Faced With The Scourge Of Hacks, NFT Trading Volume Slump To 12-Month Lows
There was a huge surge in interest in NFTs throughout the summer of 2021. After a year, the NFT market’s trading volume has plummeted.
Due to the lowest trading volumes in a year and the growing epidemic of NFT hacks, interest in NFTs has decreased along with the overall cryptocurrency market.
NFT Suffers Setback
The non-fungible token market is finding it difficult to sustain the exponential growth it saw during the 2021 bull market. Trading volumes have dropped precipitously recently and are already at their lowest levels since July 2021, according to data from prominent NFT trading sites like OpenSea.
PierreYves Gendron’s Dune data indicates that OpenSea’s trade volume peaked in January at at $5.8 billion. But throughout the year’s first two quarters, trade on the platform rapidly decreased, falling to $3.1 billion in May.
When compared to other months, June’s trade volumes saw the biggest decline in the exchange’s history, falling 74% to $826 million. With four whole days left in the month, OpenSea has already made $456.9 million, continuing the downward trend.
OpenSea monthly USD volume (Source: @PierreYves_Gendron via Dune)
The daily trade volume for OpenSea shows a more pronounced fall in activity. Daily volumes in June and July were closer to $20 million after May 1 saw $543 million in deals, the day after Yuga Labs’ eagerly anticipated Otherside drop went online.
The quantity of distinctive NFT transactions on OpenSea furthers the waning interest. Transactions consistently exceeded 150,000 per day in May and the first few days of June. They haven’t been able to surpass 75,000 since more than a month ago.
Even if other more recent exchanges have posed fierce competition for OpenSea, it is evident that total trade volumes are still declining. The top two exchanges after OpenSea, X2Y2 and LooksRare, have not been able to make up the difference with their recent trading volumes.
X2Y2 presently manages roughly $27 million in daily trading volume, whereas LooksRare sees about $9 million, according to Dune statistics provided by cryptuschrist. Furthermore, because both exchanges provide traders with token incentives, it has been hypothesized that a significant portion of their combined volume comes from wash transactions by market manipulators hoping to profit from the tokens (the exchanges reward their most active users).
Hacks On Projects Have Also Steadily Increased
In 2022, cyberattacks against NFT collections have increased steadily, according to a new TRM Labs research, costing the NFT community over $22 million in just May. NFTs are tokens built on the blockchain that represent ownership of tangible or digital assets.
According to the report from TRM Labs, a company that specializes in digital asset compliance and risk management, hacks related to NFT minting scams that were used to compromise Discord accounts climbed by 55% in June 2022 compared to the prior month.
TRM Labs investigator Monika Laird said:
“Since 2022, we’ve seen these compromises happening at scale, specifically on Discord.”
The NFT community has suffered more than 150 compromises targeting NFT projects’ Discord servers since May 2022. A sampling… (1/2) pic.twitter.com/cEdPaV5mQI
— TRM Labs (@trmlabs) July 25, 2022
Through its Chainabuse reporting platform, TRM Labs claims to have received over 100 allegations of Discord channel hacking in the previous two months. According to Laird, the attacks take place every week and frequently target ERC-721 tokens, which are a non-fungible token standard on the Ethereum network.
BTC/USD trades at $22k. Source: TradingView
Laird noted that the relationship between wallets and common consolidation sites (exchanges, mixers) on the on-chain side shows that the same individuals are likely behind the majority of these attacks.
Bored Apes Yacht Club’s creator, Yuga Labs, posted the following last week on Twitter:
“The NFT community is the target of a persistent threat group that our security team has been monitoring. We predict that they will soon use compromised social media accounts to undertake a coordinated attack against a number of communities. Please be cautious and be safe.”
According to TRM Labs, on-chain evidence indicates that the hacker who targeted the Bored Ape Yacht Club in June may be responsible for several of the Discord hacks. Other projects that the company has its eye on include Anata, Lacoste, Tasties, Parallel, Bubbleworld, and more.
Related reading | NFTs In A Nutshell: A Weekly Review
Featured image from Getty Images, chart from Tradingview.com, Dune Analytics