Larva Labs released an official statement that leaves no room for interpretation: “v1 Punks are not Official CryptoPunks.” However, it seems like the NFT Community feels differently. Twitter user @0xStroudonian posted an extensive thread about the project’s contract that directly contradicts Larva Labs’ stand.
Before we get into that, let’s take a trip down memory lane.
Larva Labs released V1 Punks in 2017. After the team sold all 10,000 Punks and the secondary market kicked off, they discovered an impactful bug in the smart contract. When users buy these Punks, they can withdraw their own funds, effectively stealing the NFT. For example, if I bought your V1 CryptoPunk for 1 ETH, you could withdraw that 1 ETH and repeat the process. @0xfoobar published a Twitter thread that thoroughly explained the bug if you want to get into the tech side of things.
So Larva Labs ended up re-launching the project. The team corrected the contract and released the CryptoPunks we know today with a supply of 10,000. Hence, the moniker V2 Punks.
PSA: "V1 Punks" are not official Cryptopunks. We don't like them, and we've got 1,000 of them… so draw your own conclusions. Any proceeds will be used to purchase real Cryptopunks!
— Larva Labs (@larvalabs) January 25, 2022
Community Reacts to Larva Labs’ Announcement
The V1 punks were mostly forgotten. They recently made a comeback because the newly launched Marketplace LooksRare allowed the listing of these “ClassicPunks.” Before that, Wrapped V1 CryptoPunks didn’t have a marketplace that would list them because Opensea banned the sale of the assets.
You need to wrap V1 CryptoPunks to collect the proceeds if you sell them. This is why the Collection on LooksRare is named “Wrapped V1 CryptoPunks”. These are V1 Punks wrapped in a new contract to prevent the exploit. As of press time, 265 V1 Punks are trading on LooksRare and the Collection has pulled in 294 ETH or $768,000 in Sales Volume.
Safe to say that Larva Labs is not happy with the resurrection of the V1 Punks and their current traction. Thus, they released a strong statement to discourage NFT Collectors from purchasing them. Referring to V1 Punks, the company tweeted: “We don’t like them, and we’ve got 1,000 of them… so draw your own conclusions. Any proceeds will be used to purchase real Cryptopunks!”
The NFT Community has some strong feelings about this new development. @0xStroudonian called out Larva Labs and accused them of not being a fan of blockchain technology at all. He pointed out that “the contract code is permanent. So you can only update a contract post-deployment by calling the self-destruct() function if there is one. A function which neither of the two Crytopunk contracts has!”
He asserted that there’s another way to destroy an NFT Project. However, Larva Labs cannot do that with v1 punks because both their v1 and v2 contracts point to the same file. As ultimate proof, he shared the identical imageHash in both contracts. So the shocking truth is that: “to destroy v2 is to destroy v1. However, @larvalabs feels doesn’t matter beyond that. The blockchain never lies.”
V1 vs. V2 CryptoPunks
The community is divided over the issue. On one end, Punk NFT Holders are defending Larva Labs and encouraging the rest of Crypto Twitter to support the official Punks, aka V2. 2017 was early for NFTs, so kinks needed to be worked on. Thus, Larva Labs doesn’t deserve to be crucified over the contract issue.
Meanwhile, other users think that Larva Labs handled the issue poorly. As user @PhuckingEth puts it, “It’s ok to acknowledge this as a mishap. Would make them rare and bring value to your lab. But instead, you hate because a community revived them with a wrapper and a zero royalty-free marketplace? Talk about protecting your bags.”
Looks pretty fuckin official to me. pic.twitter.com/Ozw9ErUrhw
— PAULY (@Pauly0x) January 25, 2022
Ultimately, the market will decide which version is more valuable. As of press time, V2 Punks are still on top of its game with an 82.5 ETH ($215,000) floor price.
Meanwhile, it’s too early to tell what the fate of the V1 Punks would be. However, we know for a fact that the NFT Community loves unearthing and reviving OG projects. Take Mooncat Rescue as an example. By chronology, Mooncat is the second oldest NFT on Ethereum after CryptoPunks, so NFT enthusiasts and collectors saw it as a goldmine. After all, factors like historical significance and scarcity drive the value of NFTs.
Potential Valuation of V1 Punks
NFTs have only been around for 8 years. So it’s amazing how there are already NFT archeologists who are dedicated to digging up historical projects. V1 Punks has a supply of 10,000 NFTs. Despite the bug, the contract confirms 10,000 NFTs spread across 116 holders. What’s more interesting is that Larva Labs held back 1017 V1 Punks, making them the largest holder of this version.
So what’s the impact of the supply distribution on the potential valuation of V1 Punks. More importantly, will it ever moon?
The total supply of V1 Punks is distributed to a few holders who can effectively control and sway the price. One possible scenario that can happen is V1 Punks’ price will skyrocket. Then, those who hold large amounts of the tokens can just dump their NFTs which would badly hurt the price.
On the other hand, history has proven that the market has a soft spot for oddities like a misprint or in this case, a “faulty” version of a high-priced asset. In addition, we have to remember the very reason why CryptoPunks rose to the top. The OG Collectible was marketed as the first NFT project on Ethereum.
Reality check: it took years before CryptoPunks took off. They were given away for free on June 23rd, 2017. In the first 5 months, there was only $170,000 sales volume (less than the current floor price of one Punk). So if you decide to purchase V1 Punks you also need to accept the reality that it might take years for it to grow.
Another consideration is that most NFT enthusiasts and collectors remain oblivious about the existence of V1 Punks. In addition, holders of the official CryptoPunks project wouldn’t support V1 because it might eat up the market share of V2 Punks. Plus, Larva Labs openly disassociated the company from V1 Punks so it’s all up to the market to boost their value.