NFT market manipulation? CryptoSlam claims suspicious activity on Blur

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Despite its recent suc­cess, the jour­ney for Blur to become the biggest NFT mar­ket­place is far from over, and eval­u­at­ing its cur­rent and future suc­cess is a com­plex matter.

NFT mar­ket­places are cur­rent­ly embroiled in fierce com­pe­ti­tion for cus­tomers, with com­pa­nies low­er­ing their fees and roy­al­ties to entice and keep users. This com­pe­ti­tion has result­ed in the grad­ual weak­en­ing of roy­al­ty fees, a cru­cial rev­enue source for many NFT cre­ators who feel aban­doned by the mar­ket­places that once sup­port­ed them. This “race to the bot­tom” is caus­ing sig­nif­i­cant dis­rup­tion to the entire NFT ecosystem.

Read more: Why we need more NFT roy­al­ties and bet­ter marketplaces

Is Blur’s volume real?

Blur has sur­passed OpenSea in the over­all val­ue of sales made through its plat­form, but the data has sparked a debate about its true significance.

One fac­tor con­tribut­ing to Blur’s suc­cess is its rewards pro­gram, which awards points to traders for list­ing and bid­ding on NFTs. These points can be exchanged for BLUR tokens, with the num­ber of tokens received based on the num­ber of points accumulated.

Since there are no mar­ket­place fees or roy­al­ties, the only obsta­cle pre­vent­ing users from gam­ing the sys­tem and earn­ing tokens by pur­chas­ing their own list­ings with a dif­fer­ent wal­let is the need to pay gas fees.

How­ev­er, last month, Cryp­toSlam, a track­er of NFT sales data, claimed that this is pre­cise­ly what was hap­pen­ing on Blur. In an email to its sub­scribers, Cryp­toSlam stat­ed that only 1% of high-val­ue traders were respon­si­ble for the bulk of trad­ing activ­i­ty on the platform.

As a result, Cryp­toSlam took action and removed hun­dreds of mil­lions of dol­lars in Blur trades from its data, cit­ing “mar­ket manip­u­la­tion.” It has since imple­ment­ed an updat­ed algo­rithm that fil­ters out “sus­pi­cious” sales.

Dur­ing the peri­od of Feb­ru­ary 14th to Feb­ru­ary 25th, Cryp­toSlam iden­ti­fied over $577 mil­lion in wash-trad­ed NFTs on the platform.

Accord­ing to Cryp­toSlam, sales data from Blur is “mis­rep­re­sent­ing” the NFT mar­ket. The poten­tial­ly arti­fi­cial surge in sales has boost­ed the industry’s over­all sales vol­ume to its high­est lev­el since Jan­u­ary 2022, lead­ing some to believe that the mar­ket was rebound­ing after a sig­nif­i­cant drop in activ­i­ty over the past year.

Data engi­neer Scott Hawkins from Cryp­toSlam stat­ed in an inter­view with Forkast, “What we are find­ing is that this is arti­fi­cial­ly prop­ping up sales vol­ume in a very disin­gen­u­ous way for the entire NFT market.”

In addi­tion, OpenSea still has more users than Blur, with a user base that con­sists of a small­er group of more active traders. Blur has only 113,886 users in the last 30 days com­pared to OpenSea’s 294,146. Crit­ics also claim that a small per­cent­age of wal­lets on Blur are respon­si­ble for the major­i­ty of transactions.

The future of Blur

The specifics of how the BLUR token will be val­ued in the future are unclear, and it’s uncer­tain how it will gain val­ue over time. Cur­rent­ly, BLUR oper­ates as a gov­er­nance token, but since Blur is a cen­tral­ized enti­ty, it will need to grad­u­al­ly cede con­trol to token hold­ers of a new­ly estab­lished DAO. This could be the rea­son why U.S. users were exclud­ed from the air­drop, despite the fact that the token is avail­able on major U.S. exchanges like Coinbase.

The Blur DAO will be respon­si­ble for gov­ern­ing impor­tant aspects of the plat­form, such as estab­lish­ing the protocol’s val­ue accru­al and dis­tri­b­u­tion. This could include deter­min­ing the pro­to­col fee rate (up to 2.5%) after 180 days and award­ing trea­sury grants to devel­op the mar­ket­place fur­ther. These choic­es will play a crit­i­cal role in shap­ing the platform’s future growth and deter­min­ing whether Blur can com­pete effec­tive­ly in the mar­ket­place both now and in the imme­di­ate future.

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