While going through the unfamiliar process of wrapping NFTs, Riley accidentally sent the asset to a burn address, permanently deleting the NFT from circulation.
A nonfungible token (NFT) from the CryptoPunks collection worth 77 Ether
$1,781 was sent to a burn address to be permanently destroyed. However, the collector intended to borrow some money against it to buy another NFT.
NFT collector Brandon Riley added CryptoPunk #685 to his collection on March 13 by paying 77 ETH, hoping to hold it for the long term.
As a seasoned investor, Riley knew the importance of procuring new NFTs right before crypto markets took off into a new bull market. As a result, he decided to borrow some money against CryptoPunk #685 by using a popular technique known as wrapping.
While going through the unfamiliar process of wrapping NFTs, Riley accidentally sent the asset to a burn address — which permanently deleted the NFT from circulation, as shown below.
“I was told to follow the directions exactly, so I did,” explained Riley, but in the process, he ended up losing 77 ETH, which was worth $135,372.16. He explained:
While members of Crypto Twitter believed that the NFT collector must have had “deep pockets,” Riley contradicted the rumors by revealing that he had purchased CryptoPunk #685 through borrowed money.
“I just shouldn’t have attempted this on my own, I guess,” was Riley’s takeaway from the experience. On the other hand, Crypto Twitter also blamed confusing user interfaces and complex instructions for the investor’s loss. As a result, the community unanimously agreed on the need to revamp the front-end processes for crypto ecosystems.
Related: Improving Bitcoin NFT marketplace infrastructure sets the stage for ecosystem growth
NFT wash trading increased by 126% in February, confirmed a CoinGecko report. The top six NFT marketplaces are Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks and LooksRare. X2Y2, Blur and LooksRare saw a rise in wash trading for the fourth straight month, with a total volume of $580 million.
As Cointelegraph previously reported, the issue of wash trading stems from a lack of clear regulations.