Since LooksRare quickly positioned itself as OpenSea’s biggest rival after launching just three weeks ago, questions have been asked about the platform’s trading figures.
Users have been buying and selling non-fungible tokens (NFTs) between wallets they control in an effort to manipulate daily rewards, a practice known as wash trading.
The launch strategy of @LooksRareNFT was amazing. But something’s fishy in the 7b valuation based on marketplace volume mostly comprised of wash trading https://t.co/qZv428lrzW is perception everything?
LooksRare Generates $8.3 Billion Volume in Three Weeks
NFT analytics firm CryptoSlam has now reported the extent of the practice, noting that LooksRare has generated more than US$8.3 billion since launching on January 9, the vast majority of that volume in wash trading. Although the full extent is yet to be officially confirmed, initial estimates are extraordinarily high:
92% of LooksRare's $9.5 billion in trading is wash trading.
That means they've done $760mm in ACTUAL NFT SALES.
That's more than Rarible, SuperRare, Foundation, Makersplace, KnownOrigin, and Async did combined in ALL OF 2021.
Most of it appears to derive from royalty-free collections, which means sellers don’t have to pay creators a secondary sale fee. Larva Labs’ Meebits tops the wash-trading list with US$4.4 billion, followed by Terraforms (US$2.9 billion), Loot (US$705 million), and CryptoPunks derivative CryptoPhunks (US$251m), with another $US62m attributed to other projects.
Why Users Are Selling NFTs at Vastly Inflated Prices
Users who buy and sell NFTs on the LooksRare site are offered a percentage of the day’s total sales via the site’s own LOOKS token. Those users then game the system by selling NFTs back and forth between their own Ethereum wallets via artificially inflated prices, with the aim of earning more in LOOKS rewards than they’d spend on LooksRare’s 2 percent marketplace fee and the Ethereum network’s own gas fees.
LooksRare also provides Wrapped Ethereum (WETH) rewards for users who stake their LOOKS tokens in the platform, providing further incentive to accumulate and then hold a large number of them. The community reward models set LooksRare apart from OpenSea, but with trading rewards at their highest level during the platform’s first 21 days, some users are clearly abusing the system.
DAOs are the newest topic of talk in the cryptosphere, garnering a lot of attention for some of the outrageous purchases some have tried to make. Recently, BlockbusterDAO announced its intention to buy Blockbuster Video and turn the iconic brand into a streaming service.
Syndicate has introduced “Web3 Investment Clubs”, the company’s first mainstream crypto-native investing tool, built on the Syndicate Protocol. The public beta version of the initiative, launched on January 25, transforms any Ethereum wallet into an investing DAO within seconds for the cost of gas fees.
Syndicate’s Web3 Investment Clubs run natively on Ethereum using an ERC-20 infrastructure, allowing the clubs to take advantage of Web3 tools. The clubs can invest in tokens and NFTs, as well as off-chain start-ups and assets.
Since investment clubs are member-driven, almost any community can create a club, given they follow certain guidelines such as having up to a maximum of 99 private invite-only members, with all of them participating in decision-making.
How to Start a Web3 Investment Club
To start a club, founders need to connect a wallet such as MetaMask to the Syndicate network. Thereafter, deposits are collected in the wallet and any excess assets available in the wallet are made visible to members of the club. Once the investment club founder chooses a name, the platform assigns a token symbol to a club.
The next step is for the founder to enter how much USDC – the only crypto the platform supports at the moment – the club aims to raise. The amount entered will in turn be paid out to members in the club’s token on a 1:1 basis.
The club founder will then determine how long deposits will be accepted, allowing time for others to join the club. Founders determine how many members can join the investment club, 99 being the maximum. Finally, after accepting the terms of service, the founder is able to launch the club.
Blockscan, the team behind the Etherscan blockchain explorer, has released Blockscan Chat in beta, an Ethereum-based wallet-to-wallet instant messaging service.
