  The Non-Fungible Token (NFT) market in the Ethereum blockchain experienced
explosive growth in 2021, with a monthly trade volume reaching \$6 billion in
January 2022. However, concerns have emerged about possible wash trading, a
form of market manipulation in which one party repeatedly trades an NFT to
inflate its volume artificially. Our research examines the effects of wash
trading on the NFT market in Ethereum from the beginning until January 2022,
using multiple approaches. We find that wash trading affects 5.66% of all NFT
collections, with a total artificial volume of \$3,406,110,774. We look at two
ways to profit from wash trading: Artificially increasing the price of the NFT
and taking advantage of the token reward systems provided by some marketplaces.
Our findings show that exploiting the token reward systems of NFTMs is much
more profitable (mean gain of successful operations is \$1.055M on LooksRare),
more likely to succeed (more than 80% of operations), and less risky than
reselling an NFT at a higher price using wash trading (50% of activities result
in a loss). Our research highlights that wash trading is frequent in Ethereum
and that NFTMs should implement protective mechanisms to stop such illicit
behavior.
