Crypto Investor Spends $113K in Fees for Tokens that Plummeted to Near Zero in 35 Minutes
Summary:
A cryptocurrency user spent a massive $113,000 in transaction fees to acquire $26,000 of a newly launched token, only to see its value plummet to near zero within 35 minutes. The hefty transaction engaged a smart contract and converted the investment into Wrapped Ether (WETH), which was then swapped for 30 No Handle (NO) tokens. The NO token later received a safety rating of 0 out of 100, marking it as "high risk" by blockchain analytics provider, Crypto Monkey. The incident spurred debate about whether the high gas fee was a strategic move or a mistake.
A cryptocurrency enthusiast has reportedly splashed out an astonishing $113,000 in transaction costs to scoop up $26,000 of a new token, which appeared to have been rapidly devalued just 35 minutes after purchase. Etherscan's transaction data revealed that on February 13, a solitary wallet transferred 10 ETH (equal to roughly $26,000) to engage with a smart contract. This contract then converted the investment into Wrapped Ether (WETH), only to exchange these for 30 No Handle (NO) tokens, a recently introduced ERC-404 token. The resultant tokens were then moved to a different wallet.
Information from DeBank, a Web3 portfolio tracking platform, showed that this hefty transaction incurred gas fees of 42.8 ETH, equating to $113,211. Some observers believe that such ostentatious outlays are indicative of a buoyant market, with investors eager to take risks on unknown tokens in the pursuit of significant windfalls.
Regrettably for the investor involved in this transaction, the value of the NO token skyrocketed from launch price of $6.80 to a staggering peak of $70,000, only to crash to almost negligible value within a 35 minutes timeframe, as reported by Dex Screener. Lookonchain stated that the investor had been "rugged" following the dramatic tumble in value of the NO token.
In light of these dramatic developments, the NO token has been assigned a safety rating of 0 out of 100 and marked as "high risk" by Crypto Monkey, a blockchain analytics provider. On February 13, Crypto Monkey communicated to its users that the majority stake of the token, 90%, was controlled by only two addresses, and the ownership of the token's contract was not relinquished.
Uncertainty lingers as to whether the investor did this intentionally to leverage the launch of the new token, or if it was a mistake, an erroneous input when dealing with the smart contract. Given the considerable gas fee, it appears this investor was trying to gain the upper hand in the launch. The wallet holding these tokens banked big from the burgeoning ERC-404 trend, raking in a profit exceeding $1.1 million from Pandora tokens alone. Pandora is credited with kickstarting the ERC-404 hype after it was introduced on February 5.
ERC-404 is a groundbreaking yet unofficial token model that seeks to bind ERC-721 non-fungible tokens (NFTs) to ERC-20 tokens, paving the way for fractionalized NFTs. This innovative model allows multiple wallets to possess fractions of a single NFT, subsequently enabling understanding and predictions about loans and trading.
Published At
2/14/2024 6:13:05 AM
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