LooksRare’s rise has been so meteoric that in just a few weeks its trading volume has outpaced mighty OpenSea.
Now it appears the LooksRare team transferred roughly 10,500 wrapped ETH (wETH), worth more than $31M, to personal wallets, according to Zodd, who works for the NFT exchange. The wETH came from LooksRare’s 2% exchange fees, all of which go to LOOKS stakers.
So what’s the issue? Partially it’s just that the team has made a lot of money in a short amount of time while the LOOKS token has plummeted 43% in the last week and has lost 70% of its value since its all-time high on Jan. 20.
“Think $500k per team member per month is a little much for the start of a project,” tweeted 0xb1, a well-known crypto investor, in response to Zodd’s explanation about the team earning so much wETH. Perhaps put some back into your token price.”
In response to the criticism, Zodd said that the LooksRare team had been working for more than six months leading up to the recent payday, which makes the numbers less eye-popping.
Crypto Twitter is still processing LooksRare’s mechanics, which have allowed the team to profit in wETH while not selling their LOOKS tokens because of the vesting schedule. The first LOOKS tokens will be unlocked for both investors who participated in what was called the “strategic sale” and the marketplace’s team on July 9.
Stragetic sale investors have also been profiting by staking their non-tradeable LOOKS.
In response to criticism like 0xb1’s, influencers like Cobie, are saying that the token mechanics which made the team and strategic sale investors so much money were available from day one, but people just didn’t take the time to research how LooksRare works.
“I think people don’t really read into or look at what they’re actually buying,” zachxbt, the self-identified, on-chain sleuth who broke the news that the CFO of the network of DeFi project’s known as Frog Nation was a convicted fraudster, told The Defiant. “From the start the LooksRare docs were very transparent with how the tokenomics were structured.”
The investigator added that the entire investor list in LooksRare wasn’t posted publicly, sharing with The Defiant a screenshot of some well-known influencers in DeFi who participated in the strategic sale.
Banteg, one of DeFi’s best known pseudonymous developers who works at Yearn Finance, isn’t buying any shade thrown LooksRare’s way. “Just to be clear, how much an anon team is allowed to make so CT doesn’t consider it ‘too much?’’ the developer tweeted. “I haven’t seen any such speed limit appl[ied] to VC-funded or known team projects. Looks like double standards to me.”
Banteg was a seed investor in LooksRare to the tune of 7.5 ETH, as the developer stated on Twitter. While seed investors can cash out wETH, they don’t get additional LOOKS through staking as airdrop recipients have.
Plus, it’s not just the team and early investors who are profiting — according to a Dune Analytics query shared by researcher Igor Igamberdiev, retail LOOKS stakers have earned 64.6% of the LooksRare wETH fees.
Plus, LooksRare airdropped 12% of the total LOOKS supply, meaning that recipients who staked have accessed the wETH revenue for essentially free.
Even when the recent kerfuffle around the team and strategic sale participants’ extreme profitability dies down, LooksRare does have other issues — volume has more than halved since LOOKS rewards were cut on Feb. 9.
Regardless of the recent drama though, the LooksRare team is hiring, which at least signals the intention to keep building, rather than letting the NFT marketplace fizzle away.