Learn how to protect yourself from a common NFT scam
You should be concerned about the source of you’re NFTs if you’re a collector. When an NFT is first created from a creator’s wallet or a smart contract that the creator controls, its source is considered to be the most genuine.
An NFT’s content can be duplicated in the same way that anyone can download an exact replica image of an art work by googling the title of the piece, similar to how anyone can photocopy a poster. It is not difficult to see or own a copy of a digital image, particularly one that has been widely shared on the internet.
What is more difficult is convincing people that you own the original art and providing cryptographic proof — specifically of an NFT first minted by the artist. This is because an NFT is supposed to be one-of-a-kind. Because it is stored on a blockchain, its entire transaction history is supposed to be preserved in perpetuity.
Sleep minting occurs when a scammer mints an NFT directly into the wallet of a famous creator with permission to reclaim or withdraw the NFT from the creator’s wallet. This gives the impression that (1) a creator authentically minted an NFT for themselves, and (2) that NFT was then sent to a scammer. The scammer can claim ownership of an NFT minted by a famous creator and sell it for a higher value based on “on-chain” provenance.
Here’s how Sleep Minting works in more detail:
- A scammer would mint an NFT to a famous creator’s wallet while retaining permissions to reclaim or withdraw the NFT.
- The scammer would issue a transaction in which the NFT is reclaimed from the famous creator. Even though the scammer is sending the transaction (rather than the creator), the creator’s address can be inserted into the “from” field of a Transfer Event. On the surface, it appears that the well-known creator legitimately transferred an NFT to the scammer.
- The scammer now has an NFT that appears to have been authentically created and previously owned by a famous creator, which they can sell for a higher price.
You can learn more about Sleep Minting Here.
Deefy is a decentralized protocol that enables financial utilities on NFTs such as Renting, Lending, and Pay Later.
Deefy’s vision is to create a revolutionary shift by introducing a truly decentralized ecosystem and creator-centric financial instrument for creators, influencers, Gen Z & micro-financiers.
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