Non-Fungible Tokens (NFTs) have been all the rage lately, with people selling them for millions of dollars — but how many of these sales are legit? According to a recent report from CryptoSlam, NFTs are being highly affected by wash trading, which means the actual number of true collectors is much lower than we might have thought.
Wash trading is a practice where someone buys and sells an asset with themselves or an associate in order to generate misleading market activity. It makes it hard to get an exact value of NFTs, as many transactions are not really ‘real’ sales, but instead are just wash trades being performed.
CryptoSlam has recently unveiled some new tools that allow traders to both track and distinguish between organic NFT sales and wash trades. These new metrics are available for most top blockchains, and can help unravel the true value of a collection.
A breakdown is now available for each blockchain and can be found on cryptoslam.io. It will show the total USD value of sales and wash sales, total number of transactions, and wash percentage for each blockchain over 24 hours, seven days, 30 days, and for the all-time period. Traders can now use this fully transparent data to determine the most accurate value of NFTs, by separating the real transactions from the artificial ones.
One noteworthy finding of the report was that Ethereum, the first and still the biggest blockchain for NFTs, has a long history of wash trading. Although Ethereum’s wash trading isn’t really the main story here, as most other major chains also have a small percentage of their volume comprised of wash trades. That said, NFT collectors and investors can use these new tools as a way to help drill down into each blockchain’s sales figures, and uncover an accurate value of NFT collections.
While wash trading is still likely to happen in the NFT market, with these new tools in place, it will be easier to differentiate wash sales from actual sales and enable transparency for buyers. This will help create a much clearer picture of the NFT market value, which has grown to become a multi-billion dollar market for decentralized platforms, game theory, DAOs, and even wash trades.
According to https://finance.yahoo.com/news/tidal-wave-wash-sales-makes-213000416.html
The material in this article is written on the basis of another article.