- The NFT market is facing an uncertain future as interest in the asset continues falling.
- That has seen many NFT marketplaces struggle to attract users and volumes that they did at the peak of the NFT craze.
- LooksRare, for instance, has lost 88% of its users, significantly cutting its transactions and volumes.
The NFT market is staring at a bleak future. Interest in the asset has plunged as dramatically as it had peaked in 2021. And with that waning interest, NFT prices and transaction volumes have plummeted, leaving marketplaces reeling from the after-effects. LooksRare is one such marketplace.
Many touted LooksRare as the alternative to the premier NFT trading platform OpenSea. But things haven’t gone to plan, and as OpenSea’s dominance remains largely unshaken, the former’s is in peril. A look at the platform’s key metrics underpins this point.
LooksRare’s Diminishing Fortunes
According to a BanklessTimes analysis, LooksRare’s popularity has dropped greatly. From a high of 857 daily active users (DAU) on April 13th, 2022, it now (13th July) has 99 DAUs only. That’s a 88 % slump in the metric over the three months. So what’s behind this drop?
BanklessTimes’ CEO has been following the platform’s performance recently. Here are his thoughts on the platform’s declining popularity:
CEO of BanklessTimesThe hype about NFTs has died down, their novelty has waned, and there’s been a "sobering up" of players in the space. Besides, the whole crypto ecosystem is bearish, and LooksRare hasn’t endeared itself much with allegations of wash trading.
The Domino Effect
LooksRare’s falling number of users has had a domino effect on other areas of the platform. First, it has led to a fall in its number of transactions. These have shrunk from 1300 three months ago to a paltry 138 at the time of writing, representing an 89% contraction.
Likewise, the platform’s volume took massive hits. From $8.18 million three months back, today, it stands at $1.64 million. So the volume depreciated by 80%.
Courting Controversy
LooksRare is no stranger to controversy, and recently it has attracted accusations of encouraging wash trading. According to a CryptoSlam expose, up to 95% of the platform’s activity comes from the practice which is one kind of market manipulation.
In wash trading, an investor buys and sells the same asset simultaneously. Consequently, they end up creating artificial and misleading activity within the marketplace. The aim is not to pump and dump NFTs but to gain tokens. As each transaction attracts fees, the marketplace also ends up benefitting.
Wash trading is illegal in other business sectors, so the platform’s silence on these accusations raises eyebrows. Another contentious issue regarding the site is the anonymity of its team. LooksRare’s team only lists their titles and pseudonyms, raising questions about the project’s transparency.
