Will Wash Trading NFT Deteriorate LooksRare ?

Solana Network Overtakes Ethereum NFT Volume by a Minimal Margin
  • LooksRare strikes up amazingly upon its recent launch. 
  • LooksRare overtakes OpenSea on the second day itself. 
  • Wash trading owes to be the booster as well as the killing factor for LooksRare.

We all know very well that the Non Fungible token (NFT) is the proven future. Even many analysts term that the NFT industry will overtake the crypto industry in time. With such a robust attribute from the crypto industry as well as the blockchain industry, it has comparatively very minimal marketplace platforms. Truly, the number of NFT trading platforms are only 7% of that of the number of crypto exchanges present. 

In such terms, the currently known overall kingmaker of the NFT industry is obviously the OpenSea NFT marketplace. With tons and tons of new NFTs emerging every day, the OpenSea NFT trading platform surges up exponentially, keeping the number one position. 

However, a new competitor has emerged just a few days back and is currently taking over the NFT market from OpenSea. The LooksRare NFT trading platform has become an instant hit, overtaking OpenSea on its very second day of launch. 

What is LooksRare?

Very much like the OpenSea NFT trading platform, LooksRare is also a NFT marketplace. Yet, LooksRare is purely based upon community driven focus, rather than being for a single entity. 

LooksRare was launched only on January 10, 2022. Besides, LooksRare terms itself as the first NFT trading platform to be completely community driven. Moreover, the platform tends to reward the traders and users carrying out the trade activities upon the platform. This NFT trading platform is completely built up on the Ethereum (ETH) blockchain. All NFTs based on ETH blockchain could be traded upon the LooksRare. 

One of the most astonishing factors, making the LooksRare a direct and solid opponent for the OpenSea, is it’s minimal trade fees. Accordingly, the overall trade fees for the LooksRare is just 2%, and that for the private sales is completely zero. 

On the other hand, for OpenSea, either it be the general sales or the private sales, the fees are 2.5%. This is exactly about 20% more than that of LooksRare. Besides all this, the LOOKS is the native token for the LooksRare platform, and the whole platform functions only with the LOOKS token. 

Apart from all this, the complete fees gained are being distributed to all the stakeholders of the LOOKS. In such terms, the more trading the platform sees, higher will be the  rewards gained for the LOOKS holders. In spite of this, LOOKS has been performing remarkably. Currently, LOOKS is being traded for $5.51, with the graphs surging upto 17.64% effortlessly.

The Triumph of LooksRare

As said before, LooksRare became an instant overnight hit upon the crypto and NFT industry. Notably, just on the second day from its launch, LooksRare trading volume overtook that of the OpenSea, by more than double the amount. Besides, by the end of January 10, 2022 the overall daily volume surpassed a whopping $394 million!

On the other hand, the overall trading managed to be constantly more than twice that of the OpenSea. With such statistics, the LooksRare overtook OpenSea on the second day itself straight from its launch till date. On January 20, the overall traded volume reached highs of more than $800 million. 

The Suspicion of Wash Trading

Giving out mindblowing trade volumes, analysts started to take a keen look upon LooksRare. Upon further investigations it has been found that despite such profuse high trade volumes, the unique users upon LooksRare amounted to just 2% to 3% of that of the OpenSea users. 

However, the trade volume amounts were more than 4 times that of the OpenSea. This strikes the truth that ‘Wash Trading’ has been actively being the reason behind LooksRare’s epic trade volumes. 

What Actually is ‘Wash Trading’ ? 

On the first terms, practicing wash trading is actually illegal, and those practicing it are subject to legal action taken on them. Wash trading is the practice of continuous and repeated buying and selling of the same asset constantly by the same trader. This in turn directly makes the trade volume spike up artificially. As a result, the market price for the asset multiplies and surges up. 

The wash trading was initially practiced upon traditional finance assets and stocks. And so, in 1936, wash trading was declared illegal in the U.S. In spite of this, all over the world, all sorts of wash trading is illegal. Accordingly, exchanges and stock platforms make sure that no such trading takes place by continuous monitoring. 

However, this cannot be done for the crypto and all its attributes sadly. This is due to the fact that most of the crypto and crypto based industries are not regulated properly enough. Upon this, the NFT marketplace such as LooksRare has large holes enough for wash traders to indulge fulfillingly. 

Will LooksRare Vanish Due to Wash Trading?

As all lights are now on LooksRare, amidst profuse wash trading taking place upon its platform, many conclude that LooksRare will deteriorate slowly due to it. When questioned upon the wash trading issue, the team from LooksRare, denies the fact and states that their platform does not allow such mishaps. Moreover, they term that their platform is well secured and are on continuous monitoring protocols which will not allow such wash trading. 

Furthermore, by such abrupt denial from LooksRare, now the industry is quite skeptical that maybe LooksRare is directly encouraging such practices, as it kind of evaluates the platform to much extent. In addition to all this, the rewarding prospects by the LooksRare upon the trades done is the main vital reason for such profuse wash trading to take place. With more rewards upon each sale, traders ought to continue this, increasing their rewards and earning through it. 

However, all this may not be quite fine, and soon LooksRare has to find a solution to stop this. In other aspects, to the least the platform has to acknowledge the issue either way. Until or unless LooksRare takes certain earnest actions, the glittering period will be short-lived for the newcomer!

A Project Engineer by profession, a writer by passion. Especially into the critics and skeptics on cryptocurrency. His fascination towards the crypto world and his personal experience on it has made him a writer with a taste.