A flurry of more than $1 billion in trades on the Blur NFT marketplace was the result of whales self-flipping their non-fungible tokens to earn reward tokens.
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It's easy to get excited by the headline that NFT sales have soared to $2 billion, their highest level since last spring.
But $1.3 billion of that volume came from Blur, a new NFT marketplace aggregator that shot to the top of the sales heap by offering reward tokens to frequent traders.
The result, perhaps predictably, was that a group of whales with plenty of NFTs and the cash to to flip their holdings decided to game the system, with a few ringing up $1 million worth of the BLUR tokens.
Meaning that as much as half of that $2 billion sales boom may have been a softer form of wash trading — in that the washers weren't looking to drive up the price of their NFTs. Real wash trading is still considered a big problem in the market.
So, is there a real boom in the NFT market?
One answer is that there has been excitement around some projects, most notably Yuga Labs' Dookey Dash, a skill-based NFT game that has been behind a surge of sales.
Washing Away Trades
Another answer from NFT data site CryptoSlam is that it was retroactively discounting more than $500 million in wash trades, and updating its algorithm to account for the phenomenon.
Noting in a Feb. 24 tweet that it did the same thing in 2022 when "when @LooksRare farming created 8 Billion in wash trades," CryptoSlam added:
"These actions are taken to protect NFT investors and ensure the industry has clarity and trust in data reported."
Data from Dune Analytics shows that OpenSea's number of unique traders has gone down in the last couple of months: From the low to mid-40,000s at the beginning of the year to about 26,000 in the first few days of March.
On the other hand, Dune showed Blur's user count spiking with the rewards program in mid-February, with unique users roughly double the previous two months.
When Blur responded by offering to collect those royalties only for NFTs that were minted to block trading on OpenSea, the one-time leader cried uncle.