for traders & liquidity providers differ by seasons?
  • What should voter incentives look like for $veBLUR voters?

We look forward to seeing active community discussion and proposals to answer these questions throughout Season 4.

Split Capital

6 Likes
2

Sounds like a great idea to make sure Opensea does not capture Blurs marketshare with their V2!

3 Likes
3

Super interesting proposal, this will also enhance volume on the platform, given the rewards for season 4 would be higher.

3 Likes
4

Drive value to the users and more will use the product, great idea!

5

This is good proposal to start up some utility of $BLUR. Good to discuss the points to move it on. Thanks!

1 Like
6

I like this proposal, we need to find ways to use Blur and we need to give incentives to people to hold it as well. We also need to reward holders for their loyalty and Blur traders as well.

7

Interesting idea… we need explicit utility for $BLUR
Hopefully any utility required within this bull-run

8

It a way to sustain the project especially with competitors.

9

Some importants questions need to be raise in my opinion.
Will this impact both Blur on ETH and Blur on Blast the same way for the fees and for the potentiel $Blur rewards for the current season ? So basically :

  1. Will Blur on Blast also add a 0.5% protocol fee on every trade and remove creator fees ? If no, why because it would be strange to have 2 different fees structures for the same app

  2. How would be splited the 1% of the total BLUR supply (30m BLUR) as rewards to the current Season between Blur on ETH and Blur on Blast ?

10

I would even suggest to up the % of blur rewards from 1% (30M tokens) to 2% or even 3%, this is because Opensea is launching their incentives program in December aswell with rumours of a token, this would heavily impact Blurs market share in terms of liquidity. Changing the blur incentives to be more competitive would make sure market share is maintained.

11

@SplitCapital love the proposal.

How do you feel about a VE implementation like BladeSwap.xyz has using a fungible token instead. Liquid VE tokens, no NFT, no lockup. Users can flow freely in and out of VE tokens.

VE is a great idea, but the old NFT voting lockup is outdated imo, and the model BladeSwap is using should be heavily considered instead as it hosts a variety of advantages for the users.

1 Like
12

Changing the 0.5% royalty fee to a protocol fee seems a good idea. I support it.
But there might be a huge conflict of interest on the council governance part, as most likely the biggest farmers (and related people) will be the ones to set the collection rewards, which does not seem healthy.