NFT Market Cools As Trading On Ethereum And Solana Dips

NFT Market Cools As Trading On Ethereum And Solana Dips

In short

  • Overall NFT transaction volume fell in February after a record January.
  • Ethereum trading fell 33%, according to DappRadar, while Flow and Avalanche saw an increase in NFT volume in February.

Next to a record month of NFT transaction volume for the market leader OpenSea in January, trading volume across the entire NFT market cooled in February, based on data shared by multiple sources.

OpenSea recorded nearly $3.65 billion in trading volume in February between NFT sales on Ethereum and Polygonthis last one side chain scaling solution for Ethereum that reduces transaction fees. These data come from Dune analysiswhich shows a decline of around 27% month-over-month in trading volume on the platform.

Although the market saw three separate days with over $200 million in Ethereum NFT trading volume, the daily volume chart suggests a general downward trend over the month. Even so, it was OpenSea’s second-best month after January in terms of total NFT trading volume.

Separate data provided to Decrypt by blockchain analytics company DappRadar shows that the broader NFT market produced $4.02 billion of what it calls “organic” NFT trading volume in February. That’s down 28% from DappRadar’s previous mark from January, according to a rep.

DappRadar saw a 33% drop in Ethereum trading volume across the entire NFT market, as well as a nearly 61% drop across Solanaa 38% drop on play-to-win Axie Infinityof the Ronin channel, and a 55% drop on Tezos.

However, not all NFT blockchain networks saw declines in February. Dapper Laboratories Stream Blockchain jumped almost 83% in February thanks to the recent launch of UFC Strikethe increasing deployment of the closed beta version of NFL all dayand the rise of the BloctoBay marketplace.

Meanwhile, avalanche NFT transaction volume increased 20% in February, fueled largely by the Crabada NFT game. Flow and Avalanche currently generate a small fraction of the volume of NFT transactions seen on Ethereum, the main blockchain for NFTs, but their respective shares increased in February.

And while the overall volume of transactions in the NFT market fell in February, according to data from DappRadar, the company saw an 8% increase in the total number of NFT traders and a 2% increase in the total number of NFTs sold. on all protocols.

Pedro Herrera, principal blockchain analyst at DappRadar, described February as a “pretty quiet month for NFTs” on the surface. But with Axie Infinity exceeds $4 billion in lifelong NFT trading, alternative NFT protocols on the rise, and new projects like Azuki and Clone X beat worshipers like CryptoPunks and the Bored Ape Yacht Club in monthly volume, it remains optimistic.

“That, to me, indicates that the space is slowly but surely diversifying and maturing,” he said. Decrypt.

A look at LooksRare

What about LooksRare then? AppearanceRare launched in January as a top rival to OpenSea, with a new token rewards model. It not only provides users with ETH rewards for trading in the market but also for staking their LOOKS rewards on the platform.

Trading on LooksRare surged almost immediately after launch, posting towering numbers that outpaced the wider market by a significant margin. But that’s because some users were manipulate the rewards model by selling NFTs back and forth between their own controlled wallets at artificially inflated sums – up to $50 million worth of ETH each. It is effectively a form of washing trade.

At the end of January, the analysis company CryptoSlam felt that LooksRare had generated over $8.3 billion of the NFT wash trade in just over two weeks. Compared to data on the total volume of transactions of Dune analysisthis mark suggested that approximately 87% of the trading volume on LooksRare at that time had been artificial market manipulation.

However, trading volume on LooksRare has fallen sharply since then, after the site’s rewards rate was cut 30 days after the site launched. After consistently registering $400 million or more per day in trading volume at the start of February, LooksRare has been below $100 million per day since February 22, according to data from Dune Analytics.

DappRadar reports that LooksRare amassed over $6.5 billion in total NFT trading volume in February, but does not count any of that towards its “organic” trading volume figure for the rest of the NFT market.

A representative from DappRadar said that while some LooksRare NFT exchanges appear to be legit and not stimulated to generate additional rewards, the company is still working on a process to “automatically and accurately separate” the wash trading data from the rest.

CryptoSlam founder and CEO Randy Wasinger said Decrypt that his team is still finalizing the analysis of the February data, but that he had over $6 billion in transactions on LooksRare and that “over 98%” of the sales volume comes from “sales of known washing”.

As before, suspected washout transactions are heavily concentrated in NFT collections that do not include additional creator royalties, such as Meebits and Terraforms. CryptoSlam’s process for identifying NFT scrubbing operations includes both automatic and manual identification of suspicious transactions.

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