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Most NFT trading volume comes from wash trading

Most NFT trading volume comes from wash trading

Dune, a crypto-analytics company, says that most non-fungible token (NFT) trading was done in a way called “wash trading.” The high trading volume of each NFT led investors to buy these non-fungible tokens.

Fake NFT trading volume?

It was found that the NFT marketplace used high trading volume as a way to get investors to buy different NFT artifacts through the wash trading method.

Wash trading is a way to manipulate the crypto space in which artists buy and sell their own art back on the market. They do this to increase the number of trades and the floor price, which makes investors more likely to buy their art because of the high number of trades.

Investors who wanted to make money from these non-fungible digital assets were thought to be fooled by this strategy.

When investors see that an NFT has a lot of trades, they want to buy it in the hopes that more people will buy it and the floor price will go up, giving them a huge return on their money.

Sometimes, these traders or producers of NFTs open many accounts on the site and begin trading in these NFTs with their own cash, buying and selling at varying prices to increase sales and trading volumes. As investors strive for faster gains and profits, their No FOMO (fear of missing out) and playing it safe tendencies are weakened.

Wash ETH and SOL Network Trading

This approach, known as wash trading, gained a great deal of interest in 2019, as NFT inventors viewed it as a dangerous but inventive means of gaining traction and generating enormous returns.

Among other things, some designers go to considerable measures to tempt investors with token prizes for owning an NFT.

The Dune company calculated that the great majority of this wash trading occurred on the Ethereum network, and that these traders occasionally lost money due to excessive gas expenses.

However, this did not prevent the strategy from being used; it was quickly implemented on the Solana blockchain, where NFTs were gaining traction and exceeding ETH.

This analytics platform mentioned several NFT platforms whose activities and trades are fueled by wash trading, one of which being the LuxRay platform.

About Tina

Tina concentrates on all matters related to NFT and Web3. Tina uses social media to spot NFT trends and report unique news.

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