Half of the NFT trades on Ethereum are fraudulent — This team aims to fix it
The nonfungible token (NFT) market has seen an unprecedented number of new NFT collections introduced in 2022 despite the year-long crypto winter, showing that the turbulent state of the crypto market was not enough to deter NFT creators and collectors. With more than half a million new contracts across Ethereum, Polygon and Avalanche, the NFT market inevitably met with its own set of troubles, with the primary issue being NFT wash trading.
A recent study by AI-powered NFT analytics provider bitsCrunch and Cointelegraph Research titled “BitsCrunch NFT Wash Trade Report for 2022” revealed that over 610,000 new NFT contracts were made during 2022, showing an 860% jump from the previous year. This translated into over 85 million new NFTs, largely thanks to the recent surges in NFT gaming and sports-related collectibles. The total NFT sale volume for 2022 hit $54 billion, with Yuga Labs, the team behind the massively popular Bored Ape Yacht Club (BAYC) collection, enjoying over $4.4 billion in trade volume alone.
However, the hype among collectors and creators attracted unwanted attention from malicious actors, namely wash traders. The bitsCrunch report points out the alarming rise in NFT wash trading activity, which skyrocketed by 25x to almost $33 billion in 2022. Wash trading refers to using fake transactions, copy-minting other creators’ original work and other means in order to artificially pump up the prices for a specific NFT or collection.
The bitsCrunch forensic analysis indicates that wash trading accounted for a significant portion of the total NFT trade volumes over the last year. More than half (59%) of the $54 billion volume traded on Ethereum in 2022 is suspected of being wash traded, according to the report.
Read more on cointelegraph.com
