NFT Wash Trading on Marketplaces (2023)

In February 2023, top 6 marketplace NFT wash trade volume reached $0.58 billion. NFT wash trading rose 126.0% from $0.25 billion the month before.

NFT wash trading followed NFT marketplace trade volume’s four-month recovery to $1.89 billion last month. Yet, NFT wash trading is 5.0% of the preceding NFT bull market’s $11.56 billion in January 2022.

Certain NFT marketplaces have wash trading. In February 2023, X2Y2, Blur, and LooksRare supplied the most NFT wash trade volume: $0.28 billion (49.7%), $0.15 billion (27.7%), and $0.08 billion (15.1%).

These marketplaces pushed users to trade more by offering rewards. $X2Y2 trading incentives began in May 2022. X2Y2 now accounts for almost 40% of monthly NFT wash trading. In July 2022, X2Y2 wash trading reached $0.64 billion.

From January to April 2022, LooksRare controlled 90% of NFT wash trading. Although starting its $LOOKS trading rewards late in January, LooksRare generated $11.33 billion in NFT wash trading in January due to the NFT rally and liquidity. Wash trading on LooksRare has varied between 15-50% of marketplace volumes since X2Y2’s rewards program.

After introducing the $BLUR airdrop last month, Blur saw wash trading treble. OpenSea washed $42.57 million, Magic Eden $0.59 million, and CryptoPunks $0 million.

NFT wash trading comprised 23.4% of unadjusted trade volume across the 6 largest marketplaces in February 2023. Since November 2022, NFT wash trade volume has steadied at these levels, up from 67.1% at the start of last year.

Yet, in February 2023, 85.0% and 80.8% of unadjusted trading volumes on X2Y2 and LooksRare were wash trades. While NFT marketplace token values plummeted, wash trading only dropped to 67.6% for X2Y2 and 68.3% for LooksRare since their trading rewards started.

Last month, 12.9% of unadjusted trading volume on Blur, 5.8% on OpenSea, and 1.4% on Magic Eden constituted NFT wash trading. If new marketplace leader Blur increases token airdrops to boost interest, NFT wash trading may be affected.

NFT wash trading involves purchasing and selling the same NFT(s) to manipulate trading volume and pricing. Individuals or groups can achieve this. Misleading buyers and sellers, tax loss harvesting, and incentive token farming are among the goals.

Due to lax restrictions, wash trading is common in NFT and crypto markets, but banned in traditional capital markets. NFT wash trades can be discovered by an address buying the same NFT multiple times in a few hours or a day.

From January 1, 2022 to February 28, 2023, Footprint Analytics data investigated wash trade volume on the top 6 NFT platforms. Blur, OpenSea, Magic Eden, x2y2, CryptoPunks, and LooksRare top the NFT marketplaces.