Wash Trade Filter
What is Wash Trading
Wash Trading is defined as trading activities that provide misleading information to the market regarding the buying demand. Users may buy or sell NFTs to mine activity rewards offered by platforms, or they could simply be buying and selling the NFTs within wallets owned by them. This creates inorganic demand for the NFT, causing the floor price and volume to rise artificially. Users who do not know that wash trading is going on will think that demand is surging for the collection or NFT and is likely to buy into it. Once they do so, wash traders will then dump on these retail users, causing them to make a loss.
Wash trading has a relatively huge impact on the market, as many metrics such as historical price and volume can be manipulated, users' judgement of the market will thus be affected. Even more worse, the construction and application of NFT fractionalization and valuation models will also be affected, given that these models are dependent on past data.
How is Wash Trading Recognized
NFTGo has developed strategies to identify wash trading activities through algorithmic analysis.
By analyzing the transaction cycles and transaction closed loops, wash trades can be identified and will be removed from the data points. This allows for NFTGo to provide more accurate data for our users to better analyze the market, NFTs and collections.
What does Wash Trading Affect?
There are several metrics that can be affected by Wash Trading.
Wash Trade Auto Filter
To allow for a better and more seamless user experience where users get to see the accurate data first-hand, the wash trade filter has been automatically turned on for the following key metrics:
| Page | SectionA | Metrics |
|---|---|---|
| Discover | Top Collections | - Volume - Sales - Market Cap - Liquidity - Avg Price - Traders - Sellers - Buyers |
| Whale Signals | - Bought - Sold - Whales Volume - Total Volume - Avg Price - Market Cap | |
| Newly Added | - Market Cap - Volume | |
| Analytics | Market Overview | - Traders - Buyers - Sellers - 30D Profit & Loss - Market Cap - Volume - Category Market Cap - Collection Distribution - Top Collections |
| Leaderboard | - Portfolio Value - PnL - Unrealized Profit - Realized Profit - Total Revenue - Total Spent | |
| Individual Collection | Overview | - Total Volume - Market Cap - Volume (24H) - Sales (24H) - Avg Price (24H) |
| Analytics | General | - Market Cap - Volume - Sales - Liquidity - Buyers - Sellers | |
| Analytics | Holders | - Estimated Value - Avg Cost - PnL - Unrealized Profit - Realized Profit | |
| Analytics | Leaderboard | - PnL - Realized Profit - Unrealized Profit - Sold - Total Spent - Bought - Total Revenue - Sold |
Wash Trade Tagging
To aid users in identifying wash trade activities easily, wash trading tags are shown next to collections, NFTs and addresses. This will allow users to notice it easily despite the amount of information available.
Abnormal Collection Tagging
Abnormal collections are tagged and removed when calculating key metrics. This will ensure that the data provided on NFTGo is accurate.
Updated about 1 year ago