NFT wash trading volumes on Ethereum marketplaces hit lowest level in more than a year

Wash trading volumes on Ethereum-based NFT marketplaces are the lowest they’ve been since May 2022, The Block Pro’s Data Dashboard shows.

NFT wash trading volumes on Ethereum marketplaces hit 1.8% on Jan. 9 and Jan. 13. That compares to 36.2% of trading volumes on Jan. 1, 2023, and it’s also the lowest level since the 0.35% rate seen on May 1, 2022. The percentages refer to the portion of total USD volume associated with wash trading, a type of market manipulation in which individuals trade assets between themselves to artificially drive up price or the appearance of liquidity.

Ratio of wash trading volume on Etheruem-based NFT marketplaces since Dec. 31, 2022. Image: The Block Pro Data Dashboard

Stamping out wash trading

The NFT platforms that have contributed the the most to wash trading in the past — LooksRare, X2Y2 and Blur — have all made changes that dissuade such activity further.

“We’ve started to see exchanges like LooksRare and X2Y2 begin to phase out some of their trading rewards programs,” said The Block’s Senior Research Analyst Rebecca Stevens. “Blur was actively trying to filter wash traders from their airdrop, which has made wash trading less attractive. That, in addition to the valuations of several NFT marketplace tokens dropping, has caused overall wash trading to continue to decline.”