The “Meebit” digital characters were among dozens of NFTs on the LooksRare marketplace that were sold among a small number of wallets in quick succession for exceptionally high prices last month, according to a Reuters review of publicly available blockchain ledgers.
The activity has helped LooksRare generate at least $10.8 billion in turnover since it launched in early January, according to data provided by market tracker DappRadar.
The 27 most expensive sales recorded in the NFTs sector in January, totaling $1.3 billion, came from just two wallets with transactions by LooksRare, according to DappRadar data as of Jan. $2.3 billion came from 16 portfolios trading on the platform.
“There’s a lot of activity going on between two wallets — let’s say wallet one sells to wallet two and then wallet two resells,” said Modesta Masoit, director of finance and research at DappRadar. “It is very likely that this is not a real demand, that these operations are not organic.”
LooksRare describes itself as “the community’s first NFT marketplace with rewards for participating,” referring to its rewards system, which includes awarding tokens to day traders based on the proportion of overall sales volumes they were traded for. responsible.
These tokens, called LOOKS, can be used in a process called “staking” to claim a slice of the platform’s revenue, earned by a 2% fee charged on all trades, according to a LooksRare spokesperson.
Asked about the transactions reviewed by Reuters and whether these operations artificially increased trading volumes, the spokesman said such practices were highly risky as traders would have to pay transaction costs that were not guaranteed to be recovered.
John Egan, chief executive of L’Atelier, an independent subsidiary of BNP Paribas that researches new technologies, characterized the LooksRare transactions analyzed by Reuters as “wash trades” that would be banned in markets. such as stocks or debt, because they give a false impression of demand for an asset.
However, these transactions are not illegal in this nascent industry because there are no equivalent rules governing NFTs, two crypto experts told Reuters.
January’s activity saw LooksRare overtake four-year-old market leader OpenSea to become the largest market for NFTs by monthly volume, despite having fewer than 3,500 operators per day, compared to 57,000 to 90,000 in OpenSea, according to data from DappRadar.
Source: CNN Brasil
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