OpenSea, the highest-volume NFT marketplace, is facing strong competition from decentralized platform LooksRare, CoinDesk reported. Data of Dune Analytics shows that the new NFT marketplace hosted trading volume of $105 million just one day after being launched. It generated the equivalent of $2 million in ether in platform fees to be distributed to stakers of its LOOKS token in the coming hours.
OpenSea registered volume of $169M on Monday
OpenSea, the dominant market player, registered $169 million in volume on Monday. It was going neck to neck with LooksRare yesterday, also with sales of $105 million. According to insiders, the new entrant has staying power, at least temporarily.
A LOOKS airdrop for $3,500 on average has been claimed by more than 75,000 Ethereum addresses. The LOOKS token is on the brink of entering the top 200 cryptocurrencies by market cap. It added 38% to its value yesterday, reaching $3.58.
Filling a clear void
The impressive figures indicate a hot start for a young marketplace that seems to fill a clear void. NFT traders have been trying to get OpenSea to release a token and decentralize at least part of its operations for many months.
OpenSea has been criticized for enforcing IP and delisting hacked or exploited collectibles. It was recently valued at $13.3 billion. Beyond the numbers, it looks like LooksRare’s popularity could be temporary. A big part of its impressive volume is accounted for by so-called “wash trading”, carried out with the sole purpose of farming platform token rewards.
What is wash trading?
Wash trading is a practice where one and the same party controls wallets and “sells” assets back and forth. At the moment, LooksRare is rewarding traders with around 2.9 million LOOKS tokens (over $10 million) per day based on trading volume. According to the platform’s documentation, it will keep doing that over the next month. Then, it will begin cutting emissions gradually.
Collections without royalty fees are the most popular
Larva Labs’ Meebits and other NFTs that don’t come with royalty fees are among the most popular. Meebits worth less than 3.5 ETH are trading for up to 30 ETH.
The LooksRare team has pointed out that trying to game rewards this way won’t be lucrative long-term. This is because the 2% platform fee on wash trades can exceed the potential rewards. The team stated:
Each trade on LooksRare (except for private sales) incurs a platform fee of 2%, and typically a royalty fee of between 5%-10%. The total LOOKS rewards for trading each day are also fixed, and distributed based on traders’ contribution to total trading volume, meaning that there’s no guarantee of the amount of rewards that a wash trader could earn in a day.
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