2022/02/07 by Victor von Wachter, von Wachter, Victor, Johannes Rude Jensen +5 · 4 citations
Arts and Humanities · Computer Science · #Art History and Market Analysis #Blockchain Technology Applications and Security #Cryptography and Security (cs.CR) #FOS: Computer and information sciences
paper · pdf · doi:10.48550/arxiv.2202.03866
openalex publication_date 2022/02/07 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
The smart contract-based markets for non-fungible tokens (NFTs) on the Ethereum blockchain have seen tremendous growth in 2021, with trading volumes peaking at 3.5b in September 2021. This dramatic surge has led to industry observers questioning the authenticity of on-chain volumes, given the absence of identity requirements and the ease with which agents can control multiple addresses. We examine potentially illicit trading patterns in the NFT markets from January 2018 to mid-November 2021, gathering data from the 52 largest collections by volume. Our findings indicate that within our sample 3.93% of addresses, processing a total of 2.04% of sale transactions, trigger suspicions of market abuse. Flagged transactions contaminate nearly all collections and may have inflated the authentic trading volumes by as much as 149,5m for the period. Most flagged transaction patterns alternate between a few addresses, indicating a predisposition for manual trading. We submit that the results presented here may serve as a viable lower bound estimate for NFT wash trading on Ethereum. Even so, we argue that wash trading may be less common than what industry observers have previously estimated. We contribute to the emerging discourse on the identification and deterrence of market abuse in the cryptocurrency markets.