LooksRare had a stellar launch to the point that it is being dubbed as OpenSea killer. The community-driven platform has outperformed any other marketplace in the industry by a considerable margin. As such, it has attracted the attention of the leading data acquisition and analysis company, DappRadar.
DappRadar is working on a series of reports that analyze on-chain metrics to identify patterns incurred by whales. The team recently released a report zooming in on the whale activity on LooksRare. Two weeks since
its launch, the marketplace has generated 153% more trading volume than OpenSea. In addition, it yielded over 26 million $LOOKS ($104 million) in trading rewards in the same period.
So the DappRadar report provides answers to the following question: Are LooksRare rewards attracting whale activity? Let’s talk about their key findings!
DappRadar’s Key Findings: Whale Activity on LooksRare
LooksRare sets its NFT marketplace apart by offering a lower transaction fee of 2% compared to the 2.5% fee on OpenSea. What’s more, it promises to give 100% of all platform fees to those who stake the $LOOKS token. So it’s easy to correlate the platform’s growth with the rewards.
The report revealed that the driver behind the massive numbers on LooksRare is artificial transactions carried out by specific users to stimulate $LOOKS token rewards. These movements tend to carry a significant monetary value. Thus, only whales can execute such transactions.
Basically, $LOOKs rewards stimulate high-end transactions because buyers and sellers receive $LOOKS rewards for the trading activity. Then, they can stake the tokens in order to earn more.
To illustrate the compelling power of this model, DappRadar used BAYC #8353 as an example. On January 16, the seller gained $1,789 by using LooksRare. Meanwhile, the buyer got the NFT they wanted, plus around $5,000 in $LOOKS tokens.
Unfortunately, the DappRadar report also revealed that some users are taking advantage of the $LOOKS rewards. The latest wave of artificial activity on LooksRare relates to what is referred to as wash trades in the traditional finance world. This is a form of market manipulation where individuals basically sell assets to themselves, creating artificial and misleading market activity.
In the case of LooksRare, the owner can sell his NFT to another wallet he owns to simulate a trade. An individual that becomes both buyer and seller of an NFT in the same transaction will instantly optimize their profits. This is why the average transaction size is 61 ETH or $201,000. To put that in perspective, an average transaction on OpenSea in January was around $1,000.
So… are $LOOKS Rewards Luring NFT Whales?
The short answer is: NO.
At first glance, one could think the high-end activity involves whales to some extent. However, Dappradar’s analysis revealed the opposite.
The most substantial proof to back this up is that even though Meebits and Terraforms are the two most traded collections on LooksRare, the wallets of the top 10 holders (whales) of both projects were not found in the sample. These 20 wallets have not been involved in a single trade on LooksRare as of January 17.
Although high-end transactions might signal whale activity, it is safe to say that this is not the case on LooksRare. The top holders of the most traded NFT collections within the marketplace did not engage in artificial trading at all. So it’s other users that are engaging in artificial trading to farm $LOOKS rewards.
About $LOOKS Rewards
$LOOKS was available to claim as an airdrop at different ratios based on users’ trading activity registered on OpenSea between June 16 and December 16, 2021. 120 million $LOOKS tokens were initially allocated to the community, with 78% already claimed by more than 116,000 unique wallets as of press time.