The immutable nature of the blockchain was brought into sharp focus on Wednesday when CryptoPunk #2386, worth about 600 ETH (or about $1.5 million), was acquired for a fraction of that price at 10 ETH (or just over $23,000 ) – after being locked up and overlooked thanks to a now defunct website.
CryptoPunks are among the most valuable Ethereum NFTs out there, even years after the market boom. This particular punk was particularly appreciated, as out of the total collection of 10,000 profile photos, it was one of only 24 that depicted a monkey – an animal beloved in the NFT space. One of these rare variants sold for almost $1.5 million last week, making this the last comparable sale.
Particularly during the height of the NFT market, some CryptoPunks were so valuable that they were sometimes fracked – segmented or broken up into smaller shares – so that many more investors could take partial ownership of them.
In the case of Punk #2386, the owner had it fractioned through a short-lived website called Niftex. The NFT itself was held in escrow on the Ethereum blockchain, and its ownership rights were split into 10,000 ERC-20 tokens in 2020. Like other fractionalized NFTs, investors could buy and sell individual shards, but that became difficult after Niftex closed its doors.
According to pseudonymous smart contract developer @0xquit on Twitter (aka X), Punk #2386 eventually had 257 fractional holders. However, with the Niftex platform gone, the main way to trade fractional NFTs remained in limbo.
However, someone had their eye on Punk #2386, and because the smart contract remained valid on the blockchain, they were able to activate a buyout feature and ultimately own the NFT for a fraction of its current value.
Punk 2386, with a current high bid of 600 ETH, sold today for 10 ETH.
A combination of clever detective work, followed by an unfortunate miscalculation, leads to a 7-figure payday for 0x282.
🧵 pic.twitter.com/E29DLQZ0GT
— Stop (@0xQuit) September 11, 2024
“The setup is such that any shareholder can propose a ‘shotgun’, where any shareholder can propose a buyout price, and if no one objects, they can buy the asset after 14 days,” @0XQuit wrote on Twitter, adding that the unknown person the ‘shotgun’ offer started on August 28.
The offer was 0.001 ETH per share, or 10 ETH for all 10,000 shares. And the timer that almost no one could see started running.
One of Punk #2386’s shareholders, pseudonymous NFT investor and 9dcc founder Gmoney, said he tried to block the purchase – again directly with the smart contract – but failed because he misjudged how much to counterbid.
I love the image of this punk sale:
This guy walks into a long-abandoned, robot-run art gallery.
he shouts into the air that he wants to buy one of the most valuable assets for 1% of its real value. no one hears his intentions except the robots.
he waits 1 week.
the…
— tropoFarmer 🐧 (@tropoFarmer) September 11, 2024
“I reached out to the two blockchain chads I know and trust most for help with this,” Gmoney wrote. “I thought we blocked it.”
Instead, the bid went through and Punk #2386 was acquired – a move that oxQuit called “the bargain of the century.”
“GG to the new owner,” Gmoney said.
The identity of the holder of Punk #2386 is unknown and at the time of writing, the now famous NFT is not for sale. However, it has already received an offer from an interested buyer for 600 ETH. If he or she ultimately sells for that amount, it would yield a 60x return on investment.
One viral tweet about the purchase labeled it a “robbery.” However, Gmoney said he didn’t see it that way.
“If you want decentralized systems, you have to combine the good with 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 play.”
Edited by Ryan Ozawa and Andrew Hayward