NFT sales hit $2 billion in February, highest since Terra crash

According to data from DappRadar.

Trading topped $2.04 billion last month, up 117% from $941 million in January. These numbers make February the best month the NFT market has seen since last May, when the Terra implosion cratered the crypto-economy and buried the then-scorching NFT market in ice.

The surge, however, seems almost entirely indebted to a single, controversial source: Blur.

The emerging NFT market, which this month overtook OpenSea in trading volume, has fueled its rapid rise with incentives that financially rewards loyal users to refrain from trading on any other platform and most importantly to trade as many high value NFTs as possible.

Blur’s trading volume jumped over $1.13 billion in February from the previous month, a stunning statistic that accounts for almost all of the NFT market’s monthly gains. But the majority of this volume was generated by a small number of whales by flipping NFTs back and forth, to accumulate BLUR tokens through the company’s incentive program.

Whether or not to count this trade as legitimate volume is a volatile question that now dominates the NFT ecosystem. Cryptoslam, a leading platform for tracking NFT sales, announced last week that it would remove $577 million in Blur transactions from its data due to “market manipulation”.

DappRadar, another leading NFT and DeFi tracking company, has decided to consider Blur’s trading volume as legit, at least for now.

“Due to the auction logic used [by Blur]most trades made by Blur farmers bypass [our wash trading] makes sense,” said Pedro Herrera, head of research at DappRadar. Decrypt. “We are currently reviewing this issue, but will not be reporting all Blur sales as washouts.”

Wash trade is generally defined as the phenomenon of traders selling NFTs between their own wallets, often at inflated prices, to artificially inflate the prestige or market value of those assets. In the past, efforts similar to gaming incentive programs offered by NFT Marketplaces, such as LooksRare, have also been labeled as washing trade.

The seemingly semantic debate over whether to classify Blur’s recent increase in activity as legitimate or illegitimate has serious implications for the NFT market. If the activity in question on Blur were in fact considered wash trading, February’s market-wide numbers would look more like January’s. Underscoring the reading is the reality that the total number of NFT sales made in February remained largely unchanged from January, in fact falling, by just over 2%, to 6.47 million.

Beyond the quantitative analysis, the phenomenon aroused by the incentive structure of Blur also testifies to the growing financialization of the NFT ecosystem, which once echoed the digital art market, but appears every day more like the world volatile and ruthless Challenge.

Despite competition and controversy spurred by Blur’s explosive growth last month, however, rival OpenSea continued to push forward in February, even after the $13.3 billion company– probably intimidated by Blur’s aggressive tactics – announced that he cut creator copyright protections. OpenSea’s monthly trading volume rose 18% last month, to $587.22 million. The platform also continues to have far more unique traders than Blur: just over 316,000 traders compared to Blur’s 96,000.

OpenSea’s continued stability is likely due in part to the excitement generated by Dookey Dasha skill-based web game launched by Yuga Labs, creators of the dominant NFT collection Bored Ape Yacht Club. The game required access to Bored Ape or Mutant Ape NFT, which increased the trading volume for these “blue chip” collections. On Monday, the winner of the month-long Dookey Dash contest sold his winning key for $1.63 million in ETH.

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