LooksRare debuted on January 10, and the newly opened NFT marketplace has gotten a lot of attention. On the second day of trading, its daily transaction volumes were more than double those of Opensea. The new NFT platform is very popular among wash traders. LooksRare was initially expected to be a rival to OpenSea, which is also a NFT platform. However, the volume of wash trade on the LooksRare raises concerns whether it will compete with OpenSea for a long time or will be banned.
Wash trading is a sequence of trading actions in which the same trader buys and sells the same item at the same time. This parallel buying and selling results in a manipulated market price and artificially high trading volume.
LooksRare launched with the worthy goal of distributing revenues to the community. The token incentives and trading benefits drew huge volumes and defeated Opensea in a flash after its inception. The two features which were seen as its key deliverable soon became the tool for wash traders for creating artificial flood the new marketplace.
Wash trading is outdated financial markets in the United States. It was banned there in 1936. The most recent example of wash trading that received worldwide attention was the manipulation of London Interbank Offered Rate (LIBOR) in 2012.