cointelegraph.com
A nonfungible token ($NFT) from the CryptoPunks collection worth 77 Ether ($ETH) was sent to a burn address to be permanently destroyed. However, the collector’s intent was just to borrow some money against it to buy another $NFT.
$NFT collector Brandon Riley added CryptoPunk #685 to his collection on March 13 by paying 77 $ETH, hoping to hold it for the long term.
Now feels like an appropriate time to introduce #BAYC 586 to #Punk 685 (acquired a week ago). Hope to hold both for a decade… LGF! pic.twitter.com/SLb68rY6MR
— Brandon Riley (@vitalitygrowth) March 19, 2023
As a seasoned investor, Riley knew the importance of procuring new NFTs right before crypto markets took off into a new bull market. As a result, he decided to borrow some money against CryptoPunk #685 by using a popular technique known as wrapping.
I did do the first part with my own address I’m step 2. But then when I got to step 5 the burn address was the one listed under “9. proxyInfo” and I was told to follow the directions exactly, so I did. I just shouldn’t have attempted this on my own I guess.
— Brandon Riley (@vitalitygrowth) March 24, 2023
While going through the unfamiliar process of wrapping NFTs, Riley accidentally sent the asset to a burn address — which permanently deleted the $NFT from circulation, as shown below.
“I was told to follow the directions exactly, so I did,” explained Riley, but in the process, he ended up losing 77 $ETH, which was worth $135,372.16. He explained:
“I was not wrapping this punk to sell it on Blur. It was to be my “forever punk.” The number is exact reverse of my ape. I was only wrapping it because I needed to borrow some liquidity from it.”
While members of Crypto Twitter believed that the $NFT collector must have had “deep pockets,” Riley contradicted the rumors by revealing that he had purchased CryptoPunk #685 through borrowed money.
“I just shouldn’t have attempted this on my own I guess,” was Riley’s takeaway from the conundrum. On the other hand, Crypto Twitter also blamed confusing user interfaces and complex instructions for the investor’s loss. As a result, the community unanimously agreed on the need to revamp the front-end processes for crypto ecosystems.
Related: Improving Bitcoin $NFT marketplace infrastructure sets the stage for ecosystem growth
$NFT wash trading increased by 126% in February, confirmed a CoinGecko report. The top six $NFT marketplaces — Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks and LooksRare. X2Y2, Blur and LooksRare — saw a rise in wash trading for the fourth straight month, with a total volume of $580 million.
As Cointelegraph previously reported, the issue of wash trading stems from a lack of clear regulations.
Magazine: 4 out of 10 $NFT sales are fake: Learn to spot the signs of wash trading