Author: Andrew Amarosa

Andrew is the CSO of Pastel and is a Venture Associate at Innovating Capital, a technology fund focused on disruptive companies that has incubated Pastel Network since day one. Andrew previously worked for Darktrace Ltd, a unicorn cybersecurity company, doing business development and go-to-market strategy. He helped grow a fledgling business unit at Darktrace – Darktrace Industrial – into a major revenue generator. He has an MBA from Columbia Business School and a BA in Political Science from the University of Pennsylvania.

What Are NFT Smart Contracts & How Do They Work?

Posted on by Andrew Amarosa

NFTs, wouldn’t exist without smart contracts, and digital agreements written with computer code and deployed on a blockchain. Their main function is to execute one or multiple actions if conditions are met, often following simple “if/when-then” statements, e.g., if X is true, then Y will happen. 

These programs automate execution, and workflow, and streamline the outcome of an agreement between one or multiple parties without the need for an intermediary. These actions, for example, could be the transfer of funds from one wallet to another, storing an NFT, locking deposited funds into a liquidity pool, and more

NFT smart contracts have an important role in keeping the NFT ecosystem healthy and honest Some of their most important functions include handling royalties, ensuring the NFT is unique and non-replicable, verifying ownership rights, and enabling access to exclusive NFT merchandise or events (NFT projects usually throw around exclusive benefits to those who buy a specific NFT from their collection).

What are NFT Smart Contracts?

The versatility of NFT smart contracts plays a key role in the development of the metaverse and the Web3 industry. 

NFT smart contracts are smart contracts specifically designed to create the relatively complex requirements of NFTs, such as provenance, non-fungibility, authenticity, and the hosting on a blockchain network. 

First, let’s have a quick refresher on what a smart contract is. Then we’ll explore how they’re used in the NFT world. 

Smart Contracts: Benefits and Main Functions

Smart contracts are being applied to a wide variety of industries –home sales, supply chain, data sharing between multiple institutions, digital identity, banking —the list is long. 

For example, blockchain supply chain solutions counter the typical setbacks within this industry (data disparity, labor shortage, reliable shipping source, etc.) using smart contracts to automate the shipping process by keeping track of items, administrating and structuring important data, and performing specific tasks if conditions are met.

Some of the main benefits of smart contracts are:

  • Transparency and trust: they facilitate transactions for multiple users in a network without them having to know or trust each other. Everything is carried out by the smart contract and not the user, and participants in a private and public blockchain can see them.
  • Speed, lower costs, and accuracy: by eliminating intermediaries and paperwork and only executing actions they’re programmed to do when terms and conditions are met.
  • Versatility: smart contracts can be programmed to perform a wide variety of tasks, and can be reprogrammed after being deployed on the blockchain to fix bugs or eliminate vulnerabilities.
  • Security: smart contracts are highly secure programs since transaction records are encrypted.

Creating an NFT with Smart Contracts

Minting an NFT refers to the process of converting digital files, like jpegs, videos, and sounds, into an NFT recorded on the blockchain, making it available for everyone to see and purchase. When you mint an NFT, you’re playing with the underlying smart contract that defines the properties of your asset.

Most people experience minting an NFT through a designed, user-friendly website where all you do is press a button that says “MINT NOW” after connecting a wallet, but you can actually mint an NFT directly from its smart contract.

The smart contract assigns the ownership of the NFT to the buyer, but if they decide to sell it at some point, the smart contract of the NFT will automatically transfer ownership rights to the new owner —if conditions and terms are met. 

If an NFT is minted, NFT marketplaces like OpenSea would use another set of smart contracts to carry out the auction. For example, a popular auctioning method is a Dutch auction, which is usually created using an ERC721 NFT smart contract (explored below).

Minting NFTs has become much simpler than when they were introduced in Ethereum’s early days. SmartMint by Pastel Network, for example, is a no-code way to design and deploy an NFT smart contract. 

NFT Smart Contract Standards

There are several types of smart contract standards for creating NFTs; ERC-721 and ERC-1155 are the most widely common. ERC stands for Ethereum Request for Comment, and they refer to a set of technical guidelines for creating smart contracts or digital assets to run on the Ethereum network. 

