Following a month of record-breaking NFT trading volume for leading marketplace OpenSea in January, trading volume across the wider NFT market dipped in February, according to data shared from multiple sources.
OpenSea NFT Volume
In February, OpenSea recorded nearly $3.65 billion in trading volume between NFT sales on Ethereum and Polygon, the latter a sidechain scaling solution for Ethereum that reduces transaction fees. This information comes from Dune Analytics, which shows a 27 percent drop in trading volume on the platform month over month.
Despite the fact that the marketplace recorded three days with more than $200 million in Ethereum NFT trading volume, the daily volume chart indicates a general downward trend over the course of the month. Nonetheless, in terms of total NFT trading volume, it was OpenSea’s second-best month to date after January.
Separate data from blockchain analytics firm DappRadar shows that the overall NFT market produced $4.02 billion in “organic” NFT trading volume in February. According to a representative, this is a 28% decrease from DappRadar’s previous January figure.
Drastic Drops
DappRadar recorded a 33% drop in Ethereum trading volume across the entire NFT market, as well as a nearly 61 percent drop in Solana, a 38% drop in Axie Infinity’s Ronin chain, and a 55% drop in Tezos.
However, not every NFT blockchain network experienced a drop in February. The Flow blockchain by Dapper Labs increased by nearly 83 percent in February as a result of the recent launch of UFC Strike, the increasing closed beta rollout of NFL All Day, and the rise of the BloctoBay marketplace.
Meanwhile, Avalanche NFT trading volume increased by 20% in February, thanks in large part to the Crabada NFT game. Flow and Avalanche currently account for a small portion of NFT trading volume on Ethereum, the leading blockchain for NFTs, but their respective shares increased in February.
While overall NFT market trading volume fell in February, according to DappRadar’s data, the firm saw an 8% increase in total NFT traders and a 2% increase in total NFTs sold across protocols.
On the surface, February was a “pretty placid month for NFTs,” according to DappRadar’s senior blockchain analyst. However, with Axie Infinity surpassing $4 billion in lifetime NFT trading, alternative NFT protocols on the rise, and newer projects like Azuki and Clone X outperforming stalwarts like CryptoPunks and the Bored Ape Yacht Club in monthly volume, he remains upbeat.
An Eye on LooksRare “Wash Trading”
LooksRare debuted in January as a significant competitor to OpenSea, complete with a novel token rewards model. It rewards users with ETH not only for trading on the marketplace, but also for staking their LOOKS rewards on the platform.
Trading on LooksRare skyrocketed almost immediately after its launch, outperforming the broader market by a wide margin. However, this was due to some users manipulating the rewards model by selling NFTs back and forth between their own controlled wallets at artificially inflated prices—as much as $50 million in ETH per transaction. It’s essentially a type of wash trading.
LooksRare generated more than $8.3 billion in NFT wash trading in just over two weeks, according to analytics firm CryptoSlam’s January report. When compared to total trading volume data from Dune Analytics, that mark indicated that approximately 87 percent of trading volume on LooksRare at the time had been manipulated artificially.
However, trading volume on LooksRare has dropped dramatically since then, following a reduction in the site’s rewards rate 30 days after its launch. According to Dune Analytics, LooksRare’s daily trading volume has been below $100 million since February 22, after consistently registering $400 million or more per day in early February.
LooksRare amassed more than $6.5 billion in total NFT trading volume in February, according to DappRadar, but does not include any of that in its figure for “organic” trading volume for the rest of the NFT market.
Final thoughts
While some LooksRare NFT trading appears to be legitimate and not boosted to yield extra rewards, a DappRadar representative stated that the company is still working on a process to “automatically and accurately separate” wash trading data from the rest.
Randy Wasinger, the founder CryptoSlam, stated that his team is still finalizing data analysis from February, but that it registered more than $6 billion in trades on LooksRare—and that “more than 98 percent” of the sales volume comes from “known wash sales.”
As previously stated, the suspected wash trades are heavily concentrated in NFT collections that do not charge a creator royalty fee, such as Terraforms and Meebits. The CryptoSlam process for detecting NFT wash trades includes both automatic and manual detection of suspicious transactions.
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