24 February 2023 19:50, UTC
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CryptoSlam has detected at least US$577 million worth of wash traded non-fungible tokens (NFT) related to the up-and-coming marketplace, Blur.io, since the platform started airdropping its native tokens to users on Valentine’s Day, Feb. 14.
According to Scott Hawkins, a data engineer at NFT data tracker CryptoSlam, the detected wash trades displayed suspicious behaviors, such as NFT resales within a short period at prices close to the assets’ initial transactions.
The behavior suggests that some Blur users have been selling NFTs to themselves using different wallets to acquire Blur tokens (BLUR) and accrue points for airdrops.
“There is no restricting mechanism from Blur to prevent this — in fact, it appears that because of no royalties paid, no marketplace fee, there is no disincentive to farm points for airdrops, aside from the rising Ethereum gas fees. What we are finding is that this is artificially propping up sales volume in a very disingenuous way for the entire NFT market,” said Hawkins.
Traders have until April to acquire listing and bidding points on Blur, which keeps track of the top contenders through its airdrop leaderboard. They then receive BLUR via airdrop, which can also be sold at centralized and decentralized cryptocurrency exchanges.
Due to the surge in NFT sales volume that has partially been flagged by CryptoSlam as artificial, Blur recently overtook rival OpenSea’s sales volume, which has been the largest in the industry. The wash trades also raised global sales volume to the highest level since January 2022, creating a false sense of a resurgent NFT market.
Blur did not immediately respond to Forkast’s request for comment.
“All of this is a by-product of [Blur’s] war with OpenSea. This token scheme has artificially distorted real activity in NFTs,” said Hawkins.
Hawkins added that CryptoSlam has been monitoring the anomaly for the past week and spent the last few days updating its wash trade detection algorithm that has been applied retroactively. The data aggregator said its latest update can prevent future wash trades from reflecting in global metrics. CryptoSlam’s algorithms will also flag individual wash trades and activities of suspicious wallets.
“CryptoSlam took similar action in 2022 when LooksRare farming also artificially inflated the markets by adding US$8 billion in wash trades to the global NFT volume. Wash trades were removed to protect NFT investors and give the industry much-needed clarity and trust in the data reported on CryptoSlam,” Yehudah Petscher, NFT strategist at CryptoSlam, said.
See related article: Wash trading in NFT marketplace LooksRare can inflate prices: analysts