🚨 ethereum instant messenger!!🚨
blockscan app, by @etherscan folks let’s u: ⁃instant chat bw wallets -use multi device login ⁃block addresses ⁃notifications
As well as enabling users to engage in instantaneous wallet-to-wallet chat, Blockscan will allow them to:
access chats from multiple devices;
block spam or unwanted addresses; and
be notified on the block explorer when a message has been received.
Negotiating Power with White-Hat Hackers
Above all else, the new feature may prove itself invaluable for dealing with white-hat hackers, who tend to leave messages embedded in Ethereum transactions in order to communicate with individuals and exploited crypto platforms.
It would have proved particularly useful in last week’s ongoing Multichain exploit, in which an assumed white-hat hacker returned 322 ETH (about US$770,000) but kept a hefty finder’s fee, not to mention last year’s US$610 million Poly Network hack. In both cases, anonymous discussions via Ethereum transactions formed part of negotiations between culprit and victims.
Blockscan Also Has NFT Applications
Apart from pleading with hackers to return funds for a bounty, the service could also prove useful in negotiating NFT purchases between buyers and sellers. If the transaction were to be conducted by a decentralised exchange, both parties could reduce the fees associated with NFT platforms such as OpenSea.
wow .. .. No we can chat to make a good deal for certain NFTs holders without diving into Discord, Twitter, Telegram.
In related news, Unstoppable Domains – a US-based company that provides blockchain-based domain names – announced a fortnight ago that Ethereum and Polygon NFT domains can now be used for single logins. The service allows users to sign in to their favourite apps with an NFT portable name, thus eliminating the need to provide any additional information.
Ethereum developers have moved away from old terminology and opted to phase out the terms ‘ETH1’ and ‘ETH2’ and pretty much everything related to them in what the foundation calls “the Great ETH2 Renaming“.
Ethereum.org is shifting much of its fundamental terminology to reflect the integration of ETH1 – the existing Proof-of-Work (PoW) chain – which will now be called the “Execution layer”, to ETH2 – the new Proof-of-Stake (PoS) chain – now known as the “Consensus layer”, making the chain greener and faster.
In late 2020, Ethereum Foundation developer and researcher Danny Ryan showed how ETH1 and ETH2 are layers in the Ethereum stack, and how they can work together to make the migration to PoS faster.
The bottom line is that the execution layer will act as an engine where all the smart contracts and network rules reside, driving user interaction, while the consensus layer ensures all the devices contributing to the network are acting in line with the rules. This means that Ethereum can move to PoS without having to abandon the current network. In essence, ETH1 (Execution layer) + ETH2 (Consensus layer) = Ethereum.
However, no changes will be made to the roadmap, with Proof-of-Stake and sharding still in the pipeline for 2022/2023.
Ethereum upgrade path. Source: Ethereum Foundation
Reasons for the Rebranding
According to the announcement, in late 2021 developers stopped using the ETH1 and ETH2 terms to address possible confusion for users. One of the major problems was that the previous terminology showed a continuum of iterations rather than stacks working together. Thus the foundation has decided it wants to “be understood by the broadest audience possible”:
By removing ETH2 terminology, we save all future users from navigating this confusing mental model.
Ethereum.org
Additionally, this also helps in scam prevention since some swindlers would try to use the ETH2 misnomer to scam users by having them swap their ETH for ‘ETH2’ tokens.
A bug has been exploited by hackers to purchase NFTs from OpenSea users at well below market value. The loophole allowed Bored Ape #8924 to be snatched up for an old sale price listing of only 6.66 ETH (about US$16,200), leaving its seller, VirtualToast.eth, very angry.
