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Rockstar Games (makers of GTA) joins Minecraft as the next big gaming platform to rebuke NFTs. Meanwhile, Genesis states that they have no immediate plans for bankruptcy but that could change if they don’t find any funding.
Today, we cover the recent activity on Chainlink’s VRF requests and our Research team offers a primer on NFT wash trading.
This is the Delphi Daily. Let’s dive in.
🚨 In Case You Missed It
- Crypto lender Genesis states no “imminent” plans to file bankruptcy as they hire Moelis & Company as restructuring adviser.
- Rockstar Games, makers of Grand Theft Auto, bans cryptocurrencies and NFTs from its third-party online roleplay servers.
- At least 19 properties in the Bahamas worth over $121M were purchased under FTX’s name, SBF’s parents, and senior-level executives.
- The founders of Hashflare, a now-defunct Bitcoin cloud miner, were arrested in Estonia for involvement in the $575M fraud scheme.
📊 Chainlink Verifiable Random Function Activity Surges
- Chainlink has recently seen a large spike in the number of Verifiable Random Function (VRF) requests. In the past week, there have been 246K VRF requests fulfilled, an increase of 259% over the week prior. The vast majority of this activity is on Polygon.
- The Chainlink VRF is a verifiably fair random number generator that enables smart contracts to obtain random values. Chainlink VRF produces an on-chain cryptographic proof demonstrating how the values were determined.
- Random values are needed in applications that rely on unpredictable outcomes such as blockchain games, NFT mints, assignment of duties (such as governance roles), and choosing a representative sample for consensus mechanisms.
- In May 2022, Chainlink released VRF v2 on Polygon, which provides a better solution while reducing transaction costs by up to 60%. The number of weekly VRF v2 requests fulfilled has increased by 579% from 30K to 204K in the past week.
- The increase comes most likely due to the beta launch of PLANET IX, an NFT-based strategy game.
⚡ A Primer on Wash Trading
- NFT wash trading occurs for two main reasons: to earn trading rewards from incentivized platforms such as LooksRare and X2Y2 and to manipulate the historical price and volume of an NFT collection to deceive potential buyers.
- Another form of price manipulation is “floor sweeping.” Floor NFTs are purchased in bulk, significantly raising the floor price to instill FOMO in speculators and sell the NFTs at a higher price.
- 98% of all NFT volume resulted from organic transactions in 2021 with genuine collecting and trading outweighing the activity of market manipulators.
- Bad actors certainly attempted to offload artificially inflated NFTs onto naive speculators. However, successfully misleading novice participants was costly and ineffective before the launch of incentivized marketplaces.
- In January 2022, wash trading activity had risen to the point where 72% of NFT trading volume on Ethereum resulted from wash trading.
- Next came the launch of LooksRare and its fork, X2Y2. Both platforms are decentralized, community-oriented, and tokenized. However, with diminishing rewards and broader market turbulence, the incentive to wash trade continually declined.
- Blur is the highly anticipated NFT marketplace and aggregator designed for amateur and professional traders. Their incentivized mainnet launched on Oct. 19th, and wash trading subsequently rose from 55% to 76%.
- Users will be eligible for retroactive BLUR token rewards for listing actively traded NFT collections with their advanced tools. Blur has stated that users who include collector royalties will earn more.
- However, royalties remain optional, and the platform charges no service fees, a recipe for wash trading. Blur attempts to filter wash trading by specifically rewarding those who list actively traded collections, but the effectiveness of this method is unknown.
- One way to avoid market manipulation and provide improved UI and UX is by using NFT aggregators. Aggregators provide users access to tighter NFT spreads and the ability to sort NFTs by traits and floor prices.
- Three months ago, 16% of all sales were conducted through aggregators and this metric has increased to 34% today.
- Due to Blur’s incentivized listing program, users are encouraged to list NFTs at reasonable prices, resulting in tighter price spreads. Tighter price spreads mean traders and collectors receive optimal prices and a better experience overall.
- For more on NFT wash trading, Delphi members can read our Delphi Pro report here.
🐣 Notable Tweets
The FTX Fallout Simplified With Numbers
1/ The FTX fallout has the potential to impact crypto for years to come.
Today, new information brings confusion, speculation and the potential for another bankruptcy.
Here is the short 20 tweet version of events, simplified with numbers & data visualization: 👇🧵
On Prime Brokers and Genesis
1/ Genesis is the only full-service prime broker in crypto. Genesis was a gem in the DCG portfolio.
It plays an critical role in enabling large institutions to access & mange risk.
The $1 Bn question – where does Genesis go from here? A thread on Prime brokers & Genesis
-Ram Ahluwalia (@ramahluwalia)
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