March 1, 2023
By Murtuza Merchant
The NFT market has been rocked by the discovery of wash-traded non-fungible tokens (NFT) worth at least US$577 million on the up-and-coming platform Blur.io.
Data engineer Scott Hawkins from NFT data tracker CryptoSlam said that the wash trades indicated suspicious behavior, including the reselling of NFTs in a short period, which led to an artificial boost in sales volume for the NFT market.
Suspicious Behavior: NFT Resales at Close Prices to Initial Transactions
The absence of royalties and marketplace fees on Blur.io incentivized some users to sell NFTs to themselves using different wallets to earn Blur tokens (BLUR) and accrue points for airdrops.
How Blur.io Users are Farming Points for Airdrops Using Wash Trading
As traders have until April to accumulate listing and bidding points on Blur.io, the platform’s airdrop leaderboard tracks the top contenders who receive BLUR tokens via airdrop that can also be sold on centralized and decentralized exchanges.
Lack of Restricting Mechanism and Disincentives Leading to Artificial Sales Volume
Hawkins noted that the surge in NFT sales volume that boosted Blur.io’s performance had distorted the real activity in NFTs, and the NFT market appeared to have a resurgent false sense.
CryptoSlam’s Latest Update to Prevent Future Wash Trades and Flag Suspicious Activities
CryptoSlam has been monitoring the anomaly for the past week and has updated its wash trade detection algorithm retroactively to prevent future wash trades from reflecting in global metrics.
The data aggregator’s algorithms will also flag individual wash trades and suspicious wallet activities. In 2022, CryptoSlam removed wash trades from the global NFT volume to protect investors and give the industry clarity and trust in the reported data, after LooksRare farming artificially inflated markets by adding US$8 billion in wash trades.
About the author
Murtuza Merchant is a senior journalist and an avid follower of blockchain and cryptocurrencies.