The NFT market has shown some interesting indicators for 2023 as wash trading and token farming practices rise amid a decline in overall trading volumes.
According to a recent DappRadar reportBoad Ape Yacht Club’s (BAYC) 7-day trading volume grew a staggering 1,095% to $21.9 million.
with analysis from crypto slate Based on data and footprint analysis, this article explores the market dynamics that give rise to these phenomena and provides a comprehensive understanding of where the NFT market is headed.
Wash Trading and Blur Point Farming
A closer look at BAYC’s recent surge in trading volume reveals that wash trades contributed significantly to the increase in the metric.
Dapp Radar report Wash trading occurs when traders trade assets against each other to create artificial volumes. This practice has become more common as the Blur Marketplace token drop Season 2 approaches. As a result, NFT market makers are strategically leveraging point collection mechanisms to maximize future profits.
For BAYC, only about 30 unique Bored Apes were involved in these wash trades. However, the majority of these sales came from whale wallets, suggesting there may be transactional activity between their accounts, although further verification is required.
Moreover, as Blur’s NFT peer-to-peer lending protocol emerges, the eligibility of Bored Apes as collateral further enhances its appeal, touching the intersection of point farming and collateralization, the DappRadar report noted.
The NFT market will contract in 2023, with daily trading volume significantly down from its all-time high. While Blur took the largest market share from Opensea, trading volumes fell overall. The report suggests that NFT royalties are becoming less important and that creators are exploring new revenue strategies.
Prime NFT projects have shown resilience in a bear market, but floor prices have fallen. Ethereum’s dominance in the NFT market is also being challenged by network congestion and fees, which could lead users to alternatives such as Polygon.
Navigating the volatile NFT market
Footprint Analytics’ monthly NFT report for April noted that the NFT market experienced a 50% drop in transaction volume by the end of the month, leading to an oversupply of sellers.
Despite some growth in the number of NFT projects, the decline in funding indicates that investors are cautious about pouring money into their sector.
The NFT market landscape is becoming increasingly complex with wash trading and token farming practices on the rise amid declining trading volumes. This evolving market requires investors and traders to be well-informed about the latest developments and trends in order to navigate the market effectively.