Nansen’s New Wash-trade Filter

Nansen’s New Wash-trade Filter

Combining the wash filter and marketplace filter on Nansen’s NFT Paradise gives investors a unique view of ‘real activity' on these emerging NFT Markets. 

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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.

Nansen’s wash filter surfacing the signal: Meetbit trades over the last 7 days without the wash filter (left) and with the wash filter (right). 

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.  

Trading volume with and without Nansen’s wash-filter demonstrates the necessity of combining on-chain analytics with automated and well informed heuristics. 

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.

Combining the wash filter and marketplace filter on Nansen’s NFT Paradise (above) gives investors a unique view of ‘real activity’ on these emerging NFT Markets. 

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.

About Nansen

Nansen is a blockchain analytics platform that enriches on-chain data with millions of wallets labels. Crypto investors use Nansen to discover opportunities, perform due diligence and defend their portfolios with our real-time dashboards and alerts.

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The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.

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