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Despite low gas fees, why is OpenSea’s trading volume bothering NFT holders

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Screen Shot 2022 02 18 at 16.56.03
19
Feb

At the start of the year, NFT traders watched with a range of emotions as OpenSea’s monthly volumes for January 2022 quickly overtook those of December 2021 – even before the month had ended. Now, with February drawing to an end, what do the stats tell us?

Not lift-off time yet?

Well, it’s still not possible to declare for certain, whether OpenSea’s February trading volume will beat that of January. At press time, $2,537,257,571.44126 had been generated. This is close to half of January’s volume of $4,954,858,223.87724.

Source: Dune Analytics

It certainly raises the question of whether the trading volumes that OpenSea [Ethereum] recorded in January 2o22 are sustainable – or if it’s the case of a one-trick pony.

Many NFT lovers will know that NFT marketplace trading volumes have a lot to do with Ethereum’s gas fees. Higher gas fees may discourage creators and collectors alike, leading to lower volumes. That said, however, Ethereum has been seeing a fall in gas fees for some time now.

For example, the mean gas price reached a five-month low of 73.151 gwei.

Adding to that, gas fees at press time were around 84 gwei, according to Etherscan.

Taking these facts together, it seems that there might be another reason for OpenSea’s slowing momentum. Perhaps, a certain rising star of a rival NFT marketplace.

LooksRare has been making headlines, thanks to its daily trading volumes eclipsing those of even OpenSea. However, analysts have criticized the volume of wash-trading that enables LooksRare users to claim LOOKS tokens as rewards.

However, when studying the evidence – here, the tiny number of daily users on LooksRare – it seems unlikely that the new NFT marketplace has been swallowing users from its oceanic counterpart.

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Source: Dune Analytics

In conclusion, more data is needed to figure out why January and February were drastically different months for OpenSea users.

LookRare’s ‘vampire attack’

It might be easy to laugh off LooksRare’s presence in the market, but that might be unwise. Coinbase’s report on the new NFT marketplace claimed that it could still be termed a “success,” thanks to its “legitimate NFT volume.”

Coinbase also explored what it called LooksRare’s “vampire attack,” where it established itself as an OpenSea rival and tempted users to change sides by offering LOOKS tokens as rewards.

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