Did a CryptoPunks NFT on Ethereum really sell for a record $56.3 million as the broader NFT market continues its long, slow decline? No. Here’s why.
While it’s true that CryptoPunk 1563 was transacted this afternoon, and that 24,000 ETH—or $56.3 million worth at the time—was “paid” for the asset, there were both surface-level and behind-the-scenes red flags that quickly cast doubt on the legitimacy of the purchase.
First off, this particular CryptoPunk was last purchased for about $69,000 worth of ETH in September. It doesn’t have any particularly rare attributes, which means it typically sells near the entry-level (or floor) price for the collection. It’s a “floor Punk.” There’s no obvious reason why it would jump in value by 81,000% in a matter of weeks.
Punk 1563 bought for 24,000 ETH ($56,292,000.00 USD) by 0x9cbb3d from 0xba1349. https://t.co/FqDvGZvg05 #cryptopunks #ethereum pic.twitter.com/hWimHKYb0x
— CryptoPunks Bot (@cryptopunksbot) October 3, 2024
A look at on-chain data shows that the purchase was conducted via crafty use of flash loans, aka uncollateralized crypto loans that must be paid back in the same transaction.
In a single transaction, the “buyer” of the NFT took out a 24,000 ETH loan from DeFi protocol Balancer, and then the “seller” paid back the loan to Balancer. No one actually made any money, though whoever pulled the stunt paid network fees and the Punk was indeed moved between wallets.
This isn’t the first time that this has happened, and in fact, the $56.3 million price here doesn’t even come close to the “record” set by a previous flash loan-funded Punk purchase.
In October 2021, someone used flash loans to buy a CryptoPunk for $532 million, also returning the funds in the same transaction. While the move grabbed headlines and put a jolt into the then-booming NFT market, CryptoPunks creator Larva Labs said it wouldn’t track the sale as being legitimate, and other NFT data platforms followed suit.
There’s an interesting twist in this case, apparently. According to pseudonymous on-chain sleuth 0xQuit, the flash loan is apparently tied to an upcoming meme coin called “Kamala Harris Punk,” and the sale appears to be a stunt used to drum up interest in the token’s pre-sale.
7/ The contract is set to accept the highest bid for Punk #1563 after a 7 day period (so long as the bid is at least as high as the current presale value).
The dev then gets 10% of the token supply, and 10% of the funds received from the presale and sale of the punk.
— Quit (@0xQuit) October 3, 2024
0xQuit notes that the CryptoPunk in question will be sold to the top bidder after the weeklong pre-sale phase, and that the developer is apparently betting that they will make more than the actual value of the Punk—current floor price is about $63,400 worth of ETH—via the NFT sale and the token presale. But there’s always a risk that the stunt could backfire.
“tl;dr 24,000 ETH is a psyop to advertise what is basically a presale where, after 7 days, the punk is sold to the highest bidder with a minimum bid equal to the amount raised in the presale,” they explained. “Also maybe a political statement given the name and the clown makeup.”
Excluding today’s questionable transaction, CryptoPunks sales over the last 30 days have generated about $16.7 million in trading volume, according to CryptoSlam. The biggest known (legitimate) CryptoPunk purchase came in February 2022 for just shy of $24 million worth of ETH. That Punk was recently resold for an undisclosed sum.