In summary
- The immutable nature of the Blockchain was highlighted on Wednesday when CryptoPunk #2386 was purchased for 10 ETH, a fraction of its 600 ETH value.
- CryptoPunks are some of the most valuable Ethereum NFTs, and this particular Punk was especially prized for being one of 24 depicting a monkey.
- Punk #2386 was fractionalized through a website called Niftex, and ownership rights were divided into 10,000 ERC-20 tokens in 2020.
The immutable nature of the blockchain was highlighted on Wednesday when CryptoPunk #2386, valued at around 600 ETH (about $1.5 million), was acquired for a fraction of that price, at 10 ETH (or just over $23,000), after being locked and overlooked thanks to a now-defunct website.
CryptoPunks are some of the most valuable Ethereum NFTs, even years after the market boomed. This particular Punk was especially prized, as out of the collection of 10,000 profile images, it was one of only 24 depicting a monkey, a beloved animal across the NFT space. One of these rare variants sold for nearly $1.5 million last week, making it the latest notable sale.
Especially during the NFT market boom, some CryptoPunks were so valuable that they were sometimes fractionalized, segmented, or broken up into smaller parts, to allow many more investors to have partial ownership of one.
In the case of Punk #2386, its owner had fractionalized it through a short-lived website called Niftex. The NFT itself was locked in escrow on the Ethereum blockchain, and ownership rights were split into 10,000 ERC-20 tokens in 2020. Like other fractionalized NFTs, investors could buy and sell individual fragments, but that became difficult to do after Niftex shut down.
According to the smart contract developer known as @0xquit on Twitter (aka X), Punk #2386 ultimately had 257 fractional holders. However, with the Niftex platform gone, the primary way to trade fractional NFTs has left them virtually in limbo.
However, someone had their sights set on Punk #2386, and because the smart contract was still valid on the blockchain, they were able to trigger a purchase function and ultimately take possession of the NFT for a fraction of its current value.
“The system is set up in such a way that any shareholder can propose a ‘shotgun’, whereby any shareholder can propose a purchase price, and if no one makes a counteroffer, they can acquire the asset after 14 days,” @0XQuit wrote on Twitter, adding that the unknown person initiated the shotgun offer on August 28.
The offer was 0.001 ETH per share, or 10 ETH for the 10,000 shares. And the timer that almost no one could see started ticking.
One of Punk #2386’s shareholders, NFT investor and 9dcc founder Gmoney, said he tried to block the purchase, again working directly with the smart contract, but failed because he miscalculated how much he should offer as a counteroffer.
“I reached out to the two blockchain chads I know and trust the most to help me with this,” Gmoney wrote. “I thought we had blocked it.”
Instead, the offer was made and Punk #2386 was acquired, in a move oxQuit called “the steal of the century.”
“Congratulations to the new owner,” Gmoney said.
The identity of the owner of Punk #2386 is unknown, and at the time of writing, the famous NFT is not listed for sale. However, it has already received an offer from an interested buyer for 600 ETH. If it eventually sells for that amount, it would be a 60x return on investment.
A viral tweet about the purchase framed the acquisition as a “steal.” However, Gmoney said he didn’t see it that way.
“If you want decentralized systems, you have to accept the good and the bad,” he said. “It’s part of the game. That’s why we’re here. If you don’t like those rules, you probably shouldn’t be playing.”
Edited by Ryan Ozawa and Andrew Hayward
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