The Sale of CryptoPunk #2386: A Surprising NFT Story
The unchangeable nature of blockchain was made clear on Wednesday when CryptoPunk #2386, which is worth about 600 ETH (around $1.5 million), was bought for just 10 ETH (a little over $23,000). This happened after the NFT was stuck and forgotten due to the closure of a website called Niftex.
What Are CryptoPunks?
CryptoPunks are some of the most valuable NFTs on the Ethereum blockchain, even years after the NFT market boom. CryptoPunks were created in 2017, and there are 10,000 unique pieces of digital art in the collection. These NFTs have become a status symbol in the crypto world, with some being sold for millions of dollars.
Out of all the CryptoPunks, only 24 show apes, which are popular in the NFT space. This made CryptoPunk #2386 especially valuable. Just last week, another similar ape Punk sold for nearly $1.5 million, making it the closest comparison for #2386. This NFT sale shocked the crypto community.
Fractional NFTs: How Does It Work?
During the height of the NFT market, some CryptoPunks became so expensive that they were divided into smaller parts, known as fractional NFTs. This process, called fractionalization, allowed investors to buy and own small pieces of a valuable NFT. This made it possible for more people to invest in high-priced NFTs like CryptoPunks.
In 2020, the owner of CryptoPunk #2386 fractionalized it using Niftex, a now-defunct website. The NFT was locked in escrow on the Ethereum blockchain, and ownership was divided into 10,000 ERC-20 tokens. Each token represented a small share of the NFT. Investors could trade these shares, but it became hard to do once Niftex shut down.
A Steal of the Century
According to 0xQuit, a pseudonymous smart contract developer, CryptoPunk #2386 had 257 fractional owners. However, since Niftex closed, these investors couldn’t easily trade their shares. The NFT seemed stuck in limbo, and many people forgot about it.
But one person was paying attention. Even though the platform was gone, the smart contract that controlled the NFT was still active on the Ethereum blockchain. This allowed someone to use a buyout feature in the contract and take ownership of the NFT for much less than its actual value.
The person made a “shotgun” offer, which is a proposal to buy the entire NFT by offering a price for all the shares. If no one counters the offer, the person can take full ownership after 14 days. This is exactly what happened with CryptoPunk #2386. The buyer offered 0.001 ETH per share, or 10 ETH for all 10,000 shares, and the timer began.
A Failed Attempt to Block the Sale
One of the fractional owners, known as Gmoney, tried to stop the sale. Gmoney is a well-known NFT investor and founder of 9dcc, an NFT-focused company. He worked with two blockchain experts to block the purchase by making a counteroffer. However, he made a mistake in calculating the counterbid, and his attempt failed.
Gmoney shared his experience on Twitter, saying, “I thought we had blocked it.” But the buyout went through, and CryptoPunk #2386 was sold for a fraction of its real value. 0xQuit, the developer who reported on the event, called it “the steal of the century.”
What Happened Next?
The buyer of CryptoPunk #2386 is still unknown, and as of now, the NFT has not been put back up for sale. However, it has already received a bid of 600 ETH, which would be a massive 60x return on the buyer’s investment if they decide to sell.
A viral tweet even described the purchase as a “heist,” but Gmoney doesn’t see it that way. He said, “If you want decentralized systems, you have to take the good with the bad. It’s part of the game. If you don’t like those rules, you probably shouldn’t be playing.”
What Does This Mean for the NFT Market?
This event is significant for the NFT market, especially with Ethereum NFTs. CryptoPunks are often considered “blue chip” NFTs, meaning they are seen as safe investments in the volatile world of digital assets. However, the market for these NFTs has been in a downturn recently.
In 2022, CryptoPunk #5822, one of the rare Alien Punks, sold for nearly $24 million to Deepak Thapliyal, a crypto executive. This was the highest sale price for any CryptoPunk at the time. But even this high-profile sale took place during a period of falling NFT prices. Many people are now questioning whether Ethereum NFTs can hold their value in the long term.
The Future of Fractionalized NFTs
Fractionalized NFTs like CryptoPunk #2386 show both the risks and rewards of investing in digital assets. While fractionalization allows more people to take part in high-value NFT sales, it also opens up the possibility for situations like this one. When platforms like Niftex shut down, fractional NFTs can become hard to manage or sell.
The success of the buyout in this case was possible because of the decentralized nature of the Ethereum blockchain. Smart contracts allowed the transaction to go through even though the original platform no longer existed. This is one of the key strengths of blockchain technology—it remains secure and functional, even if companies or websites shut down.
However, as Gmoney pointed out, decentralization also has its drawbacks. If no one is paying attention, valuable assets can slip through the cracks. This event serves as a reminder that investors need to be aware of the risks involved in dealing with decentralized systems.
Where to From Here?
The story of CryptoPunk #2386 highlights the unpredictable nature of the NFT market. From fractionalization to unexpected buyouts, NFTs on the Ethereum blockchain continue to surprise investors. As the market for blue-chip NFTs like CryptoPunks declines, it will be interesting to see how investors adapt to these changing conditions.
With the value of Ethereum and NFTs constantly shifting, one thing remains clear: the decentralized nature of blockchain ensures that opportunities—and risks—are always present.
