Trader Acquires Cryptopunk for Fraction of Its Estimated Value, Raises Eyebrows Over Deal

The world of non-fungible tokens (NFTs) has been abuzz with the news of a rare CryptoPunk being acquired for a fraction of its value through a smart contract. The transaction, which has left many in the NFT community stunned, has been described as either a ‘heist’ or a brilliant play.

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What are CryptoPunks?

CryptoPunks are some of the most expensive and highly sought-after NFTs around. These unique digital collectibles were created by Matt Hall and John Watkinson in 2017 and have since become a staple of the NFT market. Due to their rarity and value, some entrepreneurs decided to fractionalize these NFTs, splitting ownership of the piece among multiple buyers.

Fractionalization: A Smart Contract Mechanism

The process of fractionalizing CryptoPunks involves creating smart contracts that allow for multiple owners to hold a portion of the NFT. This mechanism was put in place by platforms like Niftex, which allowed traders to split ownership of the NFT into smaller parts.

The Rare Ape CryptoPunk: A Brief History

One such rare Ape-themed CryptoPunk with a headband and small shades was fractionalized through the now-defunct platform called Niftex. The NFT, known as CryptoPunk #2386, was split into 10,000 parts in 2020, with 257 owners holding a portion of the asset.

The Heist or Genius Play?

Fast forward to August 28, when a trader proposed a buyout for only 10 ETH (approximately $23,000). This proposal set off a chain reaction that would ultimately lead to the NFT being acquired at a fraction of its actual value. The developer behind the smart contract explained that the setup allowed any shareholder to propose a ‘shotgun,’ giving them a chance to purchase the piece after setting a price.

The Shotgun Mechanism

The shotgun mechanism is a feature built into the smart contract that allows for a buyout of the NFT at a predetermined price. If no one counters the bid, the asset will be transferred after 14 days. In this case, the trader proposed a buyout for 10 ETH, which was accepted by the smart contract.

GmoneyNFT’s Attempt to Block the Sale

However, not everyone was pleased with the sale. Pseudonymous NFT collector gmoneyNFT noticed the proposal and attempted to block the shotgun by setting a counterbid. Unfortunately, the trader could not set a proper counterbid, allowing the buyout to proceed.

Community Reaction: Heist or Genius Play?

The NFT community was left stunned by the sale, with some describing it as one of the biggest CryptoPunk heists of all time. However, others saw it as a brilliant play by the trader. The developer behind the smart contract, 0xQuit, described the sale as ‘the steal of the century.’

The Value of the NFT

According to the CryptoPunks site, the NFT had bids of about 900 ETH (approximately $2 million) in January. On September 6, another rare Ape-themed Punk was sold for $1.5 million.

Conclusion

The acquisition of a rare CryptoPunk for a fraction of its value has left many in the NFT community scratching their heads. Was it a heist or a genius play? Only time will tell. However, one thing is certain: the world of NFTs continues to be filled with surprises.