THE CRYPTOCURRENCY market has been red since the New Year, but it’s been a different tale for non-fungible tokens (NFTs).
The market rose to an estimated $23billion in total trading volume over the course of 2021, compared to just $94.9million in 2020 according to DappRadar.
But the market is showing no sign of stopping there.
NFT trading volume soared past the $4billion mark in December 2021, but this has more than tripled in January 2022 reaching nearly $15billion.
OpenSea recorded more than $5billion in sales in January from Ethereum and Polygon sales, breaking the previous record from August 2021 of $3.4billion.
Public blockchain data collected by Dune Analytics showed OpenSea had more than $4.95billion in Ethereum transactions in January and over $79million on Polygon, a scaling solution for Ethereum.
On January 31, 2022, OpenSea had its biggest day in months with $233 million worth of NFTs changing hands.
OpenSea’s previous all-time-high was in August 2021 after the NFT market exploded with the platform topping $3.4billion in trading volume
But a huge amount of credit for the uptick in NFT sales goes to LooksRare, a new NFT platform being labelled as the decentralised competitor to OpenSea.
LooksRare reported trading volumes of over $9.5billion in January 2022.
On January 10, 2022, the day the platform launchedd, LooksRare raked in $100million in sales within the first 24 hours of going live.
At the time of the launch, OpenSea was under intense criticism after a bug, which let hackers buy NFTs at lower prices than their market value, plagued the platform helping bring in a flurry of new customers.
But although the drop off for cryptocurrencies, especially Ethereum, made it cheaper to buy NFTs, it has been reported some traders have manipulated the market by selling NFTs for huge prices back and forth between their controlled wallets — a form of wash trading.
Wash trading is essentially when a seller buys their own product – therefore creating artificial demand and manipulating the product’s price.
NFT analytics firm CryptoSlam reported it has identified more than $8.3billion worth of wash trading from LooksRare – 87 per cent of the platforms January revenue.
This is illegal in most countries, however, as the cryptocurrency market is not regulated people are getting away with it.
Wash trading is made more attractive on LooksRare as it’s a community-owned marketplace that shares profits with traders.
The ‘wash traders’ profit by receiving ‘trading rewards’ from LooksRare in the form of the platform’s native cryptocurrency ‘LOOKS’.
‘LOOKS’ can be traded for Ethereum.
The LooksRare marketplace documentation shows NFT royalty payments, trading platform fees, and cryptocurrency gas fees make wash trading unprofitable, however, people have found ways around this by using NFTs with no royalty fees attached.
Collections such as Meebits and Terraforms, which trade without royalties due to the creators, have generated billions of artificially inflated trading volume on LooksRare.
The platforms average trade volume per transaction was $415,000 in January.
Meanwhile, on Solana, marketplace Magic Eden saw $531 million worth of trading according to DappRadar’s figures, up nearly 89 per cent in December.
The Bored Ape Yacht Club was the biggest winner among NFT collections in January 2022.
The collection generated $311 million worth of secondary trading sales, a 101 per cent increase in December.
Secondary sales of the Mutant Ape Yacht Club and Bored Ape Kennel Club collections also soared and the combined total generated over $600 million.
All three projects have passed $2billion in secondary sales to date.
Azuki – a new NFT project – surpassed $249million in secondary trading volume since launching in January, and the World of Women project soared by more than 1,100 per cent to over $69.5 million.
Dapper Labs had a good start to the year as well, with its NBA Top Shot project generating over $59million in secondary sales – a 52 per cent increase from December.
It wasn’t a great month for all high-profile NFT projects though and CryptoPunks noted its lowest month of trading volume since June 2021, with $124.2million – a nearly 28 per cent drop from December.
Axie Infinity – the most popular Ethereum-based play-to-earn game – also saw a decline in NFT trading volume, dropping to about $126.5 million in January – a 58 per cent drop from December.