VirtualToast.eth expressed his outrage at OpenSea’s negligence and warned other users of the platform’s flaw, urging them to remove all permissions for OpenSea to avoid suffering the same fate:
What the fuck @opensea I am beyond pissed at your god damn site right now, I just woke up on a Monday morning to find out that my ape @BoredApeYC just sold for 6.66 eth overnight due to an old listing price. This ape was not transferred between wallets cont. -> pic.twitter.com/M5yQv3weFC
The bug allows attackers to snap up NFTs at previously listed prices (chosen by the seller in the past), which are often well below current market prices. The exploit relies on the fact that NFT owners are unaware that old marketplace listings for their NFTs are still active. This is due to the seller not delisting the item correctly by paying a gas fee. The Messenger | NFT posted on Twitter to help explain the issue:
To protect users, Rarible was quick to temporarily disable all OpenSea orders on Rarible.com. It also developed a tool, Rarible Order Manager, to allow everyone to see and cancel their potentially risky sale orders.
Other NFTs Flipped Following Exploit
Etherscan has dubbed the account in question “OpenSea Opportunistic Buyer”. The exploit allowed the buyer in question (who goes by the name “jpegdegenlove“) to successfully purchase other NFTs at heavily discounted prices, including BAYC NFT #8274 for just under 23 ETH (around $56,000) and BAYC #9991 for just 0.77 ETH (about $1,800). The floor price for a BAYC NFT is currently 86 ETH, worth almost $210,000 at the time of writing.
“Jpegdegenlove” bought seven NFTs in the hack, paying a total of $133,000, before immediately flipping them for $934,000 in ETH and sending the funds through Tornado Cash.
Interestingly, “jpegdegenlove” seems to have partially compensated two of his/her victims, sending 20 ETH ($49,000) to “TBALLER”and 13 ETH ($32,000) to “Vault327”.
This isn’t the first time OpenSea has been criticised for flaws in its code. Just a few months ago, Crypto News Australia reported a bug on the platform that destroyed at least 42 NFTs worth around US$100,000.
According to the newest edition of the Crypto Market and Sizing Report by Crypto.com, global crypto owners are predicted to total one billion by the end of 2022. According to the report, as of January 2022 that number has already reached 300 million.
Global Crypto Adoption Up 178% in 2021
The report also states that global adoption increased by 178 percent in 2021, almost tripling from 106 million to 295 million owners in December 2021.
During the first half of 2021 crypto adoption was significant, but slowed down during the second half reaching 37.5 percent, 13 percent higher than over the same period in the previous year.
The report further states that Bitcoin was the main driver behind the observed growth, outperforming Ethereum in terms of adoption. Weak Ethereum adoption is attributed to the emergence of competitors such as Cronos, Terra and Avalanche, together with Layer 2 solutions.
🚀Bitcoin was the main driver behind the growth, outperforming Ethereum in adoption
🌱Weak Ethereum adoption can be attributed to the emergence of competitors like Terra, Cronos, and Avalanche and Layer 2 solutions pic.twitter.com/UdKzIKfBhm
— Crypto.com Research & Insights (@cryptocom_rni) January 20, 2022
Rise in Adoption Mirrored by Crypto Jobs Boom
As the blockchain industry continues to grow, so too the crypto job market. In a recent report published by LinkedIn, crypto job ads have seen a significant, and rapid, spike. In 2021, crypto job postings surged a whopping 395 percent, as the number of cryptos listed on CoinMarketCap stood at 7,000-8,000 just a year ago. At the time of writing, this number is closer to 17,000.
Delivering on a promise made last October, Twitter has released its official verification mechanism for non-fungible token (NFT) profile pictures. However, it is only available to those who sign up for the “Labs” feature via the company’s Twitter Blue subscription service.
gm!
You asked (a lot), so we made it. Now rolling out in Labs: NFT Profile Pictures on iOS pic.twitter.com/HFyspS4cQW
Though the verification tool is initially limited to Ethereum-based NFTs via OpenSea, a Twitter spokesperson says it is simply the “first iteration” of a feature that may support other blockchains in future.
