When LooksRare launched less than a week ago people were pretty quick to state that it could take down OpenSea as the go-to Ethereum NFT marketplace. After all, LooksRare offered their $LOOKS token allowing people to stake and provide liquidity to the platform, lower platform fees, returns all of the platform fees to users via additional $LOOKS tokens, among other things. While this sounds really really great the ways that the $LOOKS tokens were distributed for trading allowed for a mass amount of wash sales.
Wash sales are not true sales. What occurs is the same person is "selling" the NFT between two wallets they have. If the individual does it with an NFT that does not have a royalty connected to it (meaning that the original creator does get a cut of the sale price) the only fees that the person would have to pay would be the 2% fee. During the first few days of token distributions based on the sale of NFT people gamed the system with these trades between their own wallets.
Due to the structure of the token distributions the fees charged did not offset what could be earned by doing this. Now, this is not going to remain profitable for long but what it has allowed is certain individuals to acquire huge amounts of $LOOKS tokens and not in a fairway. This is why the data for the first few days of NFT sales on the site have been called into question on if they accurately represent the true movement of assets between individuals.
I have found it really interesting that people do talk about this going on but everyone has really given these people a pass. While I understand they did something that was technically against the rules what they did wasn't the right thing to do either and diminished the view of the platform as a whole. Now the platform has to be careful to not have other issues as if they do people can pile on and say there have been issues since the beginning. It is a slippery slope and something that I am not sure has a true answer.
The issue with the token distribution overall is bad enough that on Harvest Finance days after the farm was launched the APY for the LOOKS-ETH farm is still over 7,300% APY. Further broken down LOOKS is responsible for 7,300% while iFARM is responsible for 19% APY. It will be interesting to see if the token is able to penetrate enough of the market to not end up controlled in the hands of a few but with yields like this anyone with a bag of ETH can easily just invest in this and end up with a large amount of LOOKS via yield farming.
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