Ethereum had over $635 million in NFT wash trades in April, CryptoSlam reveals
Photo: Shubham Dhage/Unsplash
Over US$635 million of Ethereum’s non-fungible token sales in April were wash trades, which accounted for nearly 60% of all NFT trades on the blockchain for the month, according to new data from CryptoSlam,
The new data also revealed wash trading activities at Solana, Binance, Polygon, Cardano, Flow and Arbitrum, which had been largely unknown until now. According to CryptoSlam, wash trades are transactions that are made without the intention of taking a genuine position in the market.
The Blur marketplace’s spot farming is the primary driver of Ethereum NFT wash trades, leading to $3.4 billion worth of NFT trades being flagged as wash sales so far this year. Blur traders’ bids and listings are incentivized by the marketplace’s points – the platform’s loyalty system – which fuels some traders’ addiction to bulk wash sales to maximize points, which are then rewarded in the form of Blur’s utility token, $BLUR.
In March, over $1.1 billion, or 66% of all NFT sales on Ethereum, were wash trades. However, the single highest wash trading day occurred on February 20, days after the launch of $BLUR. Traders aggressively farmed points to earn more $BLUR token rewards, resulting in over 85% of the day’s sales volume, valued at USD 295 million, being flagged as wash trades.
February, March and April stand out as high points for wash trading on Ethereum, with a combined value of over $3.135 billion. At the peak of the wash trade on March 4, 2023, daily NFT wash trade transactions on Ethereum reached 49,806 compared to 2,743 on April 16, 2022, the peak of $LOOKS token farming.
Similar to $BLUR token farming in 2023, in early 2022 traders farmed $LOOKS tokens on the then new LooksRare marketplace. CryptoSlam’s data has revealed $LOOKS farming as the driving factor behind the $819 million wash sale that took place on January 19, 2022, the most successful wash trade day ever. Over USD 18 billion in laundry deals were flagged in January and February 2022.
Although the value of laundromat sales has declined since last year, the number of transactions has grown nearly 20-fold, CryptoSlam data shows.
The top two wash-traded pools across all blockchains are Ethereum’s Terraforms and Meebits, with $11.5 billion and $9 billion in flagged trades, respectively. Standout NFTs from these collections include Terraforms #4206, which has been laundered for 86,905.12 ETH ($242.97 million), and Meebit #13824 for 29,453.9 ETH ($99.4 million).
To highlight the scale of traders’ practices, CryptoSlam has uncovered $31 billion in all-time wash trading sales volume on Ethereum, a total of 41% of the blockchain’s $74 billion in sales. An additional $330 million in wash trades are reflected in the other top 10 NFT blockchains, making up a much smaller percentage of their all-time sales.
Wash trading is expected to continue and possibly increase on Ethereum as traders use liquidity-providing tools such as BenDAO, NFTfi and Blur’s new Mixture lending protocol to pursue multiple platform rewards in Blur’s Season 2.
1/ Introducing Blend: Peer-to-Peer Perpetual Lending Protocol for NFTs.
Built in collaboration with @danrobinson and @verføringer11 on @paradigmBlend enables 10x higher return opportunities than current DeFi protocols and unlocks greater liquidity for NFTs.
This is how you do it 👇 pic.twitter.com/uOFC6i3LSq
— Blur (@blur_io) 1 May 2023
While Ethereum owns the bulk of the global wash sale due to $LOOKS and $BLUR token farming, it is expected to continue on other chains with an increasing number of marketplaces adopting reward incentives.
