- LooksRare, a latest NFT marketplace, is permeated with round trip trading, aka wash trading, as clients try to game trading reward model.
- As per a data aggregator firm, LooksRare has estimatingly bagged $8.3 Billion in Ethereum, accounting for a significant amount of sales to this day.
- LooksRare’s native token LOOKS was down by 9.95% in the previous 24 hours, trading at a market value of $4.13.
Are LooksRare Users Playing Unethically?
LooksRare came out of the bushes to become the biggest OpenSea contender at the beginning of this month, but there’s something fishy about the NFT platform’s trading figures.
It is exploited by unbridled wash trading. As clients purchase and sell NFTs among wallets, they handle to manipulate regular trading rewards. Now we have an idea of how extreme wash trading has gone since LooksRare’s release in early January this year.
As per CryptoSlam, an NFT analytics organization, LooksRare has bagged over $8.3 Billion worth of Ethereum in wash trading, accounting for a prominent amount of trade volume on the platform to this day.
The majority of wash trading is done from royalty-free collections, meaning sellers are not required to pay secondary trade fees to creators. LarvaLabs’ Meebits has involved in $4.4 Billion worth of wash trading, Terraforms worth $2.9 Billion, Loot includes $705 Million, And CryptoPhunks at $251 Million an additional $62 Million are consists of other projects.
As per open blockchain data gathered by Dune Analytics, LooksRare has piled up around $10.9 Billion in the sum of Ethereum trade volume since its release at the time of this writing. If these numbers are precise, from both sources, 87% of the platform’s trade volume to the day go with CryptoSlam’s wash trading mechanism.
Why are some clients from LooksRare, trading NFTs at highly inflated value? This all connects to the trading reward design of platform. This platform offers users tokens whenever they purchase or sell NFTs on the website, providing them with a part of the day’s total sales through the site’s indigenous token LOOKS.
Clients can deceive the system by selling NFTs to and from, among their self Ethereum wallets, through fabricated inflated values, targeting to bag more LOOKS reward than they spend on the platform’s 2% market fee and gas fee of Ethereum.
Platform offers WITH(Wrapped Ethereum) rewards to clients for staking LOOKS tokens on the platform, offering more incentives to gather and hold a vast amount of them. Community reward design makes LooksRare distinct from OpenSea, but with trading rewards at their extreme level during the initial 30 days of the platform, some clients are exploiting this system.
LooksRare’s initial trading volume appeared suspicious, and the platform implemented no actions. It retweeted a thread by an investor who stated such acts as “genius.”
Any wallets selling an NFT after acquiring and holding it for less than 30 minutes can be categorized as wash trade.
On top of this, CrytoSlam CEO explains that the organization reviews NFT transactions manually, whichever appears unethical to them. Ultimately, the final step might be automated due to the refined algorithm of platform.