Those who deal in blockchain-based assets are constantly on the lookout for any signs of market manipulation. Now, according to research compiled by stats wizard, Hildobby, using Dune Analytics data, almost half of NFT sales volume recorded on the Ethereum blockchain has resulted from wash trading.
‘Wash Trading’, essentially, refers to a situation where the buyer and seller of an NFT work together to manipulate the market. Therefore, allowing those involved to boost the trading volume of a particular NFT or collection. Naturally, this is an issue of concern in the NFT market given that many buyers base their purchase decisions on existing trading volume.
“Well-intentioned schemes to incentivize usage quickly emerged as a way to pull ahead in the race to attract this volume and become the most successful marketplace,” the report noted.
Based on the figures from the report, this is a major problem on the Ethereum network as 58% of its NFT trading for 2022 and 80% of January alone was wash trading. With this dubious sales strategy accounting for almost 45% of all NFT trading on the network since records began. However, it was noted that wash trades are typically done at high amounts, which causes them to be overrepresented in these statistics.
According to the latest statistics, wash trading is not uniform across the board as marketplaces like LooksRare and X2Y2 were found to be particularly rife with these activities. Mostly due to the rewards issued to users as a way to incentivize trading.
Source NFT Plazas
