In February, the total volume of NFT sales soared to heights not seen since the arrival of crypto winter last spring, according to data from DappRadar. Trading reached $2.04 billion in February, representing a 117% increase from January’s figure of $941 million. However, this marked the most profitable month for NFTs since May last year, when Terra’s collapse decimated the crypto economy, and the once-thriving NFT market was left in ruins. Most of this surge appears to be attributed to a single source: Blur.
Blur’s NFT marketplace has experienced tremendous success since its launch earlier this month, surpassing OpenSea in trading volume. Its success has been primarily attributed to innovative incentives that reward loyal users for refraining from using other platforms and trading high-value NFTs. In February alone, Blur’s trading volume skyrocketed to over $1.13 billion, accounting for most of the market’s month-over-month gains. However, a closer look reveals that most of this volume was generated by a small group of ‘whales’ flipping NFTs to accumulate BLUR tokens through the company’s reward system.
Blur’s surge in NFT trading volume
The legitimacy of Blur’s trading volume has become a hot-button issue in the NFT ecosystem. Last week, Cryptoslam, a leading platform for tracking NFT sales, announced that it would remove $577 million worth of Blur trades from its data due to “market manipulation.” At least for now, DappRadar still counts Blur’s trading volume as legitimate.
Pedro Herrera, Head of Research at DappRadar, explained that the bidding logic used by Blur means many of its trades are bypassing their wash trading logic, and they “won’t be flagging all Blur sales as wash trades.” Nevertheless, the debate around the true size of the NFT market continues.
Wash trading, a phenomenon involving traders selling NFTs between their wallets at inflated prices to raise the prestige or market value of those assets, has been similarly linked with gaming incentive programs some NFT marketplaces offer. Moreover, the total number of NFT sales in February was almost identical to January’s figures, with a mere 2% drop to 6.47 million, suggesting that wash trading has had no major impact on the industry. Thus, if Blur’s activity is discounted as wash trading, February’s overall market figures would be more closely aligned with January’s.
The financialization of the NFT ecosystem is becoming increasingly evident, especially with the phenomenon surrounding Blur’s incentive structure. Last month, this aggressive growth caused a stir among competitors and led to rival OpenSea – valued at $13.3 billion – announcing a reduction in creator royalty protections. Despite this, OpenSea maintained its momentum and saw an 18% increase in monthly trading volume to $587.22 million. Notably, the platform continues attracting more unique traders than Blur, boasting a total of 316,000 compared to Blur’s 96,000.
OpenSea’s sustained success is partly attributed to the buzz surrounding Dookey Dash, a web-based game developed by Yuga Labs and based on skill. To participate in the game, players were required to have a Bored Ape or Mutant Ape NFT, boosting trading volume for those two popular collections. On Monday, the month-long Dookey Dash tournament winner sold their winning key for an impressive $1.63 million in ETH.