ERC-721 is the first standard designed for the creation of non-fungible tokens, and it strictly requires all tokens to be non-fungible and have their own unique metadata. ERC-721 only supports NFTs, and each NFT can only be transferred in a single transaction, which tends to  cause congestion if network activity is high. 

On the other hand, ERC-1155 supports the transfer of multiple batches of NFTs and supports the conversion of fungible tokens (such as ERC-20) into non-fungible tokens, and vice versa. Typically, projects building blockchain games will use ERC-1155 to move their NFTs due to the higher level of versatility. 

Ethereum is the most popular option for creating or using NFT smart contracts. Other blockchain networks can have their own set of NFT smart contract standards. Still, a small problem is that, by not having a universal standard, NFTs created on different networks, such as TRON, for example, cannot be traded on marketplaces that support Ethereum, or Ethereum-related chains only like Polygon.

The Role of NFT Smart Contracts in the Metaverse

The metaverse refers to a digital ecosystem in which creators, artists, players, and anyone can explore virtual landscapes, play, socialize, interact with other users, buy and sell NFTs —and much more. 

The metaverse, popularized by Web3 projects like Decentraland and The Sandbox, is, therefore, an opportunity to bridge the financial world with the digital world, but the physical world also jumps in on the equation; physical real estate can be purchased as NFTs, using an underlying smart contract to carry out the process. 

NFT smart contracts in real estate eliminate the burden of intermediaries and hefty paperwork by granting (and verifying) the ownership and rights of a property to the respective party. One famous example of this is Michael Arrington, the founder of TechCrunch and Arrington Capital, who sold his apartment in Kyiv as an NFT.

Final Thoughts: NFT Smart Contracts and You 

NFT smart contracts are the technical backbone of the digital collectible industry. There are several NFT smart contract templates from different blockchains, each competing to provide the best technical guidelines and feasibility to users, NFT projects, and marketplaces.

That being said, NFT smart contracts are already playing a key role in the development of Web3 beyond PFPs of Bored Apes or digital samurais like Azukies. 

NFT smart contracts underpin a trustless and efficient pathway for everyone in the decentralized world to interact with NFTs. Blockchain gaming projects, companies and corporations from traditional industries such as fashion and food and beverage, and financial entities have taken a stab at what might be the next iteration of the internet —and smart contracts are the main pillar of the ecosystem.

Why Are NFTs Valuable? Attempting to Explain Why Some Cost So Much

Posted on by Andrew Amarosa

If you’ve seen headlines of non-fungible tokens (NFTs) selling for millions of dollars then you may be asking yourself: why are NFTs so valuable?

The following dialogue might ensue: Is this just a really rich people thing? Are they laundering money? Is this just fake news biting on click-worthy headlines?

The answer most people will give you is that they’re pieces of art, making them intrinsically valuable. 

But, this doesn’t really give you the full picture of why someone would pay millions for essentially a .JPEG of a monkey. 

While some NFT art pieces like Pak’s ‘The Merge’ have sold for a shockingly high $91.8m, this doesn’t accurately explicate the value of collections like CryptoPunks and Bored Ape Yacht Club (BAYC), both of which have sold for upwards of six figures since their initial release. 

With that in mind, here’s why NFTs cost so much. 

What Are NFTs?

A non-fungible token (NFT) is a digital image, video, or sound recorded on the blockchain and used to certify authenticity. These assets are 100% unique from one another and cannot be physically changed once minted. Ownership, however, can be seamlessly transferred when the token is sold. 

There are many types of NFTs, including profile picture NFTs, such as those used by Cryptopunks, music NFTs that show proof of ownership of a music piece, and NFTs used for play-to-earn (P2E) gaming, which can be used for trading, gameplay, and passive income.  

In 2022 over 101 million NFTs were sold on NFT marketplaces like OpenSea and Rarible, with collections covering a range of niches such as art, gaming, fashion, sports, music, domain names, and text-based NFT collections. 

Why Do NFTs Curate Value? 

