According to data from DappRadar, the NFT market saw a surge in trading volume, reaching $2.04 billion in February, up 117% from the previous month. However, the surge appears to be largely driven by Blur, an emergent NFT marketplace that has been employing a controversial incentives scheme to reward users for trading on its platform.
The platform has fueled its rapid rise to dominance by financially rewarding loyal users for refraining from trading on any other platform and for trading as many high-value NFTs as possible.
Debate over the legitimacy of Blur’s trading volume
While Blur’s trading volume jumped to over $1.13 billion in February, the majority of that volume was generated by a small number of whales flipping NFTs back and forth to accumulate BLUR tokens through the company’s incentives scheme.
However, whether or not to count this trading as legitimate volume is a fickle question that is now dominating the NFT ecosystem. Cryptoslam, a leading platform for tracking NFT sales, announced that it would remove $577 million worth of Blur trades from its data due to “market manipulation.”
DappRadar counts Blur’s trading volume as legitimate, for now
DappRadar, on the other hand, has decided to count Blur’s trading volume as legitimate, at least for now. The firm’s Head of Research, Pedro Herrera, explained that due to the bidding logic used [by Blur], most trades performed by Blur farmers are bypassing [wash trading] logic. They’re currently looking into this, but they won’t be flagging all Blur sales as wash trades.
Wash trading is typically defined as the phenomenon of traders selling NFTs back and forth between their own wallets, often at inflated prices, to artificially inflate the prestige or market value of those assets. In the past, similar efforts to game incentives programs offered by NFT marketplaces, like LooksRare, have also been labeled as wash trading.