KEY POINTS

  • The massive amount surrounding the sale of a CryptoPunk NFT had Twitter abuzz
  • The metadata of the transaction contained the message, "looks rare"
  • Analysts claim the transaction of $537 million was a 'flash loan' implemented using smart contracts

CryptoPunk NFTs are known for being sold at exorbitantly high prices and are only 10,000 in number. The crypto community on Twitter was in a state of shock when a CryptoPunk NFT was apparently sold for a whopping half a billion dollars. Had this actually been true, the sale would’ve made the transaction one of the biggest in the entire NFT industry.

The catch here was that this CryptoPunk NFT sale seemed to be a publicity stunt pulled off by someone, as suggested by analysts.

A Twitter bot that is known for tracking the sale of CryptoPunks flagged the transaction before 8 p.m. ET. The price of the CryptoPunk 9998 NFT was kept at 124,457.07 ETH (roughly $537 million), which is relatively high as compared to the sale of the ultra alien CryptoPunk back in the month of March.

In the tweet by the CryptoPunk Twitter bot, it was clear that the transaction was made between two addresses. However, according to a tweet by @Nanexcool on Twitter, the transaction is actually the magic of a smart contract implemented by the owner of blurr.eth Ethereum Name Service NFT.

@Nanexcool explained the entire process, “0x9b5a flash loans 124,457 ETH from many sources. 0x9b5a pays 124,457 ETH to the punk contract. Punk contract sends it to 0x8e39. 0x8e39 sends back to 0x9b5a. 0x9b5a repays loan.”

The transaction cost was 0.19 ETH ($822), and the message in the transaction metadata said, “looks rare.”

Flash Loan

The main concept used in this transaction is called ‘flash loans.’ A flash loan is basically a smart contract in which the rule is that the lender has to pay back the amount borrowed before the transaction ends, which is usually a few seconds.

The funds change hands in an instant, and in that instant, the borrower has to execute other smart contracts to perform trades with the loaned capital and return the capital in time, or the loan will be declined, and funds returned to the lender. Hence the name, ‘flash loan.’ You don’t require collateral for a flash loan, and the only restriction is the stipulated time itself.

CryptoPunk
'CryptoPunk 7523,' a rare NFT from Larva Labs, is one of several of the certified digital objects being sold by auction house Sotheby's through June 10, 2021 GETTY IMAGES NORTH AMERICA / Cindy Ord
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