NFTs can be both extremely valuable or completely worthless, with one in three collections “retiring”, with little to no trading activity. 

What makes an NFT valuable is its ability to introduce scarcity to the digital marketplace. When buying an NFT you’re not just overpaying for a digital image, you’re buying a digital token recorded on a public ledger, known as a blockchain. 

Ownership of the NFT is completely irrefutable, which limits the total supply and “inflates” its price, thus justifying its value. While this sounds like a great way to profit from what could essentially be digital junk, that’s not exactly how NFTs work. They need to have some kind of appeal to increase their value, which we’ll cover below. 

Artistic Value

NFTs started as digital art, with the first NFT art piece “Quantum” being created by digital artists Jennifer and Kevin McCoy in 2014. The value of NFT art is similar to that of traditional art, in which artists sell their pieces for millions at art auction houses like Christie’s. The concept of such art is often difficult for everyday people to get their head around, particularly when it comes to art pieces like the “Banana art” which sold for $120,000 only to be eaten by a “hungry artist.” 

Other pieces like the Untitled [Bolsena] collection by Cy Twombly, which sold for $38,685,000 in 2020, can also be a little difficult to process, considering it looks like a few scribbles on the page. 

Cy Twombly, Untitled [Bolsena], 1969. Courtesy of Christie’s Images Ltd. 2020.

What makes these particular pieces valuable is the fact that there is only one kind in existence and usually, the art piece has been created by one of the most artistic minds within a generation. 

This can explain why the majority of expensive NFT sales have been one-of-works. Similar to Untitled [Bolsena], they are the only kinds to exist. For example, Clock, which sold for $52.7 million in February 2022 is a truly unique piece. This is because it functions as a digital counter for the days Assange (the activist who founded WikiLeaks) has been in London’s Belmarsh Prison for espionage.

NFT Utility 

Another crucial factor that impacts the value of an NFT is its utility — essentially how beneficial or profitable it is. As NFTs develop, they’re being used to create new business models and revenue streams. 

For example, a musician can sell NFTs that represent a stake in their new record. This would allow a musician to increase their initial revenue, while the NFT holder receives royalty every time the record sells. The value of the NFT will therefore rise based on the number of sales a record makes or the fame level of the musician. This potentially allows the NFT holder to make passive profits on their initial purchase or sell it for one lump sum. 

The concept of utility is also important in the gaming space, in which play-to-earn gamers are using NFTs to generate passive income. 

Within the world of gaming, players can make in-game purchases for skins, emotes and other unique features, however they don’t actually own them. With NFTs, these in-game purchases can be owned, which gives them greater value and the option to be resold. Considering the in-game purchase market is set to surpass $74.4 billion by 2025, NFTs could disrupt the entire market, allowing players to generate from in-game items instead of them being a liability. 

Community 

Some NFTs grant users access to exclusive clubs, similar to real-world clubs like Soho House. Within these clubs NFT holders can network with like-minded investors, as well as celebrities and business owners. A great example of this is BAYC. BAYC hosts thousands of investors and celebrities such as Mark Cuban, Eminem, Shaquille O’Neal, Snoop Dogg, Justin Bieber, Madonna, and Jimmy Fallon, making it the most socially valuable NFT collection worldwide. 

What Is the Future of NFTs?

There’s no way of denying it, blockchain technology is changing the future of digital assets. What were once just pictures on the internet have become unique tangible assets with the potential to generate revenue and create entirely new business models. 

Early adopters of NFTs have slowly started to dabble in the technology, with Taco Bell selling an NFT collection in 2021, and Nike selling an NFT collection known as Cryptokicks in 2022. The NBA has also started to capitalize on NFTs to create a deeper fan connection with NBA Top Shot, which sold over $800 million in NFTs in 2021. 

As blockchain technology continues to grow and evolve, NFT assets will only become more valuable, with early stage assets being more valuable due to being created early on in a new trend. In the future, it’s more than possible that you could own an NFT for your favorite movie, record or clothing, all being just as (or more) valuable than the real-world assets you currently own. 

