Nansen’s NFT dashboards now come loaded with a wash-trade filter. This update brings new visibility to NFT markets, enabling investors to surface a more meaningful signal. When combined with Nansen’s existing marketplace filter this update also allows entirely new views of this fast-emerging asset class.
What is wash-trading anyway?
Wash trading is the purchase and sale of the same instrument (e.g. NFTs) at the same price, or in some scenarios, a similar price for accounts with the same or common beneficial ownership.
Adapting this definition to suit the context of the NFT marketplace, wash trading involves sales funded either by the selling address or the address that initially funded the selling address. In other words, these transactions are “self-financed.” In some cases, such as the traders aimed at maximizing their LooksRare rewards, these transactions can be classified as “incentivized trades.”
Wash trading can be disruptive for those wanting to grasp accurate market activity, thereby undermining key investment decisions.
Nansen’s Wash Trading Filter
The transparency offered by blockchain data provides new ways to identify wash trading activity. Nansen’s wash-filter scans all individual trades undertaken and builds strategies to identify suspicious activity. These strategies include but are not limited to trades between numerous linked wallets and also those bounced between counter-parties. Nansen is continually improving these methods, yet will always allow users to see the unfiltered version of blockchain data.
Putting the Wash Trading filter to use
The wash trade filter is available for NFT Paradise (market level insight) and NFT-God Mode (collection level insight). To illustrate the value of our filter, below we present the top 10 collections (by total volume) with and without the filter over the last 7 days.
Not surprisingly, the Nansen Wash Trading Filter captured the wash trades involving collections such as Terraforms and Meebits. However when the wash-filter is combined with the optional market-filter we can get a completely unique view of all collections on LooksRare with the most organic volume.
As Nansen strides to surface the signal from on-chain data, we will continue to develop industry leading tools that support the future of finance.
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