NFT Wash Trading Surpasses $30 Billion in Cumulative Volume – CryptoMode
It is no secret that there is a lot of trading activity in the NFT segment. However, many agree that there is a good amount of laundry to consider. Interestingly, the industry passed $30 billion in laundry trades, representing approximately 45% of all volume.
NFT Wash Trading is still a problem
Although there are tens of thousands of NFT collections, many will never materialize. As with altcoins, NFTs can be a quick pump-and-dump scheme by people looking to make a quick buck. Also, many non-fungible tokens have no intrinsic value or utility, which will reduce demand and cost investors a lot of money.
Making matters worse is the significant amount of laundering that plagues the industry. Such antics became more apparent soon after the LooksRare marketplace went public. Unfortunately, things haven’t gotten much better since then. Although wash trades only represent 1.47% of all trading activity, they account for 44.51% of all trading volume. It is very problematic, and confirms that the high-profile collections are still subject to price manipulation.
The Dune dashboard tracking this activity provides an interesting picture. OpenSea has 2.39% in wash volume, while LooksRare remains at over 98%. X2Y2 has passed 86.5% in washing trades, and Element is at almost 65%. Also, marketplaces like Foundation, Flip, Rarity Garden and NFTInit have had zero wash. However, they also generate far less trading volume, apart from Foundation.
It is also interesting to see that aggregators do not offer much help to avoid laundering. Gem, Genie, X2Y2, Blur, Element and BitKeep all note over 10% of volume as wash trades. Reservoir is the only notable exception, at 0.22%. Smaller platforms do not have a representative total volume to draw any conclusions now. However, all platforms have a low overall wash trade percentage, making it more difficult to identify if the sale is legitimate.
Laundry trade increases near EOY
While the holiday season will not guarantee more NFT purchases, it appears that wash trade numbers are on the rise again. The industry suffered major setbacks in early 2022 and mid-2022, but it has calmed down. However, the number of suspicious transactions has increased again since the end of October 2022 and has represented almost 20% of all volume since then. That’s not a good sign for anyone looking to buy an NFT.
In the week 6.-12. As of December, there were approximately $190 million in registered organic NFT sales. Unfortunately, it was also over $77 million in laundry trade. It is still a significant part of the total volume, even if it only represents a few daily trades. It is up to aggregators and marketplaces to find ways to prevent this behavior, although it will not be easy.
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