Azuki NFTs Explained (Read Before Buying)

Posted on by Andrew Amarosa

Azuki is a collection of 10,000 avatar NFTs inspired by anime artwork. The collection works like most profile picture NFTs (PFP NFTs,) utilizing a randomized selection of traits to create each unique character. 

Released in January 2022, Azuki had one of the most successful NFT launches, selling out on OpenSea and LooksRare in just three minutes. During its release, Azuki generated an estimated $29 million and caught the attention of the entire NFT market. 

In this article, we’ll look at what Azuki is, how it works, what are Azuki’s Beanz, how to buy an Azuki NFT, Azuki Controversy, and the project’s future. 

What is Azuki?

Azuki is a PFP NFT project consisting of 10,000 generative anime-inspired avatars. Its unique aesthetic has been compared to a combination of the 3D game The World Ends with You and the skateboarding magazine Thrasher. 

Azuki was initially planned to be launched using a Dutch Auction (where a set starting price is made and decreases throughout the sale.) The dev team planned to set a starting price of 1 ETH for 8,700 NFTs (1300 were whitelisted) and decrease this by 0.05 ETH every 20 minutes until its price hit 0.15 ETH. However, as the collection sold out in three minutes, it never decreased in price. Instead, all NFTs were minted at 1 ETH- around $3246. 

Post-launch, the value of Azuki increased exponentially, with Azuki hitting almost $300 million in transaction volume across NFT marketplaces like OpenSea. Lower value NFTs were selling for around $36,000, while rare options sold for over half a million USD. Azuki had become the eighth-most traded NFT collection worldwide in just one month, competing with household names like Bored Ape Yacht Club and CryptoPunks. 

How Does Azuki Work?

Alongside unique PFP NFTs, Azuki promised investors a long-term roadmap which helped attract the NFT community to the project. This roadmap included immersive 3D experiences, unique Azuki-themed merchandise, in-person exhibits for Azuki holders, and even a native currency called $BEAN.

Since its initial release, all holders have had access to The Garden. Within The Garden, holders can be the first to access collabs with other NFT projects, Azuki drops, clothing, tickets, live events, and more. 

However, this initial roadmap was disrupted in early May 2022 after Zegabond (an Azuki founder) published a blog that mentioned his previous three projects and how each had failed. Each had been a big hit at the time and experienced controversy in one way or another. This decreased the price of Azuki’s by over 45% and caused significant backlash throughout social media, which we’ll go into more detail below. 

As of January 2023, Azuki has continued to follow its roadmap, offering streetwear to members of The Garden, the creation of a Gallery Metaverse, and plans for Meta-games within the community. 

Who created Azuki?

Azuki was created by Churu Labs, a group of artists and developers located in Los Angeles. Each member has a background in technology, gaming, and crypto, using a pseudonymous name to stay anonymous. They go by the names of 2pm.flow, location tba, HoshiBoy, and Zagabond. 

Churu labs created Azuki to take PFP NFTs to the next level, aiming to impact the real world with in-person events, merchandise, and more. 

What are Azuki’s Beanz?

In April 2022, Azuki launched a second collection called Azuki Beanz. This collection was more affordable than the traditional Azukis and had rumors to be linked to Adidas and Supreme (though these turned out to be untrue.)

The collection consists of around 30,000 NFTs, and each Azuki holder was airdropped a mysterious box that contained a unique character from the Beanz collection.

Azuki Beanz holders receive access to an exclusive Discord channel, with merchandise and collectible drops being announced in the future. 

There are two BEANZ NFTs in total; one red and one blue, each with its own personality. Red BEANZ is a rule breaker, making his way from The Garden into the alley. Apparently, the Red BEANZ bites your Azuki if you tell him what to do. 

The second bean is a blue BEANS NFT. Blue BEANZ is constantly getting into trouble. They annoy Azuki’s and have a bad reputation. 

How To Buy An Azuki NFT

You can buy an Azuki NFT on LooksRare and OpenSea.

Start by setting up an account and collecting your wallet on either platform. MetaMask and Coinbase Wallet are good options for this. 