How It Works
Link your Ethereum wallet to your Twitter account, and you’ll be presented with a list of NFTs you own. Choose an NFT, and your profile picture – usually enclosed within a circle – takes on a distinctive hexagonal border. If someone right-clicks on your NFT in an attempt to appropriate it as their profile picture without first buying the token, they will be able to use the image but will be limited to the circle frame.
Still Some Refinements to be Made
A persistent right-clicker might re-upload that same image to an NFT platform, mint a visually identical NFT and use that as their profile picture instead, complete with a hexagonal frame signifying ownership on the blockchain. Twitter has yet to come up with a solution to this advanced form of deception, which has become increasingly common as the NFT space has continued to explode over the past year.
For now, NFT verification is available only for users with Twitter Blue, the company’s US$2.99-a-month subscription service. For NFT fans, it may be a price worth paying.
Twitter is also limiting the release to iOS users but says Android and web users will be able to see when a user changes their profile pics to an NFT.
Ethereum, the world’s most in-demand blockchain, achieved some major milestones in 2021, including a massive US$10 billion in transaction fees captured from the network.
ETH transaction fees in USD for 2021.
To put this in perspective, compare it to other global payment networks such as VISA, which processed around US$24 billion in transaction fees. In 2021, Ethereum surpassed Stripe into second position in the global transactions by dollar value.
Global payment networks transaction fees comparison.
And if we compare the other crypto networks, which include both Layer 1 and Layer 2 networks, we can see both Ethereum and Uniswap taking higher fees than Bitcoin in 2021. However, this represents a combination of usage and decentralised platforms having much higher fees than their centralised alternatives.
Crypto networks transaction fees comparison.
Could We See a ‘Deflationary’ Supply of ETH in 2022?
In August 2021, the Ethereum protocol underwent an upgrade called “London EIP-1559”, which changed the way ETH fees worked. Essentially, the miners were no longer incentivised to keep fees high, with the base fee being burned from supply (moved to a wallet), along with improved blockchain security.
We have already seen some days show a negative net issuance of ETH on the network, which is shown live on watchtheburn.com. When the merge happens, it will interesting to see if that negative issuance becomes more frequent.
Ethereum plans to upgrade to version 2.0 during 2022, switching from proof-of-work to proof-of-stake. “The merge” will happen around Q2 this year when the version 1.0 blockchain simply gets turned off and version 2.0, “The Beacon Chain“, replaces it.
This upgrade will see a more eco-friendly Ethereum, maintaining high levels of decentralisation and security.
It is anticipated that the merge updates will not reduce gas fees significantly; we will have to wait until 2023 when Ethereum introduces sharding technology to reap the benefits of the high throughput and low fees. This technology will become available to Layer 2s so we may then finally be able to solve a lot of the scaling problems, something Ethereum will have to do if it wants to become the settlement platform of Web 3.0.
Find Out More
You can read the full Ethereum 2021 report written by Josh Stark and Evan Van Ness at the decentralised blogging platform called Mirror.
Crypto News Australia also recently published a guide on the best Ethereum Layer 2 projects worth keeping an eye on this year.
Tokenised real estate is now a reality thanks to NFTs. The global real estate store Propy offers a faster, simpler and more secure process for buying and selling property through smart contracts.
On January 14, Coinbase announced it would list Propy (PRO) on its website’s blog. Coinbase is the largest cryptocurrency exchange in the US and the second-largest cryptocurrency exchange by volume globally.
Propy is a project focused on expanding the functionality of NFTs beyond the digital art world. The Ethereum-based protocol integrates blockchain technology with the real estate sector and offers an automated closing process for international real estate transactions.
The PRO token is used to pay for platform fees to process tasks such as modifying and creating title and deed contracts. Read the whitepaper here.
First Real Estate NFT in the US
Along with the recent Coinbase listing, Propy has an upcoming sale in Tampa, Florida, which will be the first real estate NFT sale in the US. These two factors appear to have boosted the price of the PRO token:
PRO was worth US$1.12 on January 12 before news of the Coinbase listing. The price moved 227 percent to hit a daily high at US$3.67 on January 14 and has since continued to climb beyond US$4.00. The token has ballooned by an impressive 5192.6 percent in just one year and is still climbing the ranks, currently sitting at #257.
