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Crypto Weekly: Throwing away a $33mn key

Mads Eberhardt

Cryptocurrency Analyst

Summary:  A few flawed lines of smart contract code is the reason why the team of a highly anticipated non-fungible token (NFT) project cannot ever withdraw its proceeds worth $33mn. And one of the highest-valued private startups, payment service provider Stripe, is doubling down on crypto by enabling platforms to pay users in crypto, starting with Twitter creators.


$33mn Ether locked forever in smart contract bug

As late as last week, we argued that 2022 is prone to be the year of protocol exploits, similar to 2021 being the year of non-fungible tokens (NFTs), thanks to multiple large exploits so far in 2022. In retrospect, we should have called it the year of exploits and bugs, for not only a week after making our somewhat bold statement $33mn worth in Ether was lost due to a smart contract bug in connection with the auction on the weekend of the highly anticipated non-fungible token (NFT) project Akutars. The smart contract of the auction was set so that non-winning bidders had to be refunded prior to allowing the Akutars team to withdraw any proceeds from the auction. Yet, the smart contract also required the minimum of bids to be equal to the number of NFTs available, in other words, 5,495 bids had to be placed. For the reason that some bidders won the auction of several NFTs within one transaction, thus technically placing one bid but for several NFTs, the minimum of bids can never reach the required of 5,495, as no more NFTs are up for grabs. This means that the team cannot withdraw the proceeds of 11,500 Ether, worth nearly $33mn at the time. Since the smart contract cannot be changed, the 11,500 Ether are lost forever. This emphasizes once again how fragile crypto is in its current state, where a few flawed lines of code cannot only make you a victim of exploits but also bugs worth millions.

Stripe doubles down on crypto

In March, payment service provider Stripe, valued at $95bn in a funding round last year, publicly started to offer its services to crypto businesses. Last week, the company doubled down on crypto by enabling payout in crypto as a part of its service called Stripe Connect. The latter facilitates the payout of users from platforms in fiat currencies and now in crypto. As a start, users can be paid in the stablecoin USDC on the Polygon network but Stripe aims to add more cryptocurrencies and networks later on. The first platform to utilize Stripe Connect with crypto is Twitter. The social network now enables a select group of creators to get paid in USDC through Stripe. The support of crypto by Stripe Connect might push other platforms to support payouts in crypto, ultimately enhancing the adoption of crypto as a whole.

Bitcoin/USD - Source: Saxo Group
Ethereum/USD - Source: Saxo Group
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