Once you’ve connected your wallet, search for Azuki in the search bar, ensuring the collection has a blue checkmark to avoid a rug pull. 

Find the NFT you want to buy and click “Buy Now” to complete the purchase. 

Azuki Controversy 

In May 2022, Zagabond announced he was behind three defunct projects; Tendies, CryptoZunks, and CryptoPhunks. CryptoPhunks, in particular, was seen as a huge issue amongst the Azuki community, as it was considered a rug pull after the dev team disappeared. Consequently, many investors started to question the legitimacy of Azuki. 

But the criticism didn’t stop there. After additional research, on-chain data discovered that the founder of CryptoPhunks completed a wash trade (when a buyer and seller collaborate to inflate the market.)This caused the Azuki floor price to plunge further, decreasing from 19 ETH ($ 45,410) to as low as 10.5 ETH ($25,095.)

To address the controversy, Zagabond held a Twitter space on May 10th, hosted by Andrew Wang, a popular cryptocurrency figure. Vagabond claimed that he handed off the communities, then tried to justify his actions by stating there’s no rulebook for creators to follow. 

However, developers who worked with Zagabond took to Twitter to share their experiences. In a detailed Twitter thread, “dvx,” a former CryptoZunks team leader, stated that Zagabond was consistently dishonest about his work, failed to communicate with his team, and abandoned the project despite a roadmap already being in place. Other developers stated that Zagabond was scamming from the start and had no intention for the projects to succeed. 

Despite this criticism, Azuki buyers actually increased by 1200%, with investors capitalizing on the lower floor price. 

Final Thoughts: Is Azuki Still Worth The Investment

Although Azuki experienced negative publicity in 2022, it remains a strong investment option with a floor price of 14 ETH as of January 2023. 

The dev team has successfully expanded the project with Azuki Beanz and continues to pursue the planned roadmap, providing value to holders in the process. This continuous investment shows that the dev team is invested in the long-term success of the project. 

Nonetheless, as with any investment, completing your due diligence is always important. Only invest what you can afford and ensure Azuki is the right project for you before making any decisions. 

How to Buy NFTs on Coinbase

Posted on by Andrew Amarosa

Coinbase is the world’s second-largest cryptocurrency exchange, with over 73 million users. It’s best known for its easy to use interface and in-depth educational resources, making it the perfect exchange for new investors. 

Now, Coinbase has entered the NFT market with Coinbase NFT. Coinbase NFT works as an extension to the traditional Coinbase platform and requires users to re-sign in with their crypto wallet. 

Here is a step-by-step guide on how you can buy NFTs on Coinbase. 

How To Buy An NFT On Coinbase

  1. Start by heading to https://www.coinbase.com/ and creating a Coinbase account. On the login page, enter your email address and “Get started,” or click the Sign In button on the right side of the page. 
  1. Once logged in, click on the NFT tab on the bottom left hand side of the page. This will open a new tab for the Coinbase NFT platform. 
  1. From here you’ll need to sign in again. Click on the “Sign In” button on the top right and select your wallet. MetaMask and Coinbase are the two most popular options. 
  1. After signing in, look at the current trending NFTs or alternatively search for the collection you want to buy an NFT from. 
  1. Click on your chosen collection and select the NFT you want to buy. After clicking on an NFT, you can view its unique attributes, offers, and recent activity. You’ll also be able to see its “Buy Now” price. 
  1. If you want to buy the NFT instantly, click “Buy Now.” Alternatively, you can make an offer slightly lower than the Buy Now price to bag a bargain. 
  1. After placing your bid, the NFT owner will need to accept your offer. Once accepted, the transaction will be made, and the NFT will be sent to your wallet. 
  1. Congratulations! You’ve now purchased an NFT on Coinbase. 

How To Connect With Your Friends On Coinbase

As well as buying NFTs, the new Coinbase market is also introducing a social side to NFTs. Through the Coinbase extension, you can follow friends, look at their recent activity and show off your latest purchases. Here’s how. 

