Wash Trading Flag

Our Wash Trading Flag is designed to detect wash trading activities on NFT marketplaces.

Approach

Wash trading can be inferred through on-chain movement of NFTs and funding patterns across different buyers and sellers of NFTs.

In our mode, we considers multiple factors as input factors, assigns a score to each factor, and then computes a wash trading score based on the sum of these factors.

The output is then classified into different levels of wash trading ranging from very low to very high. The Wash Trading Flag is customizable, and users can query extra columns to have a more granular view.

Sample Query

Finding overall wash trading levels on Polygon NFT marketplace.

select 
    date_trunc('week', block_timestamp) as date,
    wash_trading_level, 
    sum(usd_price) as usd_volume
    from polygon.nfts.trades_with_wash_trading_flags
where block_timestamp > '2023-01-01'
group by 1,2 
order by 1

Output of the query above.

Allium NFT Trades Schema

Input Parameters

The Wash Trading Filter takes the following input parameters:

Wallet Funding Patterns

• buyer_birth_funding_wallet: address that first sent an ERC20/ETH to the buyer

• seller_birth_funding_wallet: address that first sent an ERC20/ETH to the seller

• wallets_first_funded_each_other: true if the buyer funded the seller or vice-versa

• wallets_first_funded_by_same_wallet: true if the same wallet funded both buyer and seller (excluding the top 500 CEX addresses)

NFT Trading Patterns

• nft_traded_back_n_forth: true if the same NFT was traded by the buyer and seller multiple times

• buyer_address_equals_seller_address: true if the buyer and seller are the same

• buyer_traded_same_nft_multiple_times: true if the buyer traded the same NFT more than once in a window of +-7 days since the given trade

• count_same_nft_trades_by_buyer: number of times the buyer traded the NFT (except for the first time) in a window of +-7 days since the given trade

• seller_traded_same_nft_multiple_times: true if the seller traded the same nft more than once in a window of +-7 days since the given trade

• count_same_nft_trades_by_seller: number of times the buyer traded the nftNFT(except for the first time) in a window of +-7 days since the given trade

• seller_funded_buyer_recently: true if the buyer sent ERC20s/ETH to the seller 24h before or after the trade

• buyer_bought_same_nft_from_seller: true if the buyer bought the same NFT from the seller multiple times

Output Parameters:

Wash Trading Score

The Wash Trading Filter outputs the following:

wash_trading_score - The Wash Trading Score is computed by adding up the scores of each input parameter as follows:

• wallets_first_funded_each_other * 3

• wallets_first_funded_by_same_wallet * 0.5

• nft_traded_back_n_forth * 1.5

• buyer_address_equals_seller_address * 3

• iff(token_standard = 'ERC721', buyer_traded_same_nft_multiple_times, 0)

• iff(token_standard = 'ERC721', seller_traded_same_nft_multiple_times, 0)

• seller_funded_buyer_recently

• iff(token_standard = 'ERC721', buyer_bought_same_nft_from_seller::int, 0.25)

Wash Trading Level

wash_trading_level - The Wash Trading Level is derived from the Wash Trading Score, and it is classified into different levels as follows:

• 'very low' if wash_trading_score = 0

• 'low' if wash_trading_score <= 2

• 'medium' if wash_trading_score < 3

• 'high' if wash_trading_score <= 4

• 'very high' if wash_trading_score > 4