A closer look at the LooksRare NFT platform, which has quickly gone to the top of the NFT marketplace in terms of transaction volume, indicates that the bulk of the activity is people selling tokens to themselves to earn more coins.
In January, during the height of the NFT boom, two anonymous co-founders — Zodd and Guts — launched the platform as a challenger to market leader OpenSea. According to a blog post at the time, the site attempted to attract NFT enthusiasts with new features. Almost all of these ventures have revolved around the Looks token, which is distributed to active platform members as an incentive.
According to NFT tracker CryptoSlam, over $18 billion of the platform’s trading volume, or roughly 95 percent of all activity, might be attributed to what is known as wash sales. When it comes to regulation, transactions are seen as one of the many gray areas in cryptocurrency. In this case, the sales are made to earn new tokens rather than to inflate nonfungible token prices to encourage ignorant buyers. Each transaction’s costs help to fund the marketplace.
LooksRare representatives could not be reached for comment. On a website dedicated to the “LooksRare Team,” only pseudonyms and titles are provided.
At the same time, LooksRare has effectively concealed the cooling demand in the NFT market. Total sales on OpenSea have fallen every month since January, according to Dune Analytics data. According to DappRadar data, the site’s sales volume has plummeted by 67% in the last 30 days. The number of traders has decreased by 23%.
While earning tokens is an important aspect of DeFi, it is a relatively new feature on NFT networks. Rarible was among the first to suggest the idea last year. The fees paid by LooksRare are also passed on to Looks holders. According to some legal experts, the wash trade that drives the LooksRare platform’s activities is illegal.