Unreal demand? Irregular sales worth billions fire up wild NFT market

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On Jan. 12, an image of a computer-generated pixelated person was sold for about $50.6 million worth of cryptocurrency on a new online marketplace that caters for non-fungible tokens.

The Meebit, which can be used as a profile picture, was exchanged between two cryptocurrency wallets - which are anonymous. Although the underlying blockchain technology creates a public record when an NFT is sold, it doesn't record the names of those involved. A person can own multiple wallets, acting as both buyer and seller in a trade.

The activity has helped LooksRare generate at least $10.8 billion in trading volume since it launched in early January, according to data provided by market tracker DappRadar. DappRadar and CryptoSlam, another data provider that reported artificially inflated volumes on LooksRare, said such trades could be linked to the platform's reward structure - though Masoit added there was also "real" activity on the site.

Asked about the transactions reviewed by Reuters and whether the trades artificially boosted trading volumes, the spokesperson said that such practices were highly risky, as traders would have to pay transaction costs that they were not guaranteed to recoup. "The LOOKS staking rewards system is the token's core reward structure, whereby 100% of trading fees are earned by LOOKS stakers. This fosters a community of users and token stakers who share the common goal of making the platform the best it can be," the spokesperson said.

 

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