On March 25, an NFT trader Brandon Riley irreversibly lost his asset, CryptoPunk #685, which he had purchased for 77 ETH worth almost $135,370 at press time. Two weeks ago, at the moment of purchase, the NFT was worth about $129,000.
The trader planned to wrap his CryptoPunk and post it on NFTfi.com, which could have earned him 7% annually. Riley specifically emphasized in his tweet that he did not want to sell his Punk on Blur.
Read also: A beginners guide to Blur, OpenSea emerging rival
To use NFTfi.com, Riley had to wrap the NFT first. Wrapping makes it possible to connect NFTs minted before ERC-721 was adapted as the NFT token standard to newer DApps and marketplaces. Unfortunately, the trader accidentally sent his asset to a burn address.
https://twitter.com/vitalitygrowth/status/1639489299254063105
According to Riley, he made a mistake when he tried to create a proxy wallet address due to a lack of technical knowledge and experience. "I should have known something was wrong and realized that this was a mistake, but I didn't. It wasn't until I went to mint my wrapped Punk that the astronomical gas gave it away," Riley explained in his Twitter thread.
Admitting that he alone was responsible for the mistake, Riley called it "the beauty and the curse of self-custody," and wished other Twitter users in the NFT community to be more careful than he was.
In response, other Twitter users also shared their expensive NFT losses. NFT artist NefticArt mentioned listing an NFT worth 3 ETH with 0 ETH. Others complained about falling victims to exploits that resulted in losses worth their entire savings.
Although Riley did not blame anyone for the incident, some Twitter users believe that developers should make the process more user-friendly. Meanwhile, user NFToga noticed that the instructions Riley used to wrap CryptoPunks were updated after Riley posted about his problem. The guide now explicitly states that a proxy wallet address should be other than 0x00...0000 which was a burn wallet Riley mistook for a proxy address.
Read also: BAYC just lost its top pricing spot to CryptoPunks
Burn addresses, also called null addresses or eaters, are used to destroy NFTs and cryptocurrencies which, are minted on a blockchain and cannot be simply removed. Sending an NFT to a burn address does not technically affect the asset, but it completely prevents potential access to the burned NFT since such addresses have no private keys attached to them
Currently, using a burn address is the only way to destroy an NFT. Originally, eaters were invented to increase the value of an asset by reducing its total supply, primarily for cryptocurrencies. This is also a method to take an unwanted NFT out of circulation.
https://twitter.com/habitnest/status/1518675737275887616
In addition, burning NFTs is used as a gamified trading strategy, especially in the case of Web3 games like Gary Vaynerchuk's Book Games NFTs, where players can burn their assets to obtain other physical or digital rewards.
