Is LooksRare Replacing OpenSea Already?

[Xangle Digest]
By Do Dive
Translated by elcreto

Summary

• Debuted on Jan 10, LooksRare has been outstripping OpenSea's transaction volume every day.
• Yet, it is premature to say that LooksRare has won the competition with OpenSea, given transaction indicators, such as no. of daily users and transactions, hourly transactions, and suspected wash trading.

Stellar Transaction Performance: Has It Overtaken OpenSea?

As was discussed in my previous article about LooksRare, there has been an ongoing controversy over whether LooksRare—which drove massive attention from the market after it airdropped a sizable amount of LOOKS tokens—has become the game changer in the NFT marketplace, considering its transaction figures that overshadow those of OpenSea. I’d venture to conclude that it is highly probable most of LookRare's transactions were for the purpose of airdropping LOOKS tokens, producing misleading results.

The Reasons LooksRare's Transaction Performance Indicators Can’t Be Trusted

1. Too Few Daily Users and Transactions

Take a look at the indicators above. Compared to the value of such transactions, the numbers of LooksRare’s daily users and transactions is significantly low:

• LooksRare on Jan 17: 1,719 daily users and 1,596 daily transactions
• OpenSea on Jan 17: 70,773 daily users and 147,812 daily transactions

The Jan 17 results of daily users and transactions show that LooksRare's numbers are hovering much lower than OpenSea’s, implying that a significant amount of such daily trading arose from only a small number of users.

2. Transactions That Flooded on a Specific Time Period

As my previous article about LooksRare pointed out, LooksRare strategically attracted wealthy whales to their platform by airdropping LOOKS tokens to OpenSea users who traded 3 or more ETH. It may be a bit far-fetched to conclude that such small numbers of users and transactions are evidencing LooksRare overtaking OpenSea in trading volume is an illusion.

Yet, the hourly transaction data above make such argument much more convincing. According to LOOKS Tokenomics, 44.1% (441 million tokens)—the largest proportion of the total supply of 1 billion LOOKS tokens, is distributed as volume rewards, and the amount of token distribution is determined by calculating the daily transaction amount. The indicators above show that daily transactions are abnormally concentrated within an hour before midnight (UTC) when the value of the transactions is calculated. Compared to OpenSea's trading volume evenly spread throughout the day, such abnormal pattern strongly suggests that there were false transactions aimed at LOOKS token airdrop.

3. Suspected Wash Trading of a Specific Collection

The most traded collection on LooksRare is Meebits, which recorded a total of 735K ETH, worth around $2.3B. It is 9 times higher than OpenSea’s total transaction amount of 81.5K ETH. And what’s more, sometimes the value of LooksRare transactions is more than 4,000 times higher than that of OpenSea. Such a radically exceptional value of transactions of a specific collection in an NFT marketplace that has just been out in the market only for a week is very unusual.

<Suspected wash trading that involves anomalously high prices; Source: LooksRare>

But once you take a closer look at the collection's transaction data, there are traces of wash trading. The table above is the transaction data of a specific wallet (0x... 287C) that traded Meebits. There were transactions with a specific wallet (0x...0C89) once a day, and the value of the transaction was over 14,500 ETH, which was about 380,000% higher than the collection's floor price of 3.75 ETH. Also, a pattern was identified where the already sold NFTs (Meebit #15248 in the above case) were sent and bought again, pointing to a possible wash trading that tried to get the rewards linked to the value of a transaction.

<Digest Point>

LooksRare has made a meteoric rise in the NFT marketplace with token airdrops and famous NFT influencers’ endorsement. But the stellar performance they have posted raises questions about whether the results are credible enough to validate its value. The price of LOOKS token stood at above $5 on Jan 19 and is showing a steady uptrend. But if such unsound indicators continue to surface, LooksRare will very likely lose its competitiveness as token rewards decrease. LooksRare’s debut created such a hype and now it seems it needs another real, innovative solution that market participants will buy into if it is to reach its goal of taking OpenSea’s crown.