87% of trades on LooksRare NFT platform reported to be wash trades

LooksRare, a new NFT marketplace that launched on January 10, has boasted enormous trading volume since day one. It's no secret that wash trading—that is, a user "selling" an NFT to another wallet they also control—is rife on LooksRare. The platform offers token rewards to any users who buy or sell NFTs, which serves to incentivize wash trades, and has taken no action to disincentivize it—in fact, the platform has retweeted another person who described the incentive system (and the wash trading it generates) as "genius". A new report by NFT analytics company CryptoSlam has put some numbers to the scale of wash trading on the platform: $8.3 billion of the platform's $9.5 billion in trading volume to date (about 87%) appears to be from wash trades.

Wash trading is also a widespread tactic in the NFT space to artificially inflate the "value" of an NFT. Because it's relatively easy to create a pseudonymous cryptocurrency wallet, users will "sell" NFTs to themselves for large amounts to create the appearance of higher demand, and to try to convince other would-be buyers that the NFT is more valuable.