NFTs were arguably already taking off when Beeple sold his NFT artwork for $69m. But another crypto project attracted attention when it bought an original Banksy artwork for $95,000.
The group literally burnt the artwork and sold its NFT on the OpenSea platform for $400,000. Although the stunt was covered by CBS News, BBC News, The Guardian, and others, it did actually make a significant point.
By removing the physical piece, the group — calling itself “Burnt Banksy” — proved that the value of the piece wasn’t affected by being destroyed, given that the NFT went up so much in value.
Now that project is turning that stunt into an actual blockchain platform for art auctions.
Burnt Finance says it has raised $3 million for a decentralized auction protocol built on the Solana blockchain.
The project is being incubated by Injective Protocol (which recently raised $10 million from investors and Mark Cuban, as well as Multicoin, DeFiance, Alameda, Mechanism, Vessel Capital, Hashkey, Spartan, Do Kwon (CEO of Terra), Sandeep (COO of Polygon), and others.
The reason why it’s worth mentioning all this is that in trying to auction the painting, the Burnt Banksy group stumbled on an increasing problem in the world of NFTs: The rising congestion on the Ethereum network is leading to larger and larger gas fees. This is making both the creation and bidding on NFTs increasingly expensive, just from a baseline.
As a result, the team decided to build the Burnt Finance NFT auction platform away from Ethereum and hit upon the Solana blockchain, which has comparatively good speed, performance and lower transaction costs. It will use “Solana Wormhole,” which connects ETH and ERC20 tokens to SPL Tokens.
A spokesperson for Burnt Finance, “Burnt Banksy” told me: “Most auctions are Ethereum based, and currently the Ethereum gas fees are extremely high. It can cost you up to $70 to make an artwork, which doesn’t work if you’re selling an NFT for $50. We chose Solana mainly because of the ecosystem. It’s fast-growing, in addition to the technical aspect of it.”
There’s another reason why we may see other crypto projects move away from Ethereum as ETH rises in price and as gas fees increase: the potential for bad faith actors in NFT auctions.
If a bad actor tries to leverage the congestion on Ethereum and manipulate the transaction fee, they might sway the results of an auction. This would be quite something, if the auction was for, say, $69 million.