Basic rules in the cryptocurrency circle to be aware of before celebrities issue NFTs: Using the EchoX and Chen Lingjiu incidents as examples

From 2018 to 2019, the era after ICO and STO, enterprises sought new paths through issuing homogeneous tokens, FT, which was once close to the beautiful fantasy of "mass adoption." However, attempting to enhance existing business models with token economic models is not easy and often ends up being superfluous or adding complexity. In 2020, the rise of decentralized finance DeFi deviated from the ambition of mass adoption due to high barriers to entry, giving way to vibrant economic activities within the community. From 2021 until now, the NFT craze has not only attracted many insiders but also drawn in many outsiders, combining GameFi and DeFi in NFTs; community-oriented PFP; music and art NFTs; and marketing-oriented collaborative NFTs such as food, peripherals, and audiovisual items, the list goes on.

With NFTs being applicable to everything and easily manipulated in terms of buying and selling prices, the "doubling success" of NFT projects may be more easily achievable. In contrast to the traditional cryptocurrency market that requires a vision to change the world, a solid technological foundation, a sustainable token model, convincing both institutional investors and retail investors, and having sufficient funds to maintain market prices and expensive advertising campaigns, even meme coins without any logic have a certain market demand.

Some NFT projects have different wealth-building capabilities from before, where vision, technology, and economic models are not necessary conditions. In times of a sluggish cryptocurrency market and lackluster DeFi, they become new sources of capital flow. For example, PFP NFTs transition to NFT VC DAO, collectively investing in "NFT projects + celebrity formula" for profit-making, presenting a different wealth-building potential and becoming a new area of interest for Taiwanese celebrities.

Advertisement - Scroll down for more content

However, with more and more celebrities getting involved, some "mistakes" have emerged in NFT projects, which should be watched out for.

Chen Ling Jiu Incident: Scientists and Contract Deployment Time

Being able to buy within seconds before the official sale time could be critical in the NFT community. The PFP NFT "YOLO Cat" promoted by the artist Chen Ling Jiu faced controversy due to the contract deployment time being earlier than the announced sale time. There were disputes regarding the time determination, which led to some players familiar with smart contract operations, commonly known as "scientists," being able to mint in advance, causing complaints within the community. Note: Etherscan also provides a contract interaction interface.

Rex Chen, Founder of FULY.AI, suggested, "It is better to fail to launch on time but ensure that purchases cannot be made before the announced sale time," which is a basic precautionary measure. Note: Delays in the release time compared to the scheduled time have been a common phenomenon in many past cases of well-known NFT launches. However, he also acknowledged that the project issuer mentioned that they would refund the Gas Fee to a large number of unsuccessful purchase transactions and conduct a lottery to give away NFTs, which is considered a sincere post-event handling.

The issuer of YOLO Cat also provided a detailed explanation of the incident: https://fbook.cc/3lru

Interestingly, the well-established NFT community, Alpha Shark, which was previously focused on Simplified Chinese content, specifically discussed the "technical perspective" in this article, debating the differences in block time and the necessity for the project party to manually activate the contract early. This phenomenon indicates the attention of the Simplified Chinese market to the Taiwanese NFT market and the active collaboration between the two sides.

EchoX's Incident of Accidentally Overminting "Edible NFTs"

The "edible NFTs" consisting of 512 Seed NFTs, a collaboration between the renowned Taiwanese chef Jiang Zhen Cheng and the NFT development team EchoX, became a classic creation. However, due to the lack of a quantity restriction in the smart contract, only two hundred were initially released in the first wave, leading to issues of early minting and overselling due to the locked sale time.

"Josh Lu's Digital Knowledge Sharing" also suggested that the official party overlooked the overselling of up to four hundred NFTs due to improper contract settings and failure to acknowledge the oversold portion. He urged the return of the NFTs by the "scientists" who exploited the contract improperly. Note: Etherscan also provides a contract interaction interface.

In fact, the official party regarded the interactive minting through smart contracts as an abnormal process, which was not the case for NFT players:

Ultimately, EchoX altered its initial policy and announced the redeployment of smart contracts. They also planned to airdrop the new version of the contract to users who had purchased in the secondary market. The following is the full statement:

Regarding today's Seed NFT sale update...

Thank you for your support and participation in Seed NFT. We deeply apologize for the abnormal minting behavior and negligence in the smart contract that occurred this morning. The premature minting was caused by "scientists" finding the contract address due to the sales plan settings. After internal discussions, we will take the following measures to alleviate your dissatisfaction and restore confidence in our team:

1. We will abandon the existing contract and reissue smart contracts for 512 Seed NFTs. For buyers who successfully minted Seed NFTs through our official channels before, we will airdrop the original purchase amount of Seed NFTs back to your wallet.
2. For buyers who purchased "unofficial Seed NFTs" in the OpenSea secondary market before 2 pm today (UTC+8), a total of 33 buyers were identified. EchoX will directly airdrop the new contract's Seed NFTs to these 33 buyers' wallets. Please email [email protected] before 6 pm on 1/12 (UTC+8) with 1) your wallet address + 2) your OpenSea NFT link.
3. We will also prepare to airdrop 3 Seed NFTs to 3 friends from the existing whitelist who have not minted before, as a token of appreciation for their continuous support of this project.

About the distribution plan for the 512 Seed NFTs, we would like to clarify:

• 305 Seed NFTs will be directly airdropped to the original buyers after reissuance.
• 33 Seed NFTs will be airdropped to the 33 buyers who purchased unofficial Seed NFTs in the secondary market before 2 pm on 1/11 (UTC+8).
• 100 Seed NFTs will be sold by strategic partners for fiat currency, providing opportunities for those unfamiliar with blockchain to make purchases.
• 40 Seed NFTs will be held by Origin NFT collectors.
• 3 Seed NFTs will be airdropped.
• 31 Seed NFTs will be used for strategic promotional purposes (including the 3 airdrops in the early community activities).

*Regarding the second point, the team has already updated the warning image on OpenSea after 2 pm (UTC+8), so we regret to inform you that we cannot accept requests from buyers who purchased these NFTs.

There is much to learn in the blockchain world every day, and we will continue to progress. We appreciate your understanding and patience.

Are There More Cases?

Previously, the Taiwanese NFT project Highstreet also had a case of manually distributing community NFTs that caused complaints, and there were issues with Fansi's overselling of Dynamite Train, possibly due to technical unfamiliarity.

Not only the smart contracts themselves, but also the community platform Discord, essential for NFT enthusiasts, have many scams and phishing traps that must be guarded against. Whether intentional or not, the reputation of celebrities can cause harm. It is essential to consider how many of the celebrity NFTs deliberately hyped within the circle are targeted by insiders versus how many are truly cherished by genuine fans.