How Blind Boxes Curbs Wash Trading
What is wash trading?
Wash trading occurs when an individual or a cartel of individuals uses market manipulation tactics to artificially drive up the price and demand of their assets. One way this is accomplished is by listing an item and then bidding on or purchasing the same item. Essentially the same user puts “buy” and “sell” orders on the same assets to create the illusion of demand. This creates a provenance and history of sales that misrepresents the asset’s true market value.
This practice is well known in the NFT space and is said to encompass a SIGNIFICANT portion of sales activity across major auction-based platforms. Salnikov the CEO of Rarible says that an estimated 40% of the $750,000 worth of NFT trades on his platform in August involved some type of wash trading.
Our randomized collection-based framework prevents wash trading
Blind Boxes’ unique Gashapon-inspired selling mechanism prevents any individual from profiteering through the malpractice of wash trading. In fact, wash trading is one of the core market frictions that we sought to address when we launched the project.
Blind Boxes specializes in selling curated NFT collections created by artists, brands, influencers, and whale collectors. All NFTs are sold one at a time at a flat rate determined by the composition of the collection in play.
The seller/curator has the final say on the price of each item listed within a collection. Once the collection is launched, the market decides if the pricing is fair. Over the past 6 months, we have seen curators using this mechanism to determine a fair evaluation for their items. If a collection does not sell, the curator is encouraged to modify the pricing of the items in the collection and then relist. Upon doing so, we typically see these collections sell out.
On the other hand, if a collection sells out too quickly, the curator may consider adjusting their pricing in another direction for future releases. Ultimately our platform allows market forces to influence valuations, not the actions of an individual. Says our CEO, “Ultimately we see our unique selling mechanism is more than just a way to gamify the NFT shopping experience. The framework is designed to promote market-driven NFT valuation while mitigating the risk of assets being traded back and forth merely to boost demand.”.
“Ultimately we see our unique selling mechanism is more than just a way to gamify the NFT shopping experience. The framework is designed to promote market-driven NFT valuation while mitigating the risk of assets being traded back and forth merely to boost demand.”
— CEO, Anita Angelica Moore
By circumventing the auction model the Blind Box mechanism creates a layer of trust between buyers and sellers. As an aside, yes it is technically possible for a user to buy out their collection to attempt to create artificial demand. However, we see the high cost associated with buying out an entire collection as a natural guardrail, especially since collections must contain a minimum of 3 NFTs.
If you have suggestions for ways we can improve the transparency and fairness of the Blind Boxes platform, drop them here. We are committed to evolving the platform to address inefficiencies and opaqueness seen in other marketplaces.
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About Blind Boxes
Blind Boxes is a gamified curation platform and launchpad for NFTs (non-fungible tokens). This highly scalable dApp enables brands and creators to diversify their revenue streams, increase the liquidity of their creative assets, and become leaders in decentralized global economies while engaging fans and buyers to discover and collect rare, limited edition NFTs.
Via the Blind Boxes Marketplace, buyers experience the thrill of time-released curated NFT collections. Collectors virtually unbox exclusive items, curated by tastemakers across art, music, sports, and entertainment. Curation is at the core of our value proposition. The platform offers a commission structure that incentivizes independent contributors to curate blind box collections that feature top-tier talent, emerging artists, and designers from around the world.
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