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Wash Trading

Description:

Typical wash trades involve a rapid sequence of transactions without taking market risk. Probably the simplest form of wash trading involves one address rapidly reselling an NFT at a much higher or lower price than what was purchased for.

More sophisticated cases use multiple addresses, which may belong either to the same user or to close associates. These addresses perform a series of fast transactions that close a cycle. For instance, address A may sell an NFT to address B, which rapidly re-sells it back to A. Similarly, A may sell an NFT to B, who sells it to “C”, who closes the cycle by selling it back to A.

Publicity Wash Trading:

In some cases, wash trades are more public and designed to motivate chatter on social media rather than facilitate underhand profits

Wash Trading to Manipulate Rewards

Numerous NFT projects and marketplaces utilize incentive programs to entice more users. In many cases, these come in the form of token rewards when NFTs are staked, swapped or traded on their platform. In the event that these rewards are linked to trade volume, traders may deliberately overvalue their NFT sales to maximize reward claims.

References:

https://www.techtarget.com/whatis/feature/NFT-wash-trading-explained