Rarible bets on token buybacks to outlast NFT farming hype

Non-fungible token (NFT) marketplace Rarible launched a redesigned trading platform on Tuesday and rolled out a new system that directs transaction fees into token buybacks.

Rarible told Cointelegraph that the model, which redistributes tokens to active traders, is intended to create a sustainable alternative to earlier NFT marketplace incentive schemes that relied on fixed token allocations.

“Previous designs in the NFT marketplace ecosystem were not sustainable,” Anna Riabokon, head of operations and governance at the RARI Foundation, told Cointelegraph.

“They heavily incentivized traders with unsustainable levels of redistribution, only to dry up when their allocations from the token distribution were exhausted.”

Riabokon told Cointelegraph that with the new model, the RARI Foundation will direct all revenue generated from platform transaction fees “back into the hands of the traders.” She claimed this essentially creates a “fee-free” marketplace.

Previous NFT marketplace attempts at token rewards

Other NFT marketplaces have experimented with reward programs, often relying on token incentives to boost trading activity.

In 2023, Blur dominated NFT volumes using a points-based system that rewarded traders with future token airdrops.

However, while the strategy quickly attracted liquidity, it also fueled wash trading methods, where users bought and sold NFTs back and forth to maximize airdrop rewards without genuine market demand.

NFT platform LooksRare also launched a similar approach, distributing its token to traders as part of an emissions schedule. While the model briefly boosted volumes, much of the activity fell sharply once token rewards lost value.

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Rarible exec says revenue generation sets platform apart

While previous reward program iterations from competitors showed unsustainable results, Rarible remains optimistic about its token rewards system. Riabokon told Cointelegraph:

“Unlike other marketplaces, Rarible generates revenue from licensing its software to brands such as Mattel and McFarlane Toys and over 40 other partners, and can consequently support the broader community with this system in a sustainable and long-term way.”

“By redirecting all revenue generated from trading into this incentive program, the system is inherently sustainable,” Riabokon added.

She also said that the platform will ensure transparency. Riabokon told Cointelegraph that all payment of transaction fees is onchain and can be traced to the RARI Foundation treasury.

She said leaderboards will be provided as part of the incentive program, and the foundation will issue regular transparency reports.

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