FacebookTwitterLinkedInTelegramCopy LinkEmail
EthereumNFTs and Metaverse

$635 Million Worth of Ethereum NFTs Fall Under Suspicion

$635 Million Worth of Ethereum NFTs Fall Under Suspicion

According to data from CryptoSlam, approximately 60% of NFT sales on Ethereum in April have been identified as wash trades, with the token farming system on the Blur marketplace encouraging this activity.

In April, over $635 million worth of Ethereum NFT sales were flagged as wash trades, accounting for nearly 60% of all NFT trades on the blockchain during that month, as reported by CryptoSlam.

CryptoSlam’s recent findings also exposed instances of wash trading on various other blockchains, including Solana, Binance, Polygon, Cardano, Flow, and Arbitrum. These activities were previously largely unknown.

Wash trades refer to the deceptive act of an investor playing the roles of both the buyer and seller in a financial instrument transaction, intending to distort trading volume and potentially manipulate prices. It is important to note that such practices are considered illegal within the securities markets of the United States.

Within the Ethereum NFT ecosystem, the primary driving force behind wash trades is the point farming system employed by the Blur marketplace. Traders on the Blur platform are incentivized to partake in large-scale wash sales to maximize their accumulation of points.

These points are then rewarded through the utility token associated with Blur, known as $BLUR. As a result of this system, approximately $3.4 billion worth of NFT trades have been identified as wash sales in the current year.


READ MORE: The Bitcoin Rich List: Uncovering the Top BTC Owners


In March, wash trades accounted for over $1.1 billion or 66% of all NFT sales on Ethereum. The highest recorded day for wash trading occurred on February 20, shortly after the launch of $BLUR.

On that day, traders aggressively farmed points to earn more $BLUR token rewards, causing over 85% of the day’s sales volume, valued at $295 million, to be flagged as wash trades.

The months of February, March, and April have seen significant instances of wash trading on Ethereum, totaling over $3.135 billion in combined value. The peak of wash trading occurred on March 4, 2023, with daily NFT wash trade transactions reaching 49,806. In comparison, on April 16, 2022, the apex of $LOOKS token farming, there were only 2,743 daily wash trade transactions.

In early 2022, traders were farming $LOOKS tokens on the LooksRare marketplace, similar to the $BLUR token farming in 2023.

CryptoSlam’s data has revealed that $LOOKS farming was responsible for approximately $819 million in wash sales on January 19, 2022, marking the most successful day for wash trading to date. In January and February 2022 combined, over $18 billion in wash trades were identified.

Among the various blockchains, Ethereum’s Terraforms and Meebits emerge as the top two collections associated with wash trading. Noteworthy trades within these collections include Terraforms #4206, which has been involved in wash trading with a total value of 86,905.12 ETH ($242.97 million), and Meebit #13824, which has been wash traded for 29,453.9 ETH ($99.4 million).

While the numbers indicate a significant increase in the number of transactions involving wash trading, the value of these sales has declined compared to the previous year, as per data from CryptoSlam.$635 Million Worth of Ethereum NFTs Fall Under Suspicion”


READ MORE: Cryptocurrency Controversy: Binance Faces DOJ Investigation


CryptoSlam’s research has revealed a total wash trade sales volume of $31 billion on the Ethereum blockchain, representing approximately 41% of the total sales of $74 billion on the platform. In contrast, the other top 10 NFT blockchains have experienced significantly smaller wash trade volumes, amounting to around $330 million, which accounts for a relatively minor portion of their overall sales.

It is anticipated that the prevalence of wash trading will persist and potentially increase on Ethereum. Traders are expected to leverage liquidity-providing tools like BenDAO, NFTfi, and Blur’s new Blend lending protocol to pursue additional platform rewards in Blur’s Season 2.

Author
Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.

Learn more about crypto and blockchain technology.

Glossary