The non-fungible token (NFT) market is seeing its fair share of news today. One big reason for that lies with the jumpstart NFT trading platform LooksRare (CCC:LOOKS-USD). After kicking off its platform to wild success, the project is coming under intense scrutiny this morning. However, even in the midst of some weighty accusations, the LooksRare crypto, LOOKS, is keeping its head above water.
LooksRare is one of the hottest topics of 2022 so far. Since its launch on Jan. 10, the platform has quickly rocketed. In fact, many investors believe it to be the most apt competitor to the NFT market monolith OpenSea. It has risen so quickly thanks in large part to its reward model.
Using LooksRare, one can do more than simply buy and sell NFTs. The platform also allows users to stake its native token, LOOKS, for passive income. In staking LOOKS, one can earn a higher annual percentage rate (APR) than many dedicated DeFi applications. Right now, the platform promises an APR of nearly 600%.
Its volume of trades has been astonishing, and its reward model makes it a no-brainer option over OpenSea. But, what if it isn’t really performing as well as investors thought? LooksRare is coming under fire this week after weekend chatter regarding the platform’s trading volume.
Yet, even caught in the grip of this news, the LooksRare crypto is proving its resilience.
LooksRare Crypto Continues to Trade Up, Brushing Off Wash Trading Concerns
One of the reasons the LooksRare crypto has been able to take off so quickly since its launch is because the platform’s trading volume impressed right out of the gate. Indeed, with nearly twice the daily average trading volume of OpenSea, the platform seemed to be rapidly establishing itself as the dominant platform for NFT trading.
But, as it turns out, this may not really be the case. Various crypto analytics firms have reported that the LooksRare platform achieved this volume, in part, through wash trading.
Wash trading is an illegal practice on the traditional stock market; it refers to the practice of buying and selling a stock at the same time in order to artificially inflate that stock’s value. But while the practice is banned on Wall Street, digital assets are largely unregulated, allowing NFT platforms like LooksRare to become hubs such activity.
Allegations suggest that LooksRare has attracted wash traders in large part because of its rewards model. Indeed, Twitter is awash with LooksRare bulls talking about the thousands of dollars of rewards they’ve reaped through simply using the platform. Using LooksRare, wash traders can artificially inflate their assets, while also exploiting the rewards for passive income. LooksRare has not yet commented on the wash trading reports, although it says its fee structure should remove the incentive for wash traders.
While the news has upset many NFT bulls, the LOOKS crypto remains white-hot today. The rewards for using the platform are still a huge draw, regardless of the potentially inflated trading volume. In fact, just last night saw a Bored Ape sale on the platform which sets the record for the highest price ever fetched for an Ape NFT. The LooksRare crypto is up 3% to start the week, with trading volume also trending up.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