  1. When logged into Coinbase NFT, click on the “Following” tab at the top of your screen. 
  1. Search through the different accounts to follow, or use the search tab to look for your friend’s account. 
  1. Click on the account to look at the NFTs they own or look at their most recent activity to see what they’ve been up to.  

Coinbase NFT: The New OpenSea?

With Coinbase dominating the cryptocurrency industry, could it overtake current NFT exchanges such as OpenSea when it comes to NFT sales? At the moment, it’s a little hard to say. 

Coinbase NFT is still in its Beta phase, and it definitely feels that way. It uses a similar interface to Coinbase, but doesn’t quite have the usability of OpenSea. It lacks the different categories offered by OpenSea and seems a little limited in its offerings, with the main focus being on popular collections. 

That being said, it definitely has the potential to influence the NFT market, especially if Coinbase can successfully convert its new crypto user base to NFTs. 

Coinbase NFT FAQs

Does Coinbase Sell Solana NFTs?

No. As of December 2022 Coinbase only offers Ethereum NFTs. 

Are There Any Selling Fees On The Platform?

Coinbase is currently running an early phase sale program where there are no fees for sales. Fees will be a part of the platform after its Beta phase, though no official date has been released. 

I Have No Experience With NFTs. Can I Still Use Coinbase To Buy NFTs?

Of course. Coinbase makes it easy to buy NFTs with their dedicated wallet. This wallet will already be used as part of your cryptocurrency account, which makes it easy to adapt. You can also learn more about NFTs through the Coinbase Learning Portal. 

What Wallets Can I Use To Buy Coinbase NFTs?

Current wallets include MetaMask, Coinbase, and WalletConnect. 

I’m Experiencing An Issue With My Coinbase NFTs. Who Can I Contact?

You can contact the Coinbase team directly here. Using the support center you can report issues about the product you’re having issues with or contact the support team directly.  

Can I Buy Music NFTs on Coinbase?

No. As of December 2022 music NFTs are not available via Coinbase.

What Are The Most Popular Collections On Coinbase?

Coinbase offers some of the most popular NFT collections, including BoredApeYachtClub (BAYC), CryptoPunks, Otherdeed For Otherside, and More Loot. 

Does Coinbase Offer New Collections?

Yes! Drops are a part of the Coinbase NFT platform and can be found on the “Drops” tab. Each drop has its own countdown and a “Remind Me” button, where you can sign up with your email to be the first to hear about any project updates. You can also view comments from other investors underneath each drop. 

The Biggest NFT Rug Pulls of All Time

Posted on by Andrew Amarosa

Rug pulls have made headlines since the 2021 NFT boom, with investors losing over $25 billion as of November 2022. These headlines have sparked fear among investors, who are now skeptical when it comes to new NFT projects.

The likelihood of a rug pull, or a scam in which a cryptocurrency or NFT team exits a project along with its investors’ funds with them, seems to be increasingly greater.

In this article, we’ll cover the seven biggest NFT rug pulls of all time ranked by the amount of money stolen from investors. 

Iconics- $140,000

Iconics was a Solana-based NFT project consisting of 8000 unique pieces of 3D artwork. It was created by an unknown 17-year-old 3D digital artist who promised unique 3D images to investors. Fourteen initial samples were showcased through the project’s Discord channel, which created the demand for more.

The project started with a pre-sale of 2000 items at 0.5 SOL; however, investors didn’t get what they paid for. Instead of 3D art, they received a random collection of emojis. After the sale, the project’s Discord went offline, and its official Twitter disappeared. 

Blockchain data showed that the scammer had around 1000 SOL at the time, which equaled around $140,000. Investors never got their money back. 

Mercenary- $750,000

Mercenary was a medieval Play-and-Earn game where players could recruit a team of mercenaries to fight for MGOLD. The game was promoted on sites like thebittimes.com and BSC news, where it was praised for its innovative mechanics and unique gameplay. 

Unfortunately, the game ended up being a rug pull. 

After building a loyal group of players, a new Twitter handle known as the Mercenary Golg Community claimed that the Twitter and Telegram groups had been hacked. Within 24 hours of this post, everything connected to the project was wiped entirely, with only a few Twitter promotions remaining. 

