One rare CryptoPunk owner’s worst nightmare became a reality over the weekend. Brandon Riley accidentally sent his treasured PFP to a burn address, losing it forever. How did this monumental error happen?
Image Credit: CryptoTimes.io
Why Did Someone Burn a Rare CryptoPunk?
Punk holder Brandon Riley purchased CryptoPunk #685 for 77 eth just two weeks ago. He then decided to use the NFT loan platform NFTfi.com to secure a 7% loan against the digital asset. Unfortunately, Riley made a mistake during the “wrapping” process necessary to use the NFTfi.com service with a CryptoPunk. As a result, he accidentally sent his Punk to a burn address.
Riley took immediate ownership of the mistake. He tweeted that he is not a dev or particularly tech-savvy, and shouldn’t have attempted the wrapping process himself. There was one step in the wrapping instructions that confused him. Since Riley lost the Punk, the set of instructions he was following was updated to clarify the procedure and prevent future mistakes.
Why Do People Wrap CryptoPunks?
Larva Labs created CryptoPunks before the ERC-721 standard was adopted. As a result, they are incompatible with many Web3 marketplaces and protocols. By wrapping a Punk, holders can create a new digital token to prove ownership of their assets and use previously-incompatible platforms.
Image Credit; LarvaLabs.com
The wrapping process involves interacting with the token on the contract level. It is not particularly user-friendly, and the popular wrapping website WrappedPunks.com warns, “We highly discourage to wrap your Cryptopunk unless you are familiar with how to interact with smart contracts via etherscan.io. If you decide to wrap your CryptoPunk, you will interact with the Ethereum blockchain so any transaction is irreversible.”
Punk #685 is lost forever, and with it, Brandon Riley also lost a third of his net worth. This situation highlights the double-edged nature of blockchain technology. We gain the benefits of eliminating middlemen but also need to suffer from its consequences.
This dichotomy, Riley observes, is “both the beauty and the curse of self-custody.”
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This article is educational material.
As always, make your own research prior to making any kind of investment.
