Lost half a million dollars when launching new COVIDPunks NFT tokens

The launch of a new NFT collection called COVIDPunks was overshadowed by bad news: investors and digital art lovers lost 174 ETH in the equivalent of $ 490 thousand in unsuccessful attempts to conduct the so-called minting of unique tokens of the series.

The reason for this was the too high load on the Ethereum network, which just coincided with an important upgrade in London. Still, COVIDPunks were launched and sold to collectors on the day of the network update.

Recall that NFT minting is the creation of a separate token of the ERC-721 standard by interacting with a smart contract. Until then, the user is essentially just dealing with an image or other format of the object. However, if the owner considers it valuable and promising, he can create a full-fledged token, which will become an NFT.

The creation of a token of this format on the Eth network requires relatively large expenses on commissions. Moreover, if the transaction for minting fails, no one will return the money for the commission. This is the situation in which everyone who lost funds on COVIDPunks found themselves in this situation.

Cryptopunks NFT cryptocurrencies


By themselves, COVIDPunks have evolved from the most popular NFT collection called CryptoPunks. Recall that their maximum number is limited to 10 thousand, and each of the representatives of the line is unique along with randomly selected properties. Today, to buy one original crypto-bank, you need to pay at least 100 thousand dollars.

crypto-banks nft tokens

Cryptobanks available for sale

Since few are able to invest a similar amount in art of this format, other lines of characters began to appear within the community. Covid punks differ from the original by the presence of a medical mask.

That is, in fact, users wanted to make money on the trend, but many of them were in the red.

How to lose money on NFT tokens

As we have already noted, the collection of unique tokens itself is not so unique: these are the same famous CryptoPunks, only with medical masks over portraits in the pixel art style. Deals with the most expensive «crypto-banks» amount to millions of dollars.

According to Decrypt sources, COVIDPunks minting started on Thursday, August 5 at 8:00 pm ET . Within an hour, all 10 thousand tokens of the collection were mined and sold. At the same time, the launch of COVIDPunks coincided with the London hard fork, the key update of which was the mechanism for burning ETH from user fees.

And since NFT minting is associated with active interaction with the collection smart contract and the consumption of large amounts of gas, COVIDPunks quickly became one of the largest «burners» of ETH. By this time, the project’s smart contract has already helped burn more than 527 ETH worth $ 1.5 million .

COVIDPunks NFT blockchain tokens

The number of ETH burned at the time of minting tokens

Minting the collection increased the rate of burning coins to 14 ETH per minute, but a little later this figure dropped to 4.7 ETH per minute. In other words, COVIDPunks has made a significant contribution to ensuring that the number of Ethereum coins gradually decreases over time.

COVIDPunks NFT blockchain tokens

Increase in the rate of ETH burning during COVIDPunks minting

And the most important thing is that the hype around this series of NFT played against those wishing to acquire new «crypto-banks». Due to too much activity during minting, fees on the Ethereum network quickly skyrocketed to an average of $ 33 per transaction. This, in turn, led to a large number of the aforementioned «failed» transactions amounting to 174.39 ETH or 490 thousand dollars .

The logic is simple: when the network is congested, transactions may simply not go through. If, in such conditions, an insufficiently high cost of gas is established, the transaction will not only not remain in the queue for carrying out for several hours, but it will also be banally canceled. This means that in this case she did not have enough gas to conduct it, and the burnt gas was just the money that users lost on commissions.

COVIDPunks NFT blockchain tokens

An example of a «failed» transaction

COVIDPunks weren’t the only major NFT event this week. Unique tokens from the Bored Apes, Meebits and CryptoPunks collections are among the new lots being awarded in the upcoming Christie’s auction. Recall that Christie’s NFT has already gone under the hammer for the most expensive NFT in history for a total of $ 69.3 million .

Apparently, NFTs, which gained widespread popularity earlier this year, continue to be heard by cryptocurrency enthusiasts. We believe that the hype around this trend will not subside, since the very concept of unique tokens changes too much what is happening in the art industry and beyond. Most likely, in the future we will see new options for using NFT and their even greater popularity.

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