NFT market manipulation? CryptoSlam claims suspicious activity on Blur
Despite its recent success, the journey for Blur to become the largest NFT marketplace is far from over, and evaluating current and future success is a complex matter.
NFT marketplaces are currently involved in fierce competition for customers, with companies lowering their fees and royalties to attract and retain users. This competition has resulted in a gradual weakening of royalty fees, a crucial source of income for many NFT creators who feel abandoned by the marketplaces that once supported them. This “race to the bottom” is causing significant disruption to the entire NFT ecosystem.
Read more: Why we need more NFT royalties and better marketplaces
Is Blur’s volume real?
Blur has surpassed OpenSea in the total value of sales made through the platform, but the data has sparked a debate about its true meaning.
One factor contributing to Blur’s success is the rewards program, which awards points to traders for listing and bidding on NFTs. These points can be exchanged for BLUR tokens, with the number of points received based on the number of points accumulated.
Since there are no marketplace fees or royalties, the only obstacle preventing users from gaming the system and earning tokens by purchasing their own listings with another wallet is the need to pay gas fees.
But last month, CryptoSlam, a tracker of NFT sales data, claimed that this is exactly what happened at Blur. In an email to its subscribers, CryptoSlam stated that only 1% of high-value traders were responsible for the bulk of the trading activity on the platform.
As a result, CryptoSlam took action and removed hundreds of millions of dollars in Blur trades from its data, citing “market manipulation.” It has since implemented an updated algorithm that filters out “suspicious” sales.
In the period from February 14 to February 25, CryptoSlam identified over $577 million in laundered NFTs on the platform.
According to CryptoSlam, sales data from Blur “misrepresents” the NFT market. The potentially artificial increase in sales lifted the industry’s total sales volume to the highest level since January 2022, leading some to believe that the market was rebounding after a significant drop in activity over the past year.
Computer engineer Scott Hawkins of CryptoSlam stated in an interview with Forkast, “What we’re finding is that this is artificially increasing sales volume in a very disingenuous way for the entire NFT market.”
In addition, OpenSea still has more users than Blur, with a user base consisting of a smaller group of more active traders. Blur has only 113,886 users in the last 30 days compared to OpenSea’s 294,146. Critics also claim that a small percentage of wallets on Blur are responsible for most transactions.
The future of Blur
It is unclear how the BLUR token will be valued in the future, and it is uncertain how it will gain value over time. Currently, BLUR acts as a governance token, but since Blur is a centralized entity, it must gradually cede control to token holders of a newly established DAO. This may be why US users were excluded from the airdrop, despite the token being available on major US exchanges such as Coinbase.
The Blur DAO will be responsible for managing important aspects of the platform, such as establishing the protocol’s value creation and distribution. This may include setting the protocol fee rate (up to 2.5%) after 180 days and awarding government grants to further develop the marketplace. These choices will play a crucial role in shaping the platform’s future growth and determining whether Blur can compete effectively in the market both now and in the immediate future.