LooksRare is one of the most exciting up-and-coming NFT marketplaces, but a recent look into its activities may point toward unethical behaviors on this platform
LooksRare: A strong contender
LooksRare is a scintillating NFT marketplace that has cemented itself as a respectable and strong player in the NFT space. LooksRare might not be as large as OpenSea, but comparing it to OpenSea isn’t fair in the platform’s growth journey.
OpenSea is so extensive that the second-placed NFT marketplace in trading volume doesn’t come close to this powerhouse. That’s enough about OpenSea for now; we’re here to talk about LooksRare, and how this company’s impressive growth numbers might be motivated by unethical and borderline illegal activity.
LooksRare has managed to set itself apart as more than just an OpenSea alternative, and many people that have used this platform have nothing but praise for the team behind the project. For a while, speculations have run rampant as to a large percentage of the trades on this platform being unethical or “wash trades.”
The practice of users selling NFTs to themselves is rife in the NFT space, and this is because one of the significant measures of success for NFT projects is the number of people trading in its tokens. So this has motivated projects and individual owners to prop up the appeal for their assets by trading NFTs between an arrangement of NFT wallets.
Wash Trading is killing the NFT Ecosystem
When we talk about “Wash Trading,” we’re talking about fake trading, and a simple way it occurs is when NFTs are uselessly recycled between users. Wash trades are not real sales, as the trades inflate the actual value of an asset or project, leading to a false sense of growth, accomplishment, value, and more.
Wash trades have been a scourge on the NFT ecosystem, and it gives NFT marketplaces and stakeholders a big headache. Wash trading operations can be as simple as one individual selling NFTs between two or three wallets they control. On the other hand, we have giant wash trading operations involving tens of people and up to thousands of wallets.
The convoluted nature of some wash trading operations makes it harder for NFT marketplaces like LooksRare to control and mitigate wash trading operations on their platforms.
LooksRare: 95% wash trading rate?
According to a report by Chainanalysis, Blockchain security, and analysis firm, in February 2022, they found that 262 users had sold NFTs to their wallet addresses. The report by Chainanalysis also found the telltale signs of money laundering, suggesting that money laundering is taking place through NFTs.
Additionally, CryptoSlam, a data platform, found that about 95% of activity on LooksRare has links to wash trading. The last thing anybody wants right now is the viability of figures about the NFT space to be questioned because it can have dire ramifications for the general NFT ecosystem. So far, LooksRare has facilitated over 106,000 transactions that have seen a total of $22.2 billion in trading volume at the time of writing.