ZachXBT Investigation NFT Converts to $15M Token on Base Network

TLDR

• ZachXBT’s investigation document NFT accidentally became a tradable token
• Token reached $15M market cap on Base network
• Zora protocol automatically converted NFTs to ERC-20 tokens without clear user notice
• Originally intended as free NFT documentation of $243M theft investigation
• Token value peaked at $4,300 before falling to $4M market cap

In an unexpected turn of events, a simple blockchain investigation document intended as a free NFT has transformed into a $15 million tradable token on the Base network.

The document, created by renowned blockchain investigator ZachXBT, was meant to serve as a permanent record of his investigation into a $243 million theft involving a Genesis creditor.

The transformation occurred through the Zora protocol in August, when ZachXBT uploaded his investigation document as an NFT.

Unknown to the investigator, Zora’s system automatically converted the NFTs into ERC-20 tokens, making them tradable on decentralized exchanges like Uniswap.

ZachXBT shared his surprise at the development, providing evidence that Zora’s user interface gave no indication that an ERC-20 token would be created alongside the NFT.

“The Zora UI currently does not give any indication to creators that an ERC-20 token will also be launched at the conclusion of an open edition NFT mint,” he explained.

Through its ERC20z standard, the Zora protocol created approximately 3,500 tokens on the Base network. This standard allows NFTs to be wrapped into ERC-20 tokens or unwrapped back to ERC-1155 tokens, enabling trading functionality similar to other token creation platforms.

The Zora UI currently does not give any indication to creators an ERC 20 token will also be launched at the conclusion of an open edition NFT mint (attaching screenshots for proof).

If people continue tagging me on posts I am going to dilute the piece with more mints that do… pic.twitter.com/RwLJVrv3RT

— ZachXBT (@zachxbt) November 5, 2024

The market response to the unexpected token was dramatic. The token’s value shot up from near zero to $4,300 per token, reaching a total market capitalization of $15 million. However, the price has since decreased, with the market cap falling to $4 million according to recent DEX Screener data.

The creator’s original intent was far removed from creating a tradable asset. ZachXBT had simply wanted to archive his investigative content on the blockchain, following a practice he had established with previous articles hosted on Mirror.

Expressing his displeasure with the speculative trading of the token, ZachXBT warned,

“If people continue tagging me on posts, I am going to dilute the piece with more mints that do not have an end date and possibly take other actions like replacing artwork off Zora with a blank image.”

The situation highlights the automated nature of current blockchain protocols and their potential to create unexpected outcomes. The Zora protocol’s automatic conversion feature, while designed to add functionality, created an unintended financial instrument from what was meant to be educational content.

The incident occurred within the broader context of ZachXBT’s investigation into a major theft involving a Genesis creditor. The original investigation document, which detailed the $243 million theft, was intended to be freely accessible to the public as an NFT.

The token’s trading activity on decentralized exchanges has created a unique situation where an investigative document has become a speculative asset.

This development stands in contrast to the creator’s goal of maintaining transparent, accessible records of blockchain investigations.

The Base network, where this incident occurred, has seen the token become one of its more notable trading pairs. The trading volume and price movements have drawn attention from crypto traders and market observers.

Technical aspects of the conversion process involve Zora’s ERC20z standard, which automatically creates wrapped versions of NFTs.

This standard allows for greater trading flexibility but, as this case shows, can lead to unexpected outcomes when creators are unaware of its implementation.

Currently, the token continues to trade on various decentralized exchanges, though at lower valuations than its peak. The market cap has stabilized around $4 million, representing a substantial decrease from its highest point.

ZachXBT’s investigation work continues to focus on blockchain security and fraud investigation, with this incident serving as an unintended side effect of his documentation efforts.