Although NFT marketplaces have to gain millions of dollars in investments these days, they remain unregulated. So, it is no wonder that there exist some issues that inhibit the growth of such NFT marketplaces as Opensea. One of these problems is wash trading. Anyone who think about how to create NFT marketplace like Opensea may concern about it. This problem is associated with the marketplace ecosystem. So, in this article, we explain what wash trading is, how it causes an unfair market and how to restrict its effects using cloning this script.
What is wash trading in an NFT marketplace like Opensea?
In NFT trading (in any marketplace), there are two parties: buyer and seller. Wash trading occurs when the same person plays both the buyer and seller roles. Nonetheless, this is not new in the blockchain space. Crypto exchange platforms do wash trading traditionally to overemphasize their trading volumes, and it has been reported that such unfair activities in the crypto atmosphere back in 2019.
However, the wash trading activities increased by enhancing the popularity of NFTs in early 2021. With a massive number of users in marketplace platforms, many of these traders try to trade their tokens at a higher price, even more than they deserve. On the contrary, many platforms do not do any vetting procedures and ask the users to connect their wallets and begin trading!
Why does wash trading cause unfairness in NFT marketplaces?
Despite the illegalness of wash trading in the real traditional markets, it is still considered enough by their users and authorities. For example, consider a beginner who gets into this NFT platform for the first time and sees NFT prices that are artificially inflated. It creates an unfair market for buyers, vanishes faith in the NFT ecosystem, and negatively affects the evolution of this space.
three parties which can be negatively affected by wash trading
investors
the investor decisions may be challenging since they will have to look for reliable statistics.
Collectors or traders
They may need help buying decisions since misleading statistics may cause anti-investment decisions.
global community
the most considerable damages are associated with the communities. Regulators and advocators of mainstream financial services recently can use wash trading activities to fight decentralization.
Restrict wash trading with create Opensea clone script
traders can utilize Opensea clone tools to curb wash trading activities. These involve the below-mentioned practices:
closed-cycle trade
The first tip to curb washing trading is to limit the entries and not interact with other economies. If you can integrate this concept into your NFT website, you (as the software owner) and your users can be assured that the trading ecosystem is self-sufficient.
Weekly upgrades
Upgrading the platform every week can help you to eliminate its drawbacks and consequently destroy wash trading activities. In this regard, a pre-build Opensea clone script enables you to make changes whenever you need.
Artificial intelligence technology
An NFT crypto market like Opensea (or Rarible clone script) which uses artificial intelligence, is able to identify sophisticated trading patterns that signify such activities. This technology also reduces spoofing activities throughout the marketplace and brings fair trading.
NFT token characteristics
This article is all about tokens and washes trading practices regarding tokens. So, although many people may know tokens, it would be better if we could redefine what exactly it is and mention their main characteristics.
NFT tokens can be seen as digital forms of art, including photos, songs, domains of gaming items, etc. the worth of these tokens is expressed in Ethereum or bitcoin crypto and their values are then converted into dollars. Non-fungible tokens act similar to a cryptocurrency in that they are stored on a blockchain, have monetary value, and are tradable. Some tokens can be partially unique or highly unique, so it is reasonable the latter one has a limited supply. The uniqueness of an NFT significantly influences its price. The original Opensea or Opensea clone GitHub are considered the most popular non-fungible token markets with a wide range of digital assets whose writers can achieve millions of dollars by selling them. These tokens have specifications like:
- Indivisibility: this means that they can not be divided into smaller pieces.
- Authenticity: The authenticity can quickly confirm all information regarding tokens and their owners.
- These are traceable and can be bought or sold on different crypto platforms. Thereby, the owners can take advantage of these advanced trading algorithms.
- Non-interoperability: every token is one of a kind, so these products can not be swapped for them.
- The grouping, trading, and market selling capabilities give the NFT holders a world of possibilities.
- Interactivity: it is possible for traders to engage with many ecosystems via ERC 721 and ERC 1155 tokens. Both are standards that make it possible to create non-fungible tokens for digital assets.
- High liquidity: since NFT tokens can be traded quickly and easily, the liquidity increases consequently.
- These platforms' target audiences range from beginners to hardened and experienced traders. Thus, there are more buyers who will be able to employ digital content.
- These digital assets represent real-world items, including art, music, gaming, and movies. These are based on the Ethereum blockchain technology and are unique in that no other value can replace them.