LooksRare is all the rage, but you have no idea what it is?
Or perhaps you’ve heard it’s a hot new NFT market, but you’re not sure why?
Worried about wash trading and other rumours of doom and gloom?
We’ve got you covered, don’t worry.
We’ll go through exactly what LooksRare is, how its incentive systems function, and why you shouldn’t be concerned about the present wash trading in this article.
Points to Remember (tl;dr)
LooksRare is a new NFT marketplace that focuses on the community. It began in January 2022. Trading NFTs on the platform, staking LOOKS tokens, and providing liquidity for LOOKS tokens are all ways to earn LOOKS token incentives. Because of the way the LOOKS token release schedule was set, there has been a lot of wash trading. LOOKS awards do not apply to private sales.
Wash trading, according to the experts, should be exceedingly unprofitable in most cases. The seed funders and the founders are both anonymous. Despite these clear red signs, the team appears to have been paying close attention to user comments.
What Exactly Is LooksRare?
LooksRare was founded in January 2022 as a community-driven NFT marketplace. It aspires to be a significant competitor to OpenSea, which is presently the market leader, and is attempting to accomplish so by embracing a strong Web3 ethos. That implies that LooksRare’s profits are returned to the community in the form of prizes.
This brand-new NFT marketplace sprang out of nowhere. When LooksRare appeared on the scene in early January 2022 as one of the first genuine OpenSea options, everyone was enjoying the new year bull-run.
Despite the fact that many people were excited to see fresh competition for OpenSea, many people were dubious about LooksRare at first since numerous well-known influencers provided seed funding before the debut. Not every one of these influencers has a stellar public image. Nonetheless, their LOOKS airdrop created quite a stir.
The NFT marketplace’s native governance token, LOOKS, is also used to distribute awards. This is noteworthy since, despite being the industry leader, OpenSea does not have its own cryptocurrency. That’s correct, there’s a whole new method to generate money using NFTs today. But we’ll get to that later.
They also launched creative new features like the “Collection Offer,” which is effectively a blanket offer to all holders of a given token, as one of the first NFT websites. Anyone is welcome to accept the offer. It’s a first-come, first-served basis. And, as one of the first NFT marketplaces, they want to incorporate the rarity tools that NFT investors require directly into their user interface. If that’s not thrilling, I’m not sure what is.
How to Get LooksRare Rewards
Trading on LooksRare, staking LOOKS tokens, or creating liquidity for LOOKS via LP staking are all ways to receive LOOKS rewards. Regular staking has the extra benefit of receiving WETH rewards, which are derived directly from trading platform costs.
The creators’ LOOKS incentives are a means for them to give back to the community while also allowing users to become owners of the NFT platform.
LOOKS tokens will be distributed over a two-year period
They come from a variety of places, including the treasury, the founding team, and strategic investors.
To reduce the danger of a “dump” by early investors, the categories indicated above are also subject to a vesting schedule. The community tokens, on the other hand, are by far the most significant category. The community will get a staggering 75% of the tokens through airdrops, staking, and trading.
Because the distribution of these tokens slows with time, being an early adopter of the NFT marketplace might be quite profitable.
You may receive LOOKS rewards in three ways
- Using the platform to trade
- By putting LOOKS tokens on the line.
- By making LOOKS tokens more liquid (LP staking)
LOOKS REWARDS TRADING
Based on your purchasing and selling behaviour, LooksRare will reward you with LOOKS tokens.
Trading awards are determined daily and are based on your relative proportion of the previous day’s trading volume. It’s also wonderful that both buyers and sellers are paid for their efforts. Both parties have a strong incentive to trade through the platform.
Staking your LOOKS tokens using LooksRare staking is possibly the most appealing way to gain rewards. This entails securing them in a DeFi smart contract. You receive more LOOKS tokens according on your part of the total tokens staked the previous day when you stake.
During staking, your LOOKS will automatically compound, eliminating the need to waste gas money on staking newly obtained LOOKS. However, the WETH incentives that you’ll earn have by far the most potential. That’s true, you may earn collectable WETH in addition to LOOKS.
LooksRare charges a platform fee on each trade, which determines how much WETH you receive. That’s true, you may earn collectable WETH in addition to LOOKS. LooksRare charges a platform fee on each trade, which determines how much WETH you receive.
That’s true, 100% of the trading fees that would ordinarily go to the corporation (OpenSea payments remain with OpenSea) are given to LOOKS stakers. You have to see it to believe it, but it is quite amazing. Consider the possibility if the NFT platform expands its market share.
Staking Rewards for LOOKS LP
Liquidity providers are required for every new token launch in order to ensure that the token stays adequately marketable. This is commonly done by exchanges for well-known tokens.
If there aren’t enough exchanges to list the token, you’ll need to enlist the support of liquidity providers using a DeFi platform like UniSwap or SushiSwap. No one gives liquidity away for free, which is why LooksRare LP stakers get LOOKS incentives as well.
Why is the trading volume of LooksRare so high?
Because the LOOKS incentives incentivise trading volume in their payout schedule, LooksRare is now seeing extraordinarily high amounts of wash trading. Wash merchants, in other words, are attempting to increase their share of the pie. Because private sales are not eligible for trade incentives, this activity should be exceedingly unprofitable in principle.
There was a lot of misunderstanding and maybe even controversy about some of the big wash trading that was going on. Wash trading is when someone sells something to themself to raise their trade volume artificially. This is done for a variety of reasons in conventional markets, many of which are banned in regulated markets.
Because the NFT industry is currently unregulated, expect a lot of “wild west” behaviour. It is the aim to get a larger percentage of the total trade volume on LooksRare in this scenario.
As a result, the number of LOOKS awards you earn is affected. Many individuals were concerned since LooksRare suddenly had 5-6 times the trade volume of OpenSea on paper. Private sales are not included in the rewards system, as the team has emphasised multiple times. And, in theory, due to the high fees associated with the enormous volume, wash trading should be tremendously profitable.
Despite this, wash trading is still going strong. This, in our opinion, should not be a concern as long as legal trade volume continues to expand.