Although Halloween is only a few days away, the decentralized sphere has already begun its practical jokes. The CryptoPunk 9998 Non-Fungible Token (NFT) of a white-haired, green-eyed pixelated character was purchased exclusively for $532 million.
The sum was returned to the bidder’s wallet, albeit with a higher floor price, in the spirit of Halloween, according to the Ethereum blockchain.
Punk 9998 bought for 124,457.07 ETH ($532,414,877.01 USD) by 0x9b5a5c from 0x8e3983. https://t.co/dmT6jDRC1W #cryptopunks #ethereum pic.twitter.com/UQlmm1oqkj— CryptoPunks Bot (@cryptopunksbot) October 28, 2021
NFT price doubled after the prank
According to Bloomberg, an Ethereum address “beginning with 0xef76 transferred the CryptoPunk to the address starting with 0x8e39”. was used to transfer the CryptoPunk yesterday. However, “0x8e39 sold the NFT to an address starting with 0x9b5a for 124,457 Ether,” or $532 million, “all of it borrowed from three sources, principally Compound,” within 90 minutes of the acquisition.
The NFT was then returned to its original address, “0xef76,” and placed up for auction for a second time for 250,000 ETH, or over $1 billion. So, in essence, the buyer and seller could have been the same person, and the goal of this complete circle exchange was to inflate the price of the NFT in question.
While selling the NFT from one wallet, they moved on to placing a bid for the same token from a separate wallet. Furthermore, they borrowed money from compound protocol to pay for the NFT originally, but returned the loan to the compound protocol after the transaction was completed, effectively doubling the NFT’s floor price to over $1 billion from over half a billion dollars.
The founder of CryptoPunks, Larva Labs, took to Twitter to explain that this transaction was not an attack, but rather a series of “flash loans.” “In a nutshell, someone borrowed money to buy this punk and then repaid the loan in the same transaction.”
PSA: This transaction (and a number of others) are not a bug or an exploit, they are being done with “Flash Loans” (https://t.co/Q5bDL1QkWP). In a nutshell, someone bought this punk from themself with borrowed money and repaid the loan in the same transaction. 1/2 https://t.co/EgS7aiga3j— Larva Labs (@larvalabs) October 29, 2021
Furthermore, according to Larva Labs, this is not the first time that significant bids have been submitted through loans to increase the floor price. While these bids are “technically briefly valid,” according to the Labs, they “can never be approved.” Filtering will be added to prevent future notifications for these types of transactions.”