New Report Suggests Wash Trades Accounted for 58% of NFT Volume in 2022 | CoinSnacks

New Report Suggests Wash Trades Accounted for 58% of NFT Volume in 2022

As we seem to find again and again, when it comes to crypto, things aren’t always what they may seem on face value. 

According to a new Dune dashboard and analysis from @hildobby, the NFT market may have a real crisis on its hands.

That’s because “wash trades”, or trades where the buyer and seller are the same or colluding with one another, are much more prevalent in the NFT market than anybody thought.

Wash trading has been illegal in the US since the 1936 Commodity Exchange Act (CEA), but crypto and NFTs, being unique digital assets, exist outside of this framework. Wash traders have taken full advantage of this lack of regulation in crypto, with some estimating that wash trading accounts for up to 95% of BTC spot trading volume.

NFTs are particularly prone to wash trading. In the saturated NFT marketplace space, platforms have relied on token rewards for active traders to draw attention and market share away from competitors. This is perfect for wash traders, who can simply trade the NFT between their own wallets and collect token rewards for each trade. It’s risk-free profit as long as the value of the rewards is greater than the gas fees. 

A Mirage

It’s well known that NFTs are plagued by wash trading, but nobody truly understood how bad the problem was until the Dune dashboard was released. 

According to the dashboard, wash trades constitute:

  • $30 billion in total volume
  • 44% of all NFT trading volume
  • 58% of NFT trading volume on Ethereum in 2022
  • 98% of NFT trading volume on LooksRare
  • 86% of NFT trading volume on X2Y2
  • 65% of NFT trading volume on Element

This is obviously bad news for JPEG connoisseurs. NFTs are already in a brutal bear market, with volume far below the 2021 peaks. And now we see that 58% of that already depressed trading volume is fraudulent?


Unfortunately, there is not much that NFT marketplaces can currently do to stop wash trading. Removing token rewards is a possible solution, but in the competitive NFT marketplace space, it is impractical. Regulation is another fix, and will likely come at some point in the future, but nobody knows when that is. 

For now, the revelation that much of the NFT market is fraudulent does not inspire confidence that a price turnaround is coming anytime soon. If you want to gain exposure to NFTs, it is probably best to stick to the blue chips: Punks, Apes, and Penguins, at least until the market flips bullish again.

Write a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Want more stories like this sent to your inbox every week?

Sign up below to get free access to our weekly newsletter.