Revealed: insiders are the biggest winners in NFTs, Chainalysis study shows
- Whitelisted buyers of newly-minted NFTs profit 75.7 per cent of the time, according to Chainalysis, versus 20.8 per cent for others
- NFTs are one of the hottest things in blockchain this year, but whitelisting appears similar to the initial coin offerings process that drew regulatory scrutiny
Users who make the whitelist and later sell their newly-minted NFT gain a profit 75.7 per cent of the time, versus just 20.8 per cent for users who do so without being whitelisted, Chainalysis said, citing Opensea data. The data suggests it’s nearly impossible to reap outsized returns on minting purchases without being whitelisted, the study said.
“A very small group of highly sophisticated investors rake in most of the profits from NFT collecting,” the study said. “This is especially true in minting, where the whitelisting process gives early supporters of collection access to lower prices that result in greater profits. We also see possible evidence of the use of bots by investors looking to purchase during minting events, which could shut out less sophisticated users, and even result in failed transactions that cost them in fees.”
The practice of whitelisting appears to be similar to the preferential treatment of some insiders and investors that has long been practised in the cryptocurrency world, especially with so-called initial coin offerings before the sales were shut down by regulators.
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SCMP Explains: What are NFTs?
NFTs have burst into popular consciousness this year, with celebrities, sports teams and artists trying to get into the action, and the likes of Ripple and Paris Hilton backing efforts to move the space forward. But there have also been questions about what exactly one gets in terms of property rights when buying one, as well as transactions that appear never to have actually taken place and steep declines in some NFT prices.