Token Created by ZachXBT Reaches $3.4 Million Market Cap

A token unintentionally created by onchain sleuth ZachXBT on the Base network reached a $3.4 million market cap.

Background

This situation arose after ZachXBT used the Zora protocol in August to issue open-edition NFTs titled "243M Theft". These NFTs were issued as a free token related to his investigation of a $243 million theft involving a Genesis creditor. Unbeknownst to ZachXBT, the Zora protocol automatically converted these open-edition NFTs into ERC-20 tokens, making them tradable as memecoins on decentralized exchanges.

ZachXBT clarified that the intent behind the digital collectible was to archive investigative content permanently on the blockchain, similar to his previous articles hosted on Mirror. However, he noted that the Zora user interface failed to indicate that an ERC-20 token would be issued after the NFT mint.

User Interface Issue

ZachXBT commented, "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," in response to an X post by crypto influencer Ansem regarding the token, providing screenshots as evidence of the UI’s lack of information on this critical aspect.

Details of the Token

Zach had minted his most recent Zora investigation using its ERC20z token standard. Approximately 3,500 tokens were created on Base. Zora’s automatic liquidity function is implemented through an extension of ERC-1155 called ERC20z, allowing NFTs to be wrapped into ERC-20 tokens or unwrapped back into ERC-1155. This enables seamless trading via decentralized exchange Uniswap, similar to token creation platforms like pump.fun. Currently, Zora has made this standard the default option for all new mints.

Market Response

However, the automatic liquidity provision led to the token being bought and sold on secondary markets, contrary to ZachXBT’s intention. From an initial valuation of almost zero, the token’s market cap escalated dramatically to a current valuation of $970 per token and a market cap of $3.4 million at the time of writing.

ZachXBT’s Reaction

Reacting to the speculative frenzy, ZachXBT expressed frustration, stating, "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."

Zora did not immediately respond to The Block’s request for comment.