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Since the Russian invasion of Ukraine on February 24, 2022, both sides have used blockchain technology to aid their efforts. Many campaigns have sought to take advantage of key developments in the crypto ecosystem to help raise funds – from decentralized finance (DeFi) to crypto pre-paid cards.
Using its internal proprietary data, Elliptic conducted an in-depth analysis of the use of cryptoassets on both sides of the conflict – from humanitarian causes to sanctioned groups suspected of war crimes.
In this excerpt from Elliptic’s new “Crypto in conflict” In the report, we will examine how non-volatile tokens (NFTs) have risen to prominence since the start of the full-scale invasion.
Introduction
Many blockchain-based services have started launching fundraising initiatives supporting both sides in the conflict following Russia’s attack on Ukraine.
Innovations in blockchain technology – including DeFi, non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs) – have played a significant role in facilitating crypto fundraising for Ukraine, raising over $78 million in donations. About 10% of that (nearly $8 million) was facilitated by NFT campaigns, while only 1% was raised in Bitcoin.
Official Ukrainian crypto donation accounts were announced at the height of the NFT craze, and the ETH donation address was accepting NFT donations the same day it was announced.
At the end of April 2022, the Ministry of Digital Transformation created a special ETH address for NFT donations. The NFT Market – which displays donated NFTs and allows customers to bid on them on OpenSea – was launched at the same time.
https://donate.thedigital.gov.ua/nft.
In total, the government received 1,000 NFTs on the Ethereum blockchain by the end of November 2022. However, nearly two-thirds of these donations were scams or unwanted NFTs that Opensea has since removed. Many of these spam NFTs falsely claimed to be official collections of large corporations in order to increase their prices.
Apart from the high-profile donation of CryptoPunk NFTs – with an average sale price at the time of $133,500 – on March 1, 2022, the remaining donations had an average value of $540. Cryptopunk is still by far the most valuable NFT donated to Ukraine – in second place is “mfer” NFT worth just under $10,000.
NFT donations gradually disappeared until mid-May, which marked the beginning of a price decline in the NFT market and crypto-assets in general. CryptoPunk was sold for 90 ETH ($115,000) on June 19, 2022. In total, Ukraine directly acquired $190,000 worth of Ethereum-based NFTs through donations.
Below is a graph showing the daily value in USD and the number of (removed) Ethereum-based NFTs donated to the Aid For Ukraine initiative – a project sponsored by the Ukrainian government.
Removed NFTs indicate fraud, spam and worthless NFTs. Donations died after mid-May 2022.
NFT donations have also taken place on other blockchains. As of October 2022, aid addresses for Ukraine held just over 250 NFTs on Polygon, 160 on Solana, two on Cardan, and two on FTM.
Related NFT projects
Several NFT projects have been created to support Ukraine’s crypto fundraising. They are advertised by the Ministry of Digital Transformation and usually send a percentage of sales revenue to the government. Most of these projects have automatic donations to Ukraine’s official donation address encoded in their smart contracts – a key check to ensure their authenticity. One government-backed project includes Help UA, a pro-Ukraine NFT marketplace that collects donations through the sale of NFTs on its platform.
ETH collected from NFT projects supported by the Ukrainian government
Case Study: Ukraine’s Virtual NFT War Museum
The “Meta History: Museum of War” project is a series of NFT collections that have been coded to automatically send 100% of their initial sales proceeds – and 5% of the proceeds from further sales – to the Aid for Ukraine initiative.
The concept of the main collections is to document the important events that happen every day of the war – usually in the form of a tweet from a trusted source – with an artistic background for context. The project includes Ukrainian and international artists.
Examples from the “Warline” Meta History collection.
Other pro-Ukrainian NFT projects
The simultaneous NFT craze at the time of the invasion contributed to the development of a large number of unofficial projects with the theme “Help Ukraine”, either as collections or as a single NFT. Many of these projects have pledged to donate most – if not all – of their revenue to Ukraine, with mandatory donations coded into some of their smart contracts. Others used the Ukrainian theme to raise prices (and beyond) for their projects.
A selection of pro-Ukraine NFTs available on OpenSea.
Unless they have gained official support from the Ukrainian government or gone viral in other ways, most pro-Ukraine NFT collections have attracted little attention. However, some notable NFT projects include those established by Ukraine’s cyber police, as well as the record $6.5 million Ukrainian flag NFT campaign launched by UkraineDAO.
Case study: UkraineDAO and Ukraine’s $6.5 million digital flag
Just before the war, DAO was formed to collect donations for Ukraine, including a member of the Russian protest group Pussy Riot as a co-founder. Although it was called DAO, the group – named “UkraineDAO” – was largely centralized.
On February 26, UkraineDAO launched the Ukrainian Flag NFT on the Zora NFT Marketplace. The DAO then began the process of bidding parties, promising to release a new token ($LOVE) to participants – representing fractional ownership of NFTs. The offering raised over 2,258 ETH ($6.75 million), making the flag the tenth most expensive NFT ever sold at the time.
UkraineDAO’s Ukrainian Flag NFT – 10th most expensive NFT at time of purchase.
UkraineDAO announced that of the funds raised, just under $4 million was donated to Come Back Alive, $990,000 was donated to the Ukraine Aid Initiative, $490,000 went to OutRight Action International, and $11,000 went to Psychology for Human Rights. The rest of the funds – although pledged to charity – became the subject of internal discord and the eventual split of The DAO.
Pro-Russian use of NFTs
Pro-Russian entities are no strangers to NFT. In October 2021, Elliptic identified NFTs worth an apparent $532,000 in an Ethereum wallet belonging to the sanctioned Russian exchange Chatex. Telegram channels supporting the Wagner Group also encouraged the purchase of NFTs as an investment strategy. Interest in NFTs in separatist circles has seen a visible growth since the Ukrainian government’s crypto campaign.
A pro-Wagner Telegram channel advertising NFTs (left) and the now-deleted OpenSea profile of the Chatex wallet holding NFTs (right).
Case Study: The Terricon Project
In April 2022, a pro-separatist website called “The Terricon Project” appeared and began asking for crypto donations to purchase military equipment for separatist fighters. The project was prominently supported by Aleksandar Zhuchkovsky, a supporter of the sanctioned far-right movement of the Russian Empire (RIM). Žučkovski himself was sanctioned by the USA in June 2022.
The group raised $3,400 in crypto-assets and launched an NFT collection, which consists of coats of arms of Ukrainian cities claimed by Russia. NFT marketplace OpenSea quickly deleted the collection before any NFTs could be sold. The Terricon website itself states that the failed NFT project was inspired by the successful UkraineDAO NFT fundraising.
Removed Terricon NFTs.
Case study: Rybar
One of the most famous military news channels is “Rybar”, which has over 1.1 million subscribers. The channel publishes updates on the latest military engagements and positions, while providing high-quality military maps. The group publishes crypto donation addresses with almost every update, which has received over $43,200.
Update provided by Rybar on November 10, 2022 – following the announced withdrawal of Russia from the city of Kherson.
Rybar has since launched two NFT collections, titled “Man at War” and “War Machines”. Both were created by the account behind a third – apparently non-wartime – collection that launched in January 2022. No sales have been recorded for either wartime collection, and Rybar has apparently dropped all advertising for its August 2022 NFT campaign.
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