LooksRare or LooksFake: How Profitable Wash Trading Can be!

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(Edited)

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(Source)

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LooksRare have been the talk of the town lately, with all the inflated trading volumes due to the probable extensive wash trading going. As per CryptoSlam, about 90% of LooksRare trading volumes are the
result of wash trading.

So let calculate out how profitable a couple of wash trades on the platform could be.
For sake of simplicity, we are going to assume a trader who performed a couple of wash trades worth 10,000 Eth between his wallets.

Ethereum Price = $2600
Total Trading Volume = $608 million = 608,000,000/2600 = 233,846 Eth
Trader's Daily Volume (2 wash trades) = 10,000X2= 20,000 Eth
Trader's %age Share of Total Trading Volume = 20,000/233,846 = 8.55%
$Looks Token Daily Reward Pool = 2,800,000$Looks
Trader's Looks Reward Share = 2,800,000X8.55/100 = 239,400$Looks
$Locks Price = $4.3
Trade's Earning = 4.3X239,400 = $1,029,420

So if our wash trader had just dumped their daily $Looks earnings he would have made $1 million profit and don't forget he have 10,000 Eth ($26 million) in circulation between his accounts. Plus, he could simply go on wash trading other royalty free NFTs collections to further increase his reward shade. $1 million profit in a day for moving 10,000 Eth ($26 million) between your wallets, I will be dammed.

Price of $Looks token have held decently so far because of the fact that stackers can earn a share of daily 2% trading fees for staking their $Looks tokens. But the honeymoon period might be ending soon, as the first month of aggressive $Looks token rewards release is about to end. Whether wash trading will be profitable with upcoming reduced emission of $Looks tokens, that remains to be seen.

Considering the whole economic model of LooksRare have been built around fraudulent wash trades, the whole thing might come collapsing down once wash trades become unprofitable and inflated trading volumes come back to normal and wash trading whales start dumping their $Looks stakes to capitalize on their gains.

To me 'LooksRare' started to seem more like 'LooksFake'!

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I do like the breakdown of the wash trading and gas fee calculation in explaining the concept. So many of these things come and go along with the profit. I have stayed out of them for the most part but am always on the lookout to catch one early enough and make a few bucks for real tokens ;)

!BEER

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