Ethereum is currently powering the future of global decentralised finance (known as “DeFi”) so it’s blockchain must be well equipped to scale and handle an influx of apps and users into the millions. Currently there are limitations with Ether blockchain with speed and high transaction fees, which has led to the emergence of Ethereum layer 2 projects that help resolve the network performance and enable continued expansion of the DeFi ecosystem.
What is Ethereum Layer 2?
A layer 2 project is a company and network of its own that operates on top of the Ethereum blockchain base layer (known as “layer 1”). Layer 2 projects (also known as “sidechains”) connect Decentralised applications (Dapps) to interact with aspects of the layer 1 blockchain to significantly speed up transactions, whilst making use of the base layer’s privacy and decentralised infrastructure.
Why use Layer 2 Projects?
The main Ethereum 1.0 blockchain currently has a low speed of around 7-15 transactions per second (TPS). Layer 2 solutions can achieve much faster speeds of up to 9,000 tps by handling most of the hard processing “off-chain” on their sidechains to increase efficiency.
There are an increasing amount of layer 2 projects and sidechains in circulation, each working to improve user experience for swapping coins and tokens, minting NFTs, reducing transaction GAS fees and increasing the speed of transactions.
We have compiled a list below of what we think are the best 10+ Ethereum layer-2 projects and sidechains worth knowing about.
1. Polygon
Polygon – a multichain ecosystem.
Polygon is a protocol and framework that allows projects to connect with Ethereum-compatible networks to enable ‘scalable-solutions’ for a multi-chain ecosystem.
Advertised as being for developers, by developers, Polygon has identified the challenges facing the Ethereum blockchain and presented its own solutions by offering instant and ‘zero-gas’ transactions with a Proof-of-stake (PoS) chain.
Polygon utilises the MATIC token, which helps to secure the network and to pay any transaction fees. Originally the project was called MATIC and was seen as a direct competitor to Ethereum, but in 2021 it rebranded to Polygon and now enhances the Ethereum ecosystem rather than directly competing with it.
Optimism is a community focused layer 2 framework that offers projects with lighting speed for a lower cost to transmit data to and from the layer 1 blockchain. Optimism is an optimistic rollup chain, which means a large batch of transactions are ‘rolled’ together and then condensed and processed on layer 1.
The Optimism ecosystem promotes hundreds of apps and integrations including DeFi, NFTs, Bridges and Portfolio trackers. There isn’t a native token for the Optimism project yet. The project current donates all the profits towards scaling the growth and sustainability of public goods.
3. Arbitrum
Arbitrum – build an app in five minutes.
Arbitrum is a layer 2 project built by Offchain Labs that provides Ethereum apps to scale at low cost whilst also providing software developer’s which simplified feature implementation of smart contracts. Arbitrum claims that you can build an Eth app in as little as five minutes.
Much like Optimism, the Arbitrum also doesn’t have a project token yet. That being said, the ecosystem is growing with hundreds of live applications including NFT marketplaces, Wallets, Bridges and On-Ramps making use of the quick start developer tools.
4. Starkware
StarkWare – facilitate all kinds of transactions.
Starkware is an Ethereum layer 2 project that provides scaling solutions for applications wanting to keep transaction fees low and fast executing.
The Starkware ecosystem includes a few different sub-projects which help provide permissionless decentralised ZK-Rollups that help facilitate the transactions that accompany AMM, spot trading, NFT minting and crypto trading. Big projects such as Sorare have integrated Starkware into their infrastructure to enable minting of Ethereum-based NFTs.
Starkware doesn’t have a native token yet.
5. Uniswap
Uniswap – apply for funding to build your app.
Uniswap is one of the leading the decentralised crypto trading protocol projects that supports thousands of DeFi applications including token swapping, staking, voting, liquidity providers and more.
