What is NFT wash trading?
Wash trading is when a user trades NFTs between multiple wallets that they own.
Why do people wash trade?
Because some NFT marketplaces like LooksRare and x2y2 reward users with their native token for trading on them. If you trade against yourself you can earn a bunch of valuable tokens without losing your NFTs.
Another reason why somebody might start a wash trading campaign is to make a collection seem more successful than it actually is.
Dune wizard extraordinaire Hildobby released some industry-defining research on the state of wash trading today. Here are 5 key insights from his results 👇
1/ 58% ($30B) of the NFT trading volume in 2022 can be attributed to wash trading.
2/ Despite making up such a huge % of trading volume, wash trades only accounted for 1.7% of NFT transactions in 2022 (417k unique transitions).
Wash trading is characterised by a smaller number of high-value transactions.
3/ LooksRare has the most wash trading activity on any NFT marketplace.
In 2022, 98% ($26B) of LooksRare trading volume has been wash trading.
4/ x2y2 was the second wash trading worst offender.
In 2022, 81% ($3.2B) of x2y2 trading volume has been wash trading.
5/ OpenSea has relatively low wash trading activity.
In 2022, 2.46% ($485) of OpenSea trading volume has been wash trading.
The vast majority of OpenSea trading has been organic because there aren't any token incentives to farm
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