A drop of more than 40%, the LooksRare team "cash-out" caused a storm

Under the "exposure" of Twitter netizens, the members of the NFT trading platform LooksRare publicly admitted that the team obtained profits by staking the platform's governance token LOOKS.

On February 8, a netizen "tradfi guy" said on Twitter that the LooksRare team had cashed out 23,116 WETH worth about $73 million, most of which went directly into the currency mixing tool Tornado Cash.

The news of "Breaking News" continued to ferment in the following days, and some netizens were therefore worried that the LooksRare team would have the problem of cashing out and running away. LOOKS also fell from around $3 to $1.9 today, a drop of more than 40% in 7 days.

Until February 14, the co-founder of LooksRare, Zodd (screen name), responded to the thread that the amount disclosed by "tradfi guy" was incorrect. It should be close to 10,500 ETH, which was allocated to more than 10 full-time members, because the team was in Worked with zero compensation for 6+ months, shared over 7 figure costs before product launch, and used Tornado Cash to protect the privacy of the anonymous team, "We're not going anywhere: we haven't even started ...The team LOOKS distribution cycle is 2 years, and the future looks bright.”

Zodd's response reassured some. Staking LOOKS on LooksRare to earn transaction fees settled in WETH is one of the platform's public incentive measures, and it can even be regarded as one of the competitive means for LooksRare to surpass the trading volume of the giant competitor OpenSea, which has no transaction procedures. Fee "dividend" mechanism.

At present, the LooksRare team is using the same method as users to earn profits. Some users think this is understandable, and some users have raised higher expectations, hoping that the team can manage funds more transparently.



LooksRare members' cash-mixing leads to panic

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Twitter netizen "tradfi guy" has been paying attention to the team income of NFT trading platform LooksRare.

As early as January 24, 2 weeks after LooksRare went live, he tweeted, "The LooksRare team has cashed out 9,169 WETH (over $25 million) in less than 2 weeks. The team's ingenious The thing is, they get paid a lot in WETH instead of LOOKS.”

WETH is the encapsulated asset of ETH, the native encrypted asset of the Ethereum network. Since ETH is not a "token" under the ERC-20 standard of the Ethereum network, it cannot be directly exchanged in the application on the Ethereum chain. Circulating in the application, it is encapsulated (converted) 1:1 into WETH, and the value is the same as ETH.

On February 8, when LooksRare was launched for nearly a month, the “tradfi guy” updated the data on Twitter, saying that the team member had cashed out 23,116 WETH, worth about $73 million, not including the platform governance token. The value of LOOKS, while most of the WETH goes directly to Tornado Cash.

Tornado Cash is a non-custodial Ethereum privacy solution, also known by the crypto community as a "mixer" that hides the details of users' transactions on the blockchain by breaking the on-chain link between source and destination addresses. Protecting the user's transaction privacy is the original intention of this tool, but it has gradually become a "money laundering (currency)" tool for criminals.

"Team's huge revenue" flows into "coin mixing tool". These two keywords in the latest tweet of "tradfi guy" aroused panic among users. Some users are worried that the LooksRare team will run away with money.

According to Coingecko, an encrypted asset trading data website, since February 8, LOOKS continued to decline in the previous downward channel. After oscillating around $3.1-3.8 for 4 days, it fell below $3.



The trend of user LOOKS since it was launched on the secondary market on January 10



The news that the LooksRare team cashed out continued to ferment, and LOOKS also fell endlessly. On February 14, LooksRare co-founder Zodd (screen name) finally showed up and responded with a thread under the "tradfi guy" tweet.

"First of all, the amount is incorrect: close to 10,500 ETH, we have more than 10 full-time team members." Zodd attached a link to the distribution instructions published by LOOKS, stating that the fact that the team earns WETH has never been a secret, and the LooksRare team has been in 6 Working around the clock with zero compensation for many months, until the first team WETH distribution, "I can also tell you that team members also shared over 7-figure costs before the release. WETH has no opinion, especially since there is no compensation for these months, a lot of it may also be reused to buy NFTs.”

Regarding the use of mixers, Zodd explained that they encourage everyone on the team to use Tornado Cash, "Privacy is a fundamental right, and as anonymity (the team), it's actually a requirement, and decentralization is welcome." As for user fears of running away, Zodd said, "We're not going anywhere: we haven't even started; we have goals to achieve, and enough enthusiasm and motivation to do so; financial stability removes external concerns and allows for more attention; the team has a 2-year LOOKS allocation and the future looks bright.”

Zodd's explanation calmed some users' doubts, but LOOK still did not stop falling.

According to Coingecko data, since LOOKS was launched on the secondary market on January 10, it reached an all-time high price of $7.1 on January 20, and has been on a downward trend since then. After netizens broke the news on February 8, LOOKS continued to decline. It was temporarily quoted at US$1.9 on February 15, a drop of more than 40% within 7 days and a drop of 72.4% from the highest price.