You can use the Uniswap app to swap DeFi tokens directly on-chain through popular DeFi wallet providers on Ethereum, Polygon, Optimism and Arbitrum networks.
The native token for Uniswap is the UNI token, which you can use to save trading fee costs and stake in liquidity mining pools to earn yield. The UNI token also serves for decentralised governance of the project.
6. Loopring
Loopring – an automated execution system.
Loopring is a zkRollup Ethereum Layer 2 project that provide low-fees and high speed for trading, swapping and payments using ETH.
Loopring promotes an ‘automated execution system’ that allows users to trade cross-exchange and participate in cross-blockchain liquidity. Defined as ‘blockchain agnostic’, Loopring can integrate with any platform using smart contracts. You can use the Loopring BETA marketplace to create a Layer 2 wallet and trade DeFi tokens with ETH and USDT trading pairs.
The LRC token is native to Loopring and aids in these transactions.
7. OMG Network
OMG Network – Enya and Boba combine.
OMG Network (also known as “OMG Foundation”) provides Ethereum with a Layer 2 Optimistic Rollup solution that reduces gas fees and improves transaction throughput for smart contracts.
A new project launched by OMG is called Boba, which is extending Ethereum Virtual Machine (EVM) smart contract capabilities specifically for DeFi and NFTs projects running integrations on external servers such as AWS to help execute sophisticated algorithms that are not possible to run on-chain.
8. ZKSpace
ZKSpace – decreasing transaction latency and gas fees.
ZKSpace is a fairly new ZK-Rollup Ethereum Layer 2 protocol that offers near instant transactions without waiting for block confirmations.
The ZK project offers a layer 2 NFT protocol which provides NFT projects with cheaper NFT issuance, minting, airdrops and sales. 2022 should be an interesting year for ZKSpace, with lots of exciting developments scheduled, including ZKSea – an NFT Layer-2 marketplace.
The native token ZKS is used to save fees on the DeFi token swap L2 Wallet and also used to pay for minting NFTs on the L2 marketplace.
9. Skale
Skale – businesses can rent a sidechain.
Skale is an elastic blockchain network that focuses on high-performance, offering up to 1000x faster transaction speeds for your Ethereum Dapps.
Crypto projects have the option to rent a sidechain through Skale to increase transaction throughput making use of the Ethereum 2.0 validator nodes with the use of Sharding technology.
Projects can execute solidity smart contracts on Skale powered blockchains to enhances DeFi, games, NFTs and content streaming services.
SKL token is the native token of the Skale network, which aids in ecosystem cleaning, network development and upkeep, and reward validator nodes – the community keeping the network secure.
10. Gnosis Chain
Gnosis Chain – formerly xDai.
Gnosis Chain (formerly known as xDai) is a prediction market platform on the Ethereum network. Gnosis chain is providing its users with the chance to build their own prediction platform through the creation of a specific infrastructure layer.
Gnosis Chain also hosts free tournaments on the outcomes of their prediction platforms, and doing well with these can earn you GNO – the native token for the Gnosis Chain.
11. Bonus: Raiden Network
Raiden Network – compatible with all ERC20 tokens.
Raiden Network is an open source project that aims to help scale Ethereum payments by providing off-chain transfer of ERC20 tokens.
While this network is currently work in progress, Raiden is looking to avoid the ‘blockchain consensus bottleneck’ to facilitate ETH micropayments, similar to that of BTC lightning network.
Ethereum layer 2 projects will have a big say in the short adoption of Ethereum-based projects and also in the long-term success of Ethereum as a global settlement platform.
2022 brings the long anticipated Ethereum 2.0 upgrade which many believe will not make Layer 2 networks obsolete, but actually enhance them and increase adoption into the Ethereum ecosystem. Upgrades such as sharding will become available to Layer 2 projects enabling them to improve their services to Dapps and Layer 3 apps.
