If you thought CryptoPunk sales were lucrative, one of the most recent Punk sales will certainly catch your eye. There’s certainly a lot you can buy with $500 million dollars. Does someone just love the JPEG? While we can never rule it out, there’s more than what meets the eye behind this record-shattering NFT sale.
Let’s take a dive into this transaction and what we know thus far.
Some of the brightest and most notable names in NFTs believe that this transaction was essentially a flash loan transaction.
— CryptoPunks Bot (@cryptopunksbot) October 28, 2021
In short, the general sentiment is that someone utilized a flash loan smart contract transaction to sell this NFT to their own wallet. While some skeptics immediately suspect money laundering (and that certainly is possible), the more likely conclusion here is that the owner wanted to cause some uproar in the NFT community. If so, that objective was certainly completed. Alternatively, the holder could’ve wanted to enable the transaction for tax purposes.
Money laundering is certainly a possibility here, but we’re operating under the assumption that the NFT holder is cognizant enough to realize that a transaction this large was going to catch some eyeballs.
The beauty of blockchains is really showcased with this CryptoPunk transaction; within a matter of hours, the NFT community was able to nail down the flash loan transactions from the wallet holder’s address, and clearly illustrate the fact that the buyer and seller were indeed the same individual. The only thing left unanswered is that individual’s motivation.
For real though, if you look at the TX it was a massive flash loan which which bought the punk, sold it and paid the loan back all in a single transaction.https://t.co/hpKnGjoCQB
— richerd (@richerd) October 29, 2021
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Flash Loan Frequency
Flash loan maneuvers are becoming increasingly common in crypto as individuals look to take advantage of market arbitrage. Unfortunately that is coming often in the form of flash loan attacks. This tactic allows individuals to exercise arbitrage between exchanges without any leverage necessary, risking only the gas fees for transactions. In short, someone is exchanging crypto and back across multiple exchanges and pocketing the profit from arbitrage.
Attacks in this form are becoming more and more frequent, to the point that in just the past 24 hours, our team at Bitcoinist covered the flash loan attack of Cream Finance that resulted in a loss of roughly $130M – one of the larger attacks on a DeFi platform to date.
In the case of this CryptoPunk, however, we’re simply seeing a flash loan at work – there’s no substantial impact on the market besides the potential for market inflation and a lot of buzz in the air.
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