NFT Sales Reach Highest Levels Since Terra Crash, Surpassing $2 Billion in February

According to statistics from DappRadar, NFT sales volume soared in February to levels not seen since the start of the crypto winter last May.

The trading volume last month reached a remarkable $2.04 billion, which is a significant increase of 117% from January's $941 million. These numbers indicate that February was the most successful month for the NFT market since May of the previous year, when the NFT market was at its peak before the Terra crisis led to the decline of the entire crypto economy.

The spike, however, appears to be almost entirely due to a single, controversial source: Blur.

Incentives that compensate devoted users for avoiding trading on any other platforms and—importantly—for trading as many high-value NFTs as possible have propelled the emergent NFT marketplace's sudden rise to dominate the market, which just this month overtook OpenSea in trading volume.

Blur's trading volume surged by over $1.13 billion since February, accounting for nearly all of the NFT market's month-on-month growth. The majority of the volume, however, was generated by a tiny number of whales swapping NFTs back and forth in order to earn BLUR tokens through the company's incentive plan.

The topic of whether or not to count that trade as real volume is currently being debated by the NFT community. This Monday, Cryptoslam, a key site for tracking NFT sales, said that $577 million in Blur trades will be removed from its data due to "market manipulation."

Another popular NFT and DeFi tracking firm, DappRadar, has opted to count Blur's trading volume as legitimate, at least for the time being.

“Due to the bidding logic used [by Blur], most trades performed by Blur farmers are bypassing [our wash trading] logic,” said Pedro Herrera, DappRadar’s Head of Research. He also said, “we’re currently looking into this, but we won’t be flagging all Blur sales as wash trades.”

Wash trading is commonly characterized as traders selling NFTs back and forth between their own wallets, usually at exaggerated rates, in order to artificially boost the market value of those assets. Previously, similar efforts to exploit reward systems offered by NFT markets such as LooksRare were labeled as wash trading.

But, despite the pressure and controversies sparked by Blur's rapid expansion in February, rival OpenSea persisted in February, even after the $13.3 billion firm said it would remove creator royalty fees. OpenSea is undoubtedly spooked by Blur's aggressive methods. Last month, OpenSea's monthly trading volume rose 18% to $587.22 million. The platform still has over 316,000 traders compared to Blur's 96,000, which is a significant advantage.