The popular Phantom Wallet has introduced the “burn NFT feature” that provides users rewards in SOL tokens for reporting spams in a bid to thwart the rampant frauds in the crypto space.
The announcement comes close on the heels of a massive hacking attack on the Solana-based crypto wallets in the first week of August. Criminals stole around $5.2 million worth of cryptos after hacking into some 8,000 Solana-based crypto wallets, mostly Phantom wallets.
In a recent tweet, Solana’s head of communications, Austin Fedora, said that “60 per cent of the wallets drained” in the attack were Phantom wallets. Phantom’s new feature encourages users to report scams and earn SOL tokens by burning NFTs.
We spun up a Typeform to collect data and the results were clear – of those drained ~60% were Phantom users and 40% Slope users. But after extensive interviews and requests to the community, we couldn't find a single Phantom-forever user who had their wallet drained— Austin federa | 🔥💃 (@Austin_Federa) August 3, 2022
What Is Burn NFT Feature?
Revealing the details in a blog post on Thursday morning, Phantom said that users could find the new feature in the Collectible tab of the Phantom wallet app. In addition, it said the users would be rewarded with SOL tokens as “rent” when the burned token is removed from the wallet.
The Phantom’s team will block the contract addresses and domains when a particular scam NFT comes under its radar. This action will help remove the scam or malicious NFT from the wallet.
Phantom hopes to minimise hacking attacks by creating a list of spam and phishing NFTs and sharing it with the global crypto community.
How Will It Benefit Solana?
The new feature will help secure the broader Solana blockchain.
“We’re still in the wild west days of Web 3. As the crypto ecosystem grows, so have the bad actors, looking for ways to steal user’s fund,” Phantom said in a blog post. With the rapid growth of cryptos, cases of hacking attacks and spam NFTs have also increased, it noted.
The Phantom team has already added more than 800 mint addresses of malicious NFT collections in their site-blocking mechanism, detailing the scam patterns.
How Do The Scammers Operate?
These spams are common in the Solana blockchain as its transaction fee is comparatively less.
Cybercriminals use the NFT airdrop feature that allows users to receive free NFT for the attacks. The scammers typically ask users to click on a link in the description to receive the free NFTs, and when they click on the link, they are directed to a malicious website.
Criminals steal the funds in two ways: either the user is asked to approve a transaction to “mint” or “claim” free NFT or ask the user for the seed phrase to drain the account.
"These scams are becoming increasingly more sophisticated. For instance, after a contract address and domain are identified as malicious, scammers can change an NFT's metadata to avoid being blacklisted. It can feel like an endless game of whack-a-mole, but one we're committed to winning," the company added.
Phantom is also collaborating with SimpleHash, an NFT API developer, to create an internal reporting system to flag spam NFTs.
How Will Users Benefit From Phantom’s New Feature?
The new feature will ensure more security for the Phantom Wallet. It gives users the control to report spam that will help block the contract address and domain. The investors can also earn SOL tokens as "rent" by reporting spam NFTs. Given the high risks in cryptos, users should be wary of transactions involving third-party websites.