It’s estimated that the team stole around $760k of investors’ funds. 

Frosties NFT – $1,300,000

Frosties was the first big NFT rug pull of 2022, and one that shocked the NFT community. It started with a huge marketing campaign, advertising 8,888 cartoon ice cream NFTs. The project was one of the fastest to ever sell out, with the team making an estimated $1.3 million in the process. 

The team had promised investors unique staking features, a metaverse game, mint passes, and other long-term benefits. However, shortly after release, the Frosties social media channels, Discord servers, and website all disappeared. The project was completely shut down, and the project team disappeared. 

Fortunately, rumors have stated that the creators were caught and charged with one count of wire fraud. Although the investors didn’t get their money back, the devs were punished for their scam. 

Swipathefox – $1,500,000

Swipathefox was an NFT project created by NBA basketball player De’Aaron Fox, consisting of 6000 unique fox-themed NFTs. Fox promised investors exclusive NFT ownership perks, including giveaways, tickets, and exclusive chats with Fox himself. 

Unfortunately, the project never bore fruit, with Fox stating that he didn’t have the time to work on it during the middle of the NBA season. In an interview, Fox said that he would be working on the collection in the future. However, he had to focus on his NBA career at that time. 

As of November 2022, action has yet to be taken on the project, and investors have claimed they never got their money back. 

Though not entirely a “rug pull” in nature, this one is in the “TBD” category.

Baller Ape Club – $2,000,000

Baller Ape Club looked like a legit NFT project when it was first released. Inspired by Bored Ape Yacht Club (BAYC,) it had a complete development team, a dedicated community, and plenty of investors supporting the project. The collection consisted of 5,000 NFTs that sold for a price of 2 SOL each. 

After the public mint, the dev team rugged the project. They deleted all socials and stole around $2 million of investor funds. However, the US Department of Justice (DOJ) has since taken the project’s founder to court. 

Le Anh Traun, a Vietnamese national, has been charged with conspiracy to commit wire fraud and international money laundering. Traun could face up to 40 years in prison as a result. 

Evolved Apes – $2.7 million

Evolved Apes was an NFT collection of 10,000 apes that would battle one another to win rewards. To attract investors, the founder, known as “Evil Ape,” created competitions in which investors could win NFTs and other rewards. However, once the project sold out, Evil Ape disappeared and deleted all accounts associated with the project. 

In total, $2.7 million was stolen, including funds that should have gone to the development team, marketing department, and artists. None of the competition winners were ever awarded their prizes, and the teams were never paid for their work. 

Evil Ape was never found.

Bored Bunny- $21 million

Bored Bunny was one of the biggest NFT projects of 2022 and gained celebrity endorsements from French Montana, Jake Paul, and Floyd Mayweather. The 4,999 NFTs sold out in hours, minting for 0.4 ETH. 

However, very quickly, in-house sources suggested that the founder was simply looking to steal investors’ money. Before launch, a dev wallet bought celebrity NFTs for additional profits, and after the initial launch, a second collection known as Bored Bad Bunny NFTs went on sale. 

After the second collection sold out, the floor price dramatically dropped, and the dev team went missing, stealing $21 million in the process. 

If this wasn’t bad enough, the remaining team released a third collection known as Bored Mutant Bunny, consisting of 3,000 NFTs selling for 0.25ETH. By this time, investors had realized the project was a scam, and it failed to sell. 

Final Thoughts: Rugpulls and Mass NFT Adoption?

Rugpulls pose a threat to mass NFT adoption. With NFT scams consistently making headlines, many investors are forgetting the practical benefits of NFTs.

Without an adequate solution addressing the disparate set of NFT exchanges lacking authentication tools, we’ll unfortunately probably see more rug pulls occur– this is why it’s incredibly important to do your research and not YOLO into unverified projects.

However, the NFT market continues to grow despite rugpulls and the negative press surrounding rugpulls. We shouldn’t let the high-flying conquests of a few malicious bad actors blind us to the good work many NFT collections are doing– even if it’s just bringing a community of like-minded crypto-savvy people together.

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