How a savvy collector scooped up a rare CryptoPunk NFT at an unbelievable bargain highlights the unpredictable nature of the decentralized world. Imagine an art heist without balaclavas or getaway cars, but executed through an intricate knowledge of blockchain rules.
The case in point is CryptoPunk #2386, which an anonymous collector purchased for just 10 ETH (approximately $23,500) on September 11—astoundingly lower than the market for CryptoPunks. For reference, merely five days earlier, CryptoPunk #6915 fetched a staggering $1.5 million.
The story traces back to 2020, a period when CryptoPunks, comprising 10,000 unique 24×24 pixel images, became highly coveted in the NFT space. Due to their immense popularity and value, the concept of fractionalized NFTs emerged, allowing multiple investors to own a share of these digital collectibles.
The Genesis of the Bargain: Fractionalized NFTs
One prominent platform in the fractional NFT market was Niftex, where investors could trade shares through a blockchain-based smart contract. In 2020, CryptoPunk #2386 was fractionalized into 10,000 shares on this platform, leading to 257 different fractional holders.
I don’t consider this a heist. It’s an arb. The smart contract worked as intended.
If you want decentralized systems, you have to take the good with the bad. It’s part of the game. It’s why we’re here. If you don’t like those rules, you probably shouldn’t be playing.
— gmoney.9dcc.e τh (@gmoneyNFT) September 11, 2024
How the Shotgun Clause Played Out
With the downturn of the NFT market in 2022, Niftex ceased operations, making it challenging for holders to trade their shares. However, the smart contract remained active on the blockchain. One shareholder of CryptoPunk #2386 activated the smart contract’s shotgun clause on August 28, proposing to buy all shares at 0.001 ETH ($2.35) each, giving other holders 14 days to counter.
Since Niftex’s notification system was defunct, most shareholders were unaware of the ticking clock. One prominent NFT collector, Gmoney, noticed the activity and attempted to counter the bid with blockchain experts’ assistance. Unfortunately, Gmoney’s counter was unsuccessful, allowing the original offer to proceed.
3/ The setup is such that any shareholder can propose a “shotgun”, whereby any shareholder can propose a buyout price, and if nobody counters, they can purchase the asset after 14 days.
— Quit (@0xQuit) September 11, 2024
The Community Reaction
The shrewd and covert acquisition sparked debate across the crypto community, with some labelling it as a heist. The fact that CryptoPunk #2386, adorned with a two-tone sports headband and sunglasses, is one of just 24 ape-themed CryptoPunks, added to its allure and value.
Despite the contention, Gmoney didn’t perceive the tactic as underhanded. “If you want decentralized systems, you have to take the good with the bad,” he explained on X. “It’s part of the game. It’s why we’re here. If you don’t like those rules, you probably shouldn’t be playing.”
By September 12, the new owner of CryptoPunk #2386 had already received a bid of $1.43 million, underscoring the asset’s significant value increase.
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