NFT wash trading is growing! However, platforms are starting to take notice and crackdown.
Wash trading in the NFT sector grows
“By using Chainalysis software, we can see when a person buys a token using funds from the same person who sold them that very token. This is the definition of wash trading.” “Overall, we found that it’s not profitable to wash trade NFTs because you end up paying a lot in gas fees. Many wash traders came out negative due to the amount spent on gas versus the amount generated from their sales.”
Alex Salnikov, co-founder and head of product at NFT marketplace Rarible, told Cointelegraph that in terms of what the platform has seen in the broader NFT ecosystem, there tends to be a pattern of users wash trading on platforms that provide incentive rewards for trading. To Salnikov’s point, the LooksRare platform planned to, which could have added to the amount of wash trading on the platform.
While Rarible has taken a number of steps to ensure user safety across the platform, Grauer mentioned that Dapper Labs, a blockchain platform that offers NFT-based products and decentralized apps, is working closely with Chainalysis to monitor wash trading and other illicit activities.its new “NFT Security Group.” According to the post, members will be expected to share and learn about vulnerability reports that have not been publicly announced in order to fix problems before users are impacted.
However, Weinberg remarked that NFTs are still a grey area when it comes to regulations. “Regulators haven’t even been able to give us clear guidance on DeFi [decentralized finance], so I think they’re waiting to see how it plays out,” he said, adding that the biggest challenge currently facing regulators is the fact that art is not a regulated environment:
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