NFT Marketplace Explodes to $2.04 Billion in Trading Volume Thanks to Controversial Marketplace Blur – Cryptopolitan
In February, the total volume of NFT sales rose to heights not seen since the arrival of crypto winter last spring, according to data from DappRadar. Trade reached $2.04 billion in February, representing a 117% increase from January’s figure of $941 million. However, this marked the most profitable month for NFTs since last May, when Terra’s collapse decimated the crypto-economy, leaving the once-booming NFT market in ruins. Most of this increase appears to be attributable to a single source: Blur.
Blur’s NFT marketplace has seen tremendous success since its launch earlier this month, surpassing OpenSea in trading volume. Its success has been primarily attributed to innovative incentives that reward loyal users for refraining from using other platforms and trading high-value NFTs. In February alone, Blur’s trading volume skyrocketed to over $1.13 billion, accounting for most of the market’s month-over-month gains. However, a closer look reveals that most of this volume was generated by a small group of “whales” flipping NFTs to accumulate BLUR tokens through the company’s reward system.
Blur’s increase in NFT trading volume
The legitimacy of Blur’s trading volume has become a hot-button issue in the NFT ecosystem. Last week Cryptoslam, a leading platform for tracking NFT sales, announced that it would remove $577 million worth of Blur trades from its data due to “market manipulation”. At least for now, DappRadar still counts Blur’s trade volume as legitimate.
Pedro Herrera, head of research at DappRadar, explained that the bidding logic used by Blur means that many of their trades bypass their wash trade logic, and that they “won’t flag every Blur sale as a wash trade.” Nevertheless, the debate about the true size of the NFT market continues.
Wash trading, a phenomenon involving traders selling NFTs between their wallets at high prices to increase the prestige or market value of those assets, has similarly been linked to gambling incentive programs offered by some NFT marketplaces. Also, the total number of NFT sales in February was almost identical to January’s numbers, falling just 2% to 6.47 million, suggesting that wash trading has not had a major impact on the industry. Thus, if Blur’s activity is discounted as laundry, February’s overall market figures will be more in line with January’s.
The financialization of the NFT ecosystem is becoming increasingly apparent, especially with the phenomenon surrounding Blur’s incentive structure. Last month, this aggressive growth caused a stir among competitors and led rival OpenSea – valued at $13.3 billion – to announce a reduction in royalty protection for creators. Despite this, OpenSea maintained its momentum, seeing an 18% increase in monthly trading volume to $587.22 million. Notably, the platform continues to attract more unique traders than Blur, boasting a total of 316,000 compared to Blur’s 96,000.
OpenSea’s continued success is partly attributed to the buzz surrounding Dookey Dash, an online skill-based game developed by Yuga Labs. To participate in the game, players had to have a Bored Ape or Mutant Ape NFT, increasing trade volume for the two popular collections. On Monday, the month-long Dookey Dash tournament winner sold his winning key for an impressive $1.63 million in ETH.
