NFT project MekaVerse inspired by Gundam sees a sharp drop in price, what mistakes led to this downfall?

MekaVerse is a Gundam-themed PFP NFT avatar-style limited collection, with a total of 8,888 pieces. Registration for the lottery draw opened on 10/7 and has concluded. It has over 200,000 followers on Twitter, surpassing Bored Ape, including many well-known NFT collectors. After the launch, the floor price at the lowest auction price exceeded 7 ETH, but dropped to 3 ETH by the 15th day.

However, this large and well-known project seems to have several design flaws. We have compiled on-chain data analysis and related information from the Twitter account @NFTherder, which may serve as reference factors for NFT investors!

• How MekaVerse was exploited at launch
• You do not actually own Meka
• Issue with rarity loopholes
• Using "for the community" NFTs for self-enrichment?

About MekaVerse

MekaVerse is themed around Gundam, the human-operated giant robots, inspired by the Japanese Mecha culture メカ. The term "Mecha" is short for Mechanism, commonly used in describing sci-fi content centered around giant robots. The two creators have works on NFT trading platforms SuperRare and Foundation. It is claimed that holders may also receive 3D printed components of the NFT in the future and will collaborate with more artists for expansion.

Exploitation of MekaVerse Launch

@NFTherder stated that the MekaVerse lottery was exploited by some unusual wallets, which is not uncommon, as he previously discussed in a case of NFT issuance by Time Magazine. He explained the situation on MekaVerse as follows:

• huohuohuo.eth, the holder of Bored Ape Yacht Club #4962, created over 300 robot wallets, Twitter, and Discord accounts to increase the chances of winning.

@NFTherder provided evidence that huohuohuo.eth distributed ETH to these wallets via Disperse.app and then transferred the Meka back to the main wallet after the draw. The end result was that he spent 4.4 ETH and Gas Fee to exploit and acquire 22 Meka, which could be sold for 110 ETH, approximately $308,000 at the time of 10/15 if sold directly after the launch.

You Don't Actually Own Meka

This issue is an old one, and not many NFT players really care about it: "You don't truly own your NFT."

Related Reading: "The Challenge of NFTs: Where Is the Essence of Beeple's Artwork When Its Identity Is Linked?"

The image data of MekaVerse is not decentralized and is not stored on IPFS or other decentralized storage solutions but is stored at a centralized address belonging to MekaVerse, meaning the image can be replaced or deleted.

You can use websites like Check My NFT to enter the ERC-721 contract address and Token ID to check the file storage location of the NFT. Higher-profile NFT projects, such as Bored Ape Yacht Club, on OpenSea's detailed information section, will display its decentralized storage location.

Related Reading: "Permanently Bind the Physical and Spiritual Aspects of NFTs! Opensea Introduces 'Freeze' Function for NFT Metadata"

The Metadata is permanently locked and stored in a decentralized manner:

Rarity Vulnerability Issue

@NFTherder pointed out that the smart contract of MekaVerse allows creators to specify specific token IDs into wallets, meaning creators can choose what kind of NFT they want and transfer it to a designated wallet. He believes that although this may not be a big deal, it is concerning to see it in a high-quality project like MekaVerse.

In addition, traits affecting the rarity of NFTs can also be found on their website, allowing those interested in selecting specific traits to find NFTs with designated IDs. At the same time, @NFTherder also noted that MekaVerse does not use Chainlink's random number verification function to ensure the randomness of NFTs.

"For the Community" NFTs Used for Self-Enrichment?

@NFTherder stated that over 170,000 registered wallets participated in MekaVerse, and theoretically, they should all be sold, but in reality, they were not. Approximately 300 NFTs were not minted, and according to MekaVerse's plan, they should have been retained and given to active members, supporters, or used in future activities.

However, these NFTs that should have been retained were transferred to the creator's wallet on the day of MekaVerse NFT distribution without public information.

High-Risk of Fast-Food Investment

From the above cases, it is evident that the NFT investment market still harbors many "intentional" or "unintentional" schemes, and @NFTherder does not believe the creators did this intentionally. Pursuing information for early investment still requires caution, as a slight misstep can result in loss of liquidity in the secondary market. The case of MekaVerse, if it affects market liquidity, these factors are worth considering.