In a classic bull market move, a cryptocurrency user recently made headlines by spending an astonishing $113,000 in gas fees while attempting to purchase $26,000 worth of a newly launched token. Unfortunately, their efforts were in vain as the token turned out to be a scam just 35 minutes later.
According to transaction data from Etherscan, a wallet address interacted with a smart contract address on February 13th, transferring 10 Ether (ETH) valued at approximately $26,000 to the contract. The smart contract then converted it into Wrapped Ether (WETH) and executed a swap for 30 No Handle (NO) tokens, which were a newly listed ERC-404 token. The proceeds from the swap were deposited into another wallet address.
This transaction incurred a hefty gas fee of 42.8 ETH, equivalent to $113,211, as reported by Web3 portfolio tracker DeBank. Some believe that such exorbitant spending on gas fees is indicative of a bull market, where users take risks in the hopes of making substantial profits from obscure tokens.
Unfortunately for this particular user, the price of a single NO token skyrocketed from $6.80 at launch to a staggering peak of around $70,000 before plummeting back to nearly $0 within just 35 minutes, according to data from Dex Screener. Lookonchain described this user as being “rugged” when the price of the NO token suddenly crashed.
Adding to the concerns, the NO token has received a safety score of 0 out of 100 and has been flagged as “high risk” by blockchain analytics service Crypto Monkey. In a post on February 13th, Crypto Monkey informed users that the token’s contract had not been renounced and that only two addresses held 90% of the token.
It is unclear whether the user was attempting to take advantage of the token’s launch or if it was simply a mistake when interacting with the smart contract. However, the high gas priority fee suggests that it was likely a deliberate move.
Interestingly, the wallet address in question has been profiting significantly from the growing ERC-404 trend. It has earned over $1.1 million in profit from Pandora tokens, the project that is credited with starting the ERC-404 craze after its launch on February 5th.
ERC-404 is an unofficial and experimental token standard that aims to connect ERC-721 nonfungible tokens (NFTs) with ERC-20 tokens. This allows for the fractionalization of NFTs, enabling multiple wallets to own a portion of a single NFT and trade or use it as collateral for loans.
In conclusion, this incident highlights the risks and volatility associated with investing in newly launched tokens in the crypto market. Users must exercise caution and conduct thorough research before making any transactions.