Loot Introduces Royalty Fees Bringing 450 ETH to the Treasury

Loot Introduces Royalty Fees Bringing 450 ETH to the Treasury

Royalty fees of 5% per sale to battle artificial trading on LooksRare

Loot for Adventurers has experienced a renaissance in trading activity in the past several weeks after the new Ethereum-based marketplace LooksRare launched. As a royalty-free collection, Loot attracted a lot of questionable transactions that can easily qualify as wash trading. However, to limit this phenomenon, the team has introduced a 5% royalty fee which will be deducted at every sale. 

The swift move was somewhat necessary as the Loot community saw wash trading activity as unwanted attention. Indeed, in the past several weeks, Loot bags have been among the highest-grossing sales, according to DappRadar data

For example, Loot Bag #2579 registered two sales circling 15.000 WETH. This was about $47 million at the time of the sales. This is a significantly higher price than any regular Loot sale as the collection averages a sale price of $2 million (including the sales data from the past several weeks). However, a deeper dive into the transaction history reveals that this NFT simply moved between two wallets. It ends in the original owner’s portfolio after all. Of course, these expensive sales brought a lot of LOOKS rewards to the owner.

Importantly, Loot Bag #2579 is not the only such case. The collection was deliberately targeted because there were no royalty fees. However, the community started noticing the unreal activity Loot NFTs saw on LooksRare. Consequently, the team decided to set up royalties on this marketplace as well. 

Impressively, this resulted in a hefty gain for the treasury. People continued wash trading Loot NFTs unaware of the royalties changes on LooksRare. According to Etherscan records, the Loot Treasury grew by around 450 ETH in royalties fees shortly after royalties launched. 

Loot trading activity plummets thanks to LooksRare royalties

Loot has had a royalty mechanism set up on other secondary marketplaces like OpenSea from the start. However, as LooksRare took the NFT space by storm a couple of weeks ago, this must have slipped through the cracks as something the team needed to do. Consequently,  in the past 30 days, Loot smart contracts welcomed 151% more unique active wallets.

However, since the announcement that LooksRare sales will incur royalty fees, the trading activity for Loot has plummeted. In the past seven days, the number of traders decreased by more than 70%, while sales dropped 76%. Additionally, the artificially inflated market cap of the collection started shrinking back to its original valuation, losing more than 20% in the past seven days. 

The significant drop in activity is clearly visible around January 23, when the 5% royalty fee was introduced for Loot NFTs on LooksRare. While it’s never pleasant to see your project output statistics in red, this was a decision in the right direction for Loot. 

The Loot community is among the most dedicated in the NFT space, and a royalty fee of 5% is not going to affect genuine sales activity. Most importantly, the collection already features such fees on other marketplaces. However, the royalty fee makes it much less profitable for collectors to participate in wash trading. According to DappRadar’s latest Whale Analysis Report, LooksRare airdrops are incentivizing a lot of traders to look for 0% royalty fee collections, as this boosts their earnings. However, the LOOKS rewards they receive when wash trading are impacted heavily by a 5% fee. 

Wash trading is a phenomenon that is here to stay, both in traditional finance and in the crypto world. However, smart moves like Loot’s decision to introduce royalty fees are a step in the right direction. DappRadar will continue monitoring both Loot, and LooksRare, as other collections continue to draw in wash trading activity. You can read more about wash trading on LooksRare here. Additionally, you can check out DappRadar PRO, which gives you access to the most up-to-date on-chain NFT sales data. 

Unsubscribe at any time. T&Cs and Privacy Policy

Share this post on social media

Share this Article

Related articles

Related articles

More Loot Floods the NFT Market

Dom Hofmann releases 1,308,004 additional Loot NFTs
More Loot Floods NFT the Market