Balloonsville NFT holders had a nightmare yesterday when the collection turned out to be a sham. Shamelessly, the official account accepted how it was a pretence via a tweet. Obviously, after which they deleted their account.
In a series of tweets, Balloonsville’s account wrote about how Magic Eden which is a Solana marketplace, didn’t even bother to verify the team’s ID. Furthermore, the team admitted that they did not provide any proof of concept and did not adhere to Solana’s protocols.
These announcements infuriated the NFT community, putting Solana in a difficult position.
What is the Balloonsville NFT collection?
The Balloonsville NFT series, a 5000-item NFT collection, was a successful drop. Allegedly, the project made more than 17890 SOL ( $2M) before the rug pull. Meanwhile, the average sale price of one NFT was around 1.88 SOL.
How will the collectors recover?
In response to the recent rug pull, Magic Eden has decided on a course of action. They made the following announcements via Twitter :
1) Derugging of Ballons/NFTs – Essentially, the decision came after keeping the Balloonsville followers’ count in mind. Therefore, Magic Eden not only decided to derug the project but also offer 5,000 SOL from their treasury to fund the roadmap. This is to note that the creators’ royalties will now flow into a new address and not to the scammer.
2) Refund minters who sold below the floor price – Around 85% of initial balloons were sold above the mint price. Given that, Magic Eden will only refund the rest of the 15% of sellers, who sold below the mint price. This will be done through an airdrop where the difference amount will be adjusted in the next 24 hours.
3) Offer an option for a refund to holders: Lastly, if the holders want to leave, the marketplace is giving an option to burn and refund for the mint price i.e. 1 SOL. To find out more, you can join the Balloonsville 2.0 discord.
Apart from this, there will be no refunds for the people who bought into the project on secondary and sold at a loss. To explain, Magic Eden wrote, “It is a slippery slope to refund trading losses, doing this will lead to market manipulation”.
Markedly, after Balloonsville’s tweets, Magic Eden took more than 30 minutes to flag the project on their website, despite the fact that sales of over 3 SOL had already occurred during that time.
What does the NFT community think of the Rugpull?
Acknowledging the fact that many of the current holders purchased the NFTs on the secondary market, the NFT community expressed its displeasure with Magic Edens’ decisions. For instance, @Dorian349 tweeted “The winners are the guys who bought ours for 0.4. They can now sell them for 3 SOL easily and get the SOL we lost back. I still don’t understand why they decided to derug the project after they know most of us sold at a loss”.
On the other hand, some were quite happy with the steps as @bhammers wrote “Man, this community pushes me further and further away almost daily now. Jeez! They sat in a Space for over two hours listening, getting cussed at, owning up to the mistake. THEN they took that advice and attempted to help and STILL, everyone is shitting them”.
There’s no denying that Magic Edens’ or Solana’s reputation was affected due to the rugpull. Currently, many people do have questions regarding the verification process and transparency.
On the bright side, according to the Twitter accounts, some NFT project creators such as solDOOGLES, MetaHeaven and SolClones are trying to refund the victims of the Balloonsville rug.
It is important to note as of May 2022, the collection is under new ownership and the new owners claim the project is “de-rugged”. Their community now claim it is a solid project with the current floor price of around 3SOL ($150).
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This article is educational material.
As always, make your own research prior to making any kind of investment.
