‘Blur’ Pushes NFT Volumes But Is Wash Trading Involved?

Paigambar Mohan Raj
Source: PYMNTS.com

The NFT (Non-fungible Token) markets are seeing renewed interest from users. Towards the end of 2022, the space witnessed a significant decline in user activity. Now, according to Glassnode, NFT transactions have increased their overall gas consumption by 97% for the past two months. Activity levels are reaching those during the boom of the non-fungible space.

The introduction of new collections by some of the biggest competitors has been credited for the renewed interest. Nonetheless, the events surrounding the Blur Airdrop are primarily responsible for the spike in gas demand over the past two weeks.

Source: Glassnode

Following its airdrop on Feb. 14, Blur overtook OpenSea and now controls 78% of the NFT transfer volume. Despite the token’s recent 13% value decline, the airdrop renewed interest in the upstart competitor. Blur’s market share increased by 34%, cutting OpenSea’s share by more than half, from 36% to 15%. OpenSea restructured its pricing model and policies to compete with its new opponent. However, it has been unable to keep its market share.

With 4 to 5 trades per user per day, Blur is clearly in the lead. On the other hand, OpenSea only averages two trades per user per day.

Source: Glassnode

However, the most recent interest in NFTs seems to appeal to current users and isn’t doing anything to draw new users to the Ethereum network just yet. However, Dune offers some arguments to the contrary, which we will look into in the next section.

Is wash trading the reason behind the NFT spike?

According to CryptoSlam, at least US$577 million in wash-traded NFTs related to Blur have been detected. As per Scott Hawkins, a data engineer at CryptoSlam, the washed trades follow suspicious patterns like NFT resales occurring quickly at values near the assets’ initial transactions. Some Blur users may have been buying NFTs from themselves and selling them to themselves to buy Blur tokens (BLUR) and earn airdrop points.

However, one Dune community member has pointed out some reasons why Blur’s volumes are legit. Firstly, only 11% of trading volume was detected as wash trades.

Source: Dune

Second, the analyst investigated the source of users. 62.9% of users have come from OpenSea, while 3% are from Gem. Moreover, 22.3% were new traders, contrary to Glassnode’s analysis.

Source: Dune

Thirdly, the analyst points out that volume sticks around even after incentives have stopped, which is a good sign for organic activity.

Source: Dune

And lastly, compared to Blur, the hourly volume on LooksRare and X2Y2 tells a different tale. Huge sporadic spikes coexist with hours of no volume in these two wash trading havens. Blur, on the other hand, has an hourly volume that is consistent with a healthy routine with natural activity and a wide range of users.

Therefore, going by both analyses’, we can concur that Blur might be bringing bank interest to the NFT market. The space is in much need of some awakening, and Blur might just be the spark that brings it back to life.