LooksRare Surpasses OpenSea in Trading Volume Via Wash Trading

The new kid on the block, LooksRare, has done more trading volume than OpenSea since its launch. But is there more to it than meets the eye?

LooksRare’s trading volume exceeded $8B in wash trades today, according to CryptoSlam. On LooksRare, a new NFT marketplace, 2866500 LOOKS tokens are awarded to traders trading certain NFT collections daily. The traders are allocated LOOKS tokens based on the trading volume they undertake on a particular day. LooksRare delivered $20M or more in daily LOOKs rewards since the company’s inception on Jan. 10, 2022. After 30 days, the daily rewards halve, so it remains to be seen whether high trading volumes persist thereafter. After the launch, LooksRare users were selling Meebits and Loot for $50M worth of ETH. The price on OpenSea for a Meebits NFT the week before on OpenSea was 4.1 ETH.

How is wash trading inflating volumes?

Traders can send NFTs between their own ETH wallets and artificially inflate the prices of NFTs. The more sales volume generated, the greater the reward of LOOKS tokens. According to Dune Analytics, LooksRare has seen $9.5B in Ethereum trading volume. By cross-referencing data from Dune Analytics and CryptoSlam, 87% of LooksRare’s trading volume to date was generated through wash trading.

Most of the wash trading comes from NFTs that don’t attract royalty fees when sold on OpenSea or any other secondary marketplace. Meebits generated $4.4B in wash trades, Terraforms $2.9B, Loot $7.05M and CryptoPhunks $251M.

CryptoSlam employs multiple methods to filter out wash trading data from its metrics. Firstly, they wrote an algorithm to detect wash sale transactions. They have removed wash sale transactions from their metric “NFT Collection Rankings By Sales Volume.” They have also added a UI feature to indicate a wash sale for most collections.

LOOKS holders can earn staking rewards

Users that earn LOOKS tokens can stake them to earn rewards in wrapped ETH, with an Annual Percentage Rate of 480.77%. On Jan. 28, 2022, LooksRare distributed WETH 261 ($10.2M). The WETH rewards can be used to offset the 2% flat market transaction fee for trades. On Jan. 28, 2022, LooksRare expanded its trading rewards to include any listed NFT, not just special collections like Meebits.

Terraforms currently sits atop the pile on LooksRare with respect to 24-hour trading volume of 127105.92 ETH, followed by Meebits with 101315.3 ETH. OpenSea still leads the way with regards to total transactions and total users since LooksRare launched.

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