Quick take:
- LooksRare’s daily transaction volume has plummeted significantly since Feb. 9.
- The NFT marketplace completely annihilated its rival OpenSea last month with an average daily volume of $550M.
- However, activity has slowed since Feb. 9 after the expiry of the Phase A rewards.
LooksRare’s NFT trading activity has slowed in recent weeks following the expiry of the Phase A rewards. The platform averaged a daily transaction volume of about $550 million during the first 30 days since launching on Jan. 10, 2022.
LooksRare’s highly incentivised platform rewarded traders in a 4-tier system, spanning 741 days.
In the first tier, called Phase A and expiring within 30 days, the platform had a maximum daily reward of 2,866,500 LOOKS tokens from a total of 85,995,000 for the entire phase.
Phase B’s total daily allocation is 1,361,587.50 LOOKS issued over 90 days for a total of 122,542,875.
On the other hand, C and D have a daily allocation of 537,468.75 LOOKS and 286,650.00 LOOKS, respectively expiring after 240 days and 361 days. Each phase kicks off following the expiry of the preceding phase.
Overall, the total daily allocation has fallen by more than 50%, with the current Phase B LOOKS limit representing about 47% of the Phase A limit.
However, with an average daily transaction volume of about $150 million representing just about 27% of $550 million the platform averaged during the first phase, LooksRare’s trading activity has plunged more than expected.
This could be related to last week’s reports where the LooksRare team was caught cashing out $30 million in wETH through the Ethereum Swapping platform Tornado Cash. The team received backlash from the LooksRare community prompting them to explain the reason behind their activity.
Since then, the $LOOKS token price has fallen more than 60% amid increased market doubt over whether it could be nothing more than a rag pull.
Subsequently, with LOOKS losing its value and the daily allocation for rewards reduced by more than 50%, the platform’s incentivised rewards mechanism seems to be losing its shine.
The NFT whales and wash traders that drove volume sky-high in January seem to be losing interest with trading volume only spiking in moments before falling for extended periods.
As demonstrated in the Dune Analytics chart by @hildobby, LooksRare’s hourly transaction volume spikes for a few hours to about $30-$40 million, before falling closer to zero for several hours.
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