An NFT trader was devastated Friday to discover that a CryptoPunk he purchased for 77 Ethereum went up in smoke after he accidentally sent the pricy piece of digital art to a burn address.
Burn addresses, which are digital wallets that don’t have a private key, are one-way gateways that can only receive assets like cryptocurrencies and NFTs. As a result, the NFT was permanently removed from circulation, preventing it from ever being traded or owned again.
Brandon Riley, who purchased CryptoPunk #685 two weeks ago, said he made an error when attempting to wrap the NFT to take a loan against it on Twitter. He told Decrypt he planned on posting CryptoPunk #685 to NFTfi.com, where he could earn a yield of around 7% per year.
I would just like to make one thing clear. 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.
— Brandon Riley (@vitalitygrowth) March 24, 2023
CryptoPunk #685 was worth approximately $129,000 in Ethereum when it was acquired by Riley, according to the Ethereum block explorer Etherscan.
Originally created in 2017, CryptoPunks is widely viewed as a “blue chip” collection, on par with the likes of Yuga Labs’ Bored Ape Yacht Club. With a market capitalization of over $1 billion, the cheapest CryptoPunk is worth just over $109,000, according to NFT Price Floor.
However, CryptoPunks were created before ERC-721 was established as a token standard for NFTs, making them incompatible with some marketplaces and applications designed for decentralized finance—such as NFTfi.com.
Using a guide he found online, Riley tried to wrap his punk as an ERC-721 token, creating a new digital token that proved he owned CryptoPunk #685 but would be compatible with NFTfi.com. But by inputting the wrong address, CryptoPunk #685 is now forever gone.
This is truly a devastating mistake for me.💔 But I did this myself, and it is no one’s fault but my own. Both the beauty and the curse of self-custody.
Stay safe out there everyone, and please be way more careful than I was. Thank you to so many of you for the kind words. 🙏🏼
— Brandon Riley (@vitalitygrowth) March 25, 2023
Riley’s unfavorable situation is indicative of issues that many face in the digital assets industry due to the often complex and irreversible nature of transactions. And because there are no financial intermediaries involved, there’s nothing Riley can do to get his lost CryptoPunk back, which he described as “both the beauty and the curse of self-custody.”
One Twitter user named NFToga pointed out that the guide used by Riley has since been updated, including language that specifically warns people not to send CryptoPunks to wallets formatted as burn addresses.
Asking for some form of a reprieve, Riley asked Yuga Labs—which purchased the IP to CryptoPunks from Larva Labs last year—if he could buy the v1 version of CryptoPunk #685. CryptoPunks v2 was released after a bug was found in the original collection’s smart contract.
In the original Cryptopunks smart contract, there was a code error that caused Ethereum to be allocated to the buyer instead of the seller when a purchase was made. In other words, a buyer was immediately refunded for their purchase and was able to keep the Punk.
/2
— CryptoPunks ᵛ¹ (@v1punks) March 28, 2022
Riley said that he has not yet from Yuga Labs after tagging them in his posts on Twitter, and Yuga Labs did not immediately respond to requests for comment from Decrypt.
Sometimes, NFTs aren’t burned by accident, but rather as a way of making a statement. Last month, Jason Williams burned BAYC # 1626—worth $169,000 at the time—to symbolically shift the asset’s underlying network from Ethereum to Bitcoin in the form of an Inscription made through Ordinals.
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Source: https://decrypt.co/124598/nft-trader-accidentally-burns-129k-cryptopunk
