V1 Punks (or V1 CryptoPunks) revived, adding mystery to CryptoPunks and big headaches for Larva Labs

  • Back in November 2021, I wrote about the cryptic case of the CryptoPunks, which were first released for free without any content licenses.
  • Check out my article “The Cryptic Case of the CryptoPunks Licenses: The Mystery Over the Licenses for CryptoPunks NFTs.
  • Co-founder of Larva Labs John Watkinson described the rollout of the CryptoPunks “a complete disaster.”
  • Well, now the disaster has been revived from the dead and, like a zombie, has produced major headaches for Larva Labs.
  • So what’s the problem?
  • A new group of so-called “V1 Punks” NFTs started selling on OpenSea [click here] and other marketplaces, with the advantage they are “wrapped” with a smart contract for ERC-721. The CryptoPunks NFTs are not.
  • The website for “V1 Punks” NFTs explains that they are the original CryptoPunks that Larva Labs first gave away.
  • But, apparently, there was a technical loophole with the V1 Punks. According to Jon Terrey, who credits Foobar for the information, the glitch was that “the original CryptoPunks [smart] contract allowed for the buyer, not the seller to withdraw the money.”
  • Or, as the V1 Punks website says, “Launched in June 2017 by Larva Labs, Cryptopunks were originally free for anyone with an Ethereum wallet to claim (+ gas). The Punks were a huge hit at launch and all of them were claimed incredibly fast. In the original Cryptopunks smart contract, there was a code error that caused Ethereum to be allocated to the buyer instead of the seller when a purchase was made. In other words, a buyer was immediately refunded for their purchase and was able to keep the Punk.”
  • To fix the glitch, Larva Labs released a second round of CryptoPunks: “Not long after the bug was found a newer version of the Punks contract (Version 2, V2) was released and Punks were airdropped to this new contract.”
  • Well, now, apparently the owners of the first round of CryptoPunks have revived them from the dead: “V1 Punk owners are now able to wrap their Punks into an ERC-721 contract (another kind of standardized smart contract) and patch over the bug. This recovery of the original Punks smart contract is a community led and rapidly growing phenomenon consisting of original Punk claimant’s, NFT historians, digital archeologists and extremely talented developers. There is no clear leader and all important decisions are voted on by community members.”
  • The group of V1 Punk owners have even created this video explaining it:
  • Larva Labs, however, has disavowed the V1 Punks as “not official CryptoPunks“:
    • PSA: ‘V1 Punks’ are not official Cryptopunks. We don’t like them, and we’ve got 1,000 of them… so draw your own conclusions. Any proceeds will be used to purchase real Cryptopunks!” – Larva Labs (see above Tweet)
  • Can the CryptoPunks saga get any crazier? In my paper noted above, I described the very odd situation that Larva Labs apparently didn’t even have a content license for CryptoPunks when they were released in 2017. That shocking omission was not corrected until May 17, 2019 in a Discord post by John Watkinson, who said they were adopting the NFT License with a limited merchandising license for each CryptoPunk owner capped at $100,000 annually, but no right to make derivative works beyond the merchandising of one’s own CryptoPunk. Curiously, Larva Labs has not posted this NFT License or referred to it for CryptoPunks on its website!
  • Larva Labs disavowal of V1 Punks as “not official CryptoPunks” is a cryptic remark. It may imply that Larva Labs does not consider the NFT License “for CryptoPunks” applicable to V1 Punks, meaning Larva Labs has not granted merchandising rights to owners of V1 Punks. On the other hand, Larva Labs did give away the NFTs that are now being revived as V1 Punks. And in its cryptic Tweet above, Larva Labs does not expressly state that the NFTs are unauthorized versions (just “not official”). So, assuming they are not unauthorized (which is unclear from Larva Labs’ cryptic tweet) but they are not subject to the NFT License “for CryptoPunks,” the V1 Punks might lack any content license from Larva Labs. Got that?
  • In other words, V1 Punks NFTs might face the same problem that existed back in 2017: Larva Labs apparently didn’t have a content license, to begin with. And that could mean that Larva Lab still retains all intellectual property rights to V1 Punks or the first round of CryptoPunks that it had released. (For example, for a transfer of copyright, there must be a written agreement signed by the copyright owner, here, Larva Labs. If there was no license at all, there is no written transfer.) But, if that is so and Larva Labs still owns the IP rights to V1 Punks, why then doesn’t it just come out and assert those IP rights? Perhaps it’s because they fear intense backlash on social media.
  • Another lurking possibility that seems unlikely now, but cannot be ruled out: the “original” V1 Punks eclipse the value of the CryptoPunks (V2). The highest sale so far, for V1 Punk #2924, has been 139 ETH or $342,664, well above the floor price of 79.5 ETH for CryptoPunks. (Of course, the highest CryptoPunk sale ever is over $11 million, so there’s still a ways to go.)
  • The cryptic case of the CryptoPunks could not get any more mysterious. CryptoPunks revived from the dead. Instead of the Cryptic Case of the CryptoPunks, the movie about this saga should be called CryptoPunks Zombie Apocalypse. But this uncertainty in the status of the V1 Punks might make a movie deal for Larva Labs more difficult to strike with a movie studio.
  • If the first rollout of CryptoPunks was a “complete disaster” in the words of Watkinson, not sure how he’d describe this.

UPDATE Jan. 30, 2022: Here is an excellent wiki describing the history of V1 versus V2 CryptoPunks and how V1 was revived from the dead.