A recent report published by blockchain analytics firm Dune revealed that nearly 60% of non-fungible token (NFT) trading volumes this year were laundered deals.
Wash trading is a form of market manipulation where a trader buys and sells a security to create the impression of increased trading volume and activity in the market. In crypto, these activities involve the buying and selling of digital assets – fungible or non-fungible tokens – on trading platforms, with the aim of inflating transaction volumes. The ultimate goal is to mislead other traders about the level of demand for the asset.
An example of wash trading in the context of non-fungible tokens (NFTs) might involve a trader who owns a particular NFT and wants to create the impression that it is in demand. A trader can create multiple accounts in the NFT market and use them to buy and sell NFT back and forth, generating high trading volume and driving up the price of that asset.
Most NFT platforms engage in laundered trading
According to Dune, laundry deals I started It gained traction in the crypto industry in 2019 but has become relevant in the NFT space in 2022.
The analyst firm noted that NFT trading is boosted by attracting traders with token rewards due to the highly competitiveness of the space and the frequent launch of new platforms.
The most popular wash trading methods involve investors trading NFT between two or more wallets, which they control, for as much Ether (ETH) as possible. They aim to accumulate token rewards that are more valuable than the gas fees spent.
In February, blockchain analytics firm Chainalysis mentioned That roughly 110 laundry store titles generated $8.9 million in revenue. Notably, a large number of these wallets lost money on transaction fees. However, the profitable titles outnumbered the losses of the unprofitable titles.
$30 billion in NFT trading volume on Ethereum is laundry deals
Notably, the percentage of wash trade varies between NFT markets, but some platforms are more activity based. According to the report, platforms like LooksRare and X2Y2 account for 98% of laundry trading and 87% of their respective volumes, depending on activity. But only 25% and 22% of their total business is laundry.
In addition, Element and Sudoswap are major trading platforms, each accounting for 66% volume and 11% activity. On the other hand, only 18.5% and 14.5% of their total business is laundry.
Dune also revealed that about 45% of the total NFT trading volume in Ethereum are laundry businesses that account for $30 billion in volume. open sea It has only 2.4% of laundry trade turnover and less than 1% of closings.
At the same time, in June, Vijay PraveenBitsCrunch, CEO and founder of NFT analytics provider, revealed that more than 33% of NFT trading volume was fake.
Nearly 60% of NFT Trading Volumes Published in 2022 Wash Trading: The report appeared first on CryptoPotato.