There is a user, identified by the nickname nd4.eth, who is burning crypto and NFTs.
Arkham, which has already detected several burns carried out by nd4.eth, is chronicling his exploits.
Initially, he had only burned tokens, but later he also did the same to NFTs.
Burning crypto and NFTs
Tokens or NFTs that are created on the blockchain can be burned.
NFTs are also tokens, except that they are non-fungible unlike other tokens.
Burning a token simply means sending it to an address whose private keys are known not to exist.
Indeed, the only way to be able to use a token is to be in possession of the private keys of the address on which it is stored. Private keys, once lost, cannot be regenerated in any way, unless one is in possession of the original seed (or passphrase) with which they were originally generated.
There are particular addresses for which it is mathematically certain that private keys do not exist. So to send tokens to those addresses means making them definitely no longer usable. This process is called burn, because it is equivalent to destroying them, i.e. removing them from circulation forever.
Any token that can be sent to an address can be burned, as all it takes to burn it is to send it to an address that has no private key. Moreover, on-chain transactions are irreversible, so once a token is sent to an address without a private key, it is surely burned forever.
This is true when one does it voluntarily, but also when one possibly happens to do it unknowingly.
The burning on the part of nd4.eth
Arkham is monitoring the outgoing transactions of known wallets belonging to the user nd4.eth, and the OpenSea user nothingness321, who are probably the same person.
The monitoring started on 9 August, when it was discovered that, after burning 2,500 ETH a couple of weeks earlier, nd4.eth had also sent 1 BAYC, 1 MAYC and 1 BAKC to the burn address.
He later continued, also burning Apecoin tokens, GNS and GMX.
Finally, the last known burn was that of Cryptopunk’s NFT #5237.
According to Arkham, these were deliberate burns, and not errors. So nd4.eth is deliberately destroying many tokens, thus making them lost forever.
According to Arkham, he has so far burned a total of 5,000 ETH and ARB tokens, two Bored Ape Yacht Club NFTs and three Mutant Ape Yacht Club NFTs purchased in total for more than $150,000, one Cryptopunk NFT purchased for more than $100,000, as well as $1.8 million in GMX and $1.54 million in GNS.
In total, the market value of the tokens burnt by nd4.eth would be more than $8 million.
No one yet knows why, although it is suspected that nd4.eth burned only a portion of the tokens held, and perhaps not even the largest portion.
These are not programmed burns, like those for example that Binance does by buying BNB from the market with part of the profits.
Programmed burns are used to reduce circulating supply, in an attempt to reduce selling pressure in the hope of driving up the price.
In this case, however, we are not dealing with planned burns, but with an autonomous, arbitrary and impromptu action by a single user who has not given any reasons.
It is not even known whether the aim is actually to reduce supply, nor is it certain that nd4.eth is doing so in full knowledge.
That is, the sending appears to be intentional, but it is not 100% certain that nd4.eth knows that he is sending the tokens to addresses from which they can never again be moved by anyone.
However, the hypothesis that he is doing this unknowingly seems rather far-fetched, not least because it has been going on for weeks now, and several media sources have reported on the affair at this juncture.
It is worth adding that the amount of tokens that are burned with scheduled burns is usually far greater, so it is hard to imagine that nd4.eth’s aim is really to reduce supply.
For now, this remains an unsolved mystery, until perhaps the user himself will state the reasons behind his sensational gesture.