Did a CryptoPunks NFT on Ethereum actually promote for a report $56.3 million because the broader NFT market continues its lengthy, sluggish decline? No. This is why.
Whereas it’s true that CryptoPunk 1563 was transacted this afternoon, and that 24,000 ETH—or $56.3 million value on the time—was “paid” for the asset, there have been each surface-level and behind-the-scenes purple flags that shortly forged doubt on the legitimacy of the acquisition.
First off, this specific CryptoPunk was final bought for about $69,000 value of ETH in September. It doesn’t have any notably uncommon attributes, which implies it usually sells close to the entry-level (or ground) value for the gathering. It’s a “ground Punk.” There’s no apparent purpose why it might soar in worth by 81,000% in a matter of weeks.
Punk 1563 purchased for twenty-four,000 ETH ($56,292,000.00 USD) by 0x9cbb3d from 0xba1349. https://t.co/FqDvGZvg05 #cryptopunks #ethereum pic.twitter.com/hWimHKYb0x
— CryptoPunks Bot (@cryptopunksbot) October 3, 2024
A have a look at on-chain knowledge reveals that the acquisition was performed through artful use of flash loans, aka uncollateralized crypto loans that have to be paid again in the identical transaction.
In a single transaction, the “purchaser” of the NFT took out a 24,000 ETH mortgage from DeFi protocol Balancer, after which the “vendor” paid again the mortgage to Balancer. Nobody really made any cash, although whoever pulled the stunt paid community charges and the Punk was certainly moved between wallets.
This isn’t the primary time that this has occurred, and in reality, the $56.3 million value right here doesn’t even come near the “report” set by a earlier flash loan-funded Punk buy.
In October 2021, somebody used flash loans to purchase a CryptoPunk for $532 million, additionally returning the funds in the identical transaction. Whereas the transfer grabbed headlines and put a jolt into the then-booming NFT market, CryptoPunks creator Larva Labs mentioned it wouldn’t observe the sale as being legit, and different NFT knowledge platforms adopted go well with.
There’s an fascinating twist on this case, apparently. In response to pseudonymous on-chain sleuth 0xQuit, the flash mortgage is seemingly tied to an upcoming meme coin referred to as “Kamala Harris Punk,” and the sale seems to be a stunt used to drum up curiosity within the token’s pre-sale.
7/ The contract is ready to just accept the very best bid for Punk #1563 after a 7 day interval (as long as the bid is not less than as excessive as the present presale worth).
The dev then will get 10% of the token provide, and 10% of the funds obtained from the presale and sale of the punk.
— Give up (@0xQuit) October 3, 2024
0xQuit notes that the CryptoPunk in query shall be bought to the highest bidder after the weeklong pre-sale part, and that the developer is seemingly betting that they are going to make greater than the precise worth of the Punk—present ground value is about $63,400 value of ETH—through the NFT sale and the token presale. However there’s at all times a danger that the stunt might backfire.
“tl;dr 24,000 ETH is a psyop to promote what’s mainly a presale the place, after 7 days, the punk is bought to the very best bidder with a minimal bid equal to the quantity raised within the presale,” they defined. “Additionally possibly a political assertion given the identify and the clown make-up.”
Excluding right this moment’s questionable transaction, CryptoPunks gross sales over the past 30 days have generated about $16.7 million in buying and selling quantity, based on CryptoSlam. The most important identified (legit) CryptoPunk buy got here in February 2022 for simply shy of $24 million value of ETH. That Punk was lately resold for an undisclosed sum.
