The Bull Case for Fake World Assets

Skeptics have hailed TokenWorks's Fake World Assets as a one-trick pony, just another onchain gambling app that wouldn't survive after its initial $FWA rewards phase.

Full disclosure, I'm a user and holder here, so I'm biased as a fan. Yet I do think we've seen enough already to declare there's absolutely a there there when it comes to this project.

As those of you who read my beginner's guide to the protocol last month may recall, FWA's inaugural 15-day $FWA emissions window was the platform's main outstanding question mark out of the gate.

A Beginner’s Guide to Fake World Assets on Bankless

Fake World Assets is Ethereum’s breakout NFT gacha. Here’s how it works, how to play, and what to watch out for going forward.

BanklessWilliam M. Peaster

Could this onchain gacha survive after its direct bootstrapping period ended?

Fast forward to today, a month after the project launched on Ethereum, and FWA's intro emissions have come to a conclusion, but the gacha's broader tokenomics flywheel has continued to spin, be refined, etc., letting the platform's gain real fundamentals and a growing ecosystem of extensions along the way.

So here is the bull case for FWA right now, the main pillars that I, as an aficionado myself, think that you should be paying attention to going forward.

📈 FWA's fundamentals rival protocols many times its size

Per the FWA Pulse tracker dashboard, FWA has processed +17,239 ETH in total volume so far across +162,000 settled "opens" (i.e. gacha pulls), with ~1,108 ETH in total value locked (TVL) across +5,400 live positions.

Additionally, all-time protocol fees have passed +1,777 ETH collected, with ~406 ETH already routed into $FWA buybacks and ~138 ETH still sitting in reserve. Not too shabby, right?

FWA has also turned into a legitimately significant Ethereum gas consumer. On its wildest day so far (July 25th), it briefly became Ethereum's single largest gas consumer, even ahead of Tether and Circle at the time. Hence the community's running joke that FWA is going to "save Ethereum." Regardless of whether you personally enjoy spinning for random NFTs, it's quite cool to see that mainnet can still support new activity surges like this.

Of course, I'd be remiss here not to mention Purposeful, an anon analyst who recently appeared and began piecing FWA's early stats into an impressive valuation case.

For instance, they've highlighted that when it comes to holders' revenue, FWA has repeatedly ranked among Ethereum's very top earners, on some days beating DeFi heavyweights like Pendle, Sky, and Uniswap combined and cracking into the top 10 revenue generators across all of crypto.

From this reality, Purposeful has pointed out that $FWA trades at roughly 1-2x annualized holder revenue relative to its FDV, while some comparable protocols presently sit in the 29-237x range. Even a conservative re-rating toward these other projects suggests significant upside potential, and even without revenue needing to grow considerably further from here.

🧩 An ecosystem of permissionless extensions has started to blossom

One of the most interesting things to watch around FWA over the past month has been the amount of third-party devs that have started to build extensions atop the main protocol. Permissionless composability ftw.

For example, I'm surely missing some, but a handful of these projects I've been tracking so far include:

• FWAAH, an alternative frontend by Austin Griffith.
• Pull Pool, onchain artist ripe's suite for collectively funding FWA pulls, i.e. pooling ETH to speedrun exposure and split $FWA settlements plus rewards pro-rata.
• LFWA, a liquid FWA vault by madame/acc that farms $FWA and ticket fees off big shared positions and runs its own King-of-the-Hill side game (buy a ticket, become temporary king, survive unchallenged to claim the vault).
• FWAP, or Fake World Asset Pools, is Quit and Jameson's shared pool that matches depositor NFTs and ETH into FWA at minimum backing, then lets a keeper recycle the positions continuously while splitting PNL and $FWA rewards among depositors.
• Gacha Battles, a multiplayer winner-take-all game by Eric Conner where players pull straight from the live FWA pool, and the one who receives the highest ETH backing wins that round's full pot.
• FWA.gg, another gaming layer take by hov that stacks 1v1 pack battles and a growing jackpot on top of FWA pulls, with onchain prediction markets also reportedly on the slate.

None of the projects above were built by, or even explicitly called for, by TokenWorks, which is the kind of organic and creative activity you want to see this early on if the FWA protocol is going to accrue true staying power.

🎟️ Behold, a new distribution avenue for NFTs

FWA's newest primitive, FWAIR Launches, lets a new NFT collection launch directly into its shared gacha pool instead of running its own solo mint.

As for the basic mechanics, supporters back a drop's positions with ETH upfront, then the collection enters the pool once fully backed, after which the artist earns ongoing fees from pool activity instead of a one-time mint windfall.

The first test release, FWAIR PFPs, a 111-piece PFP collection made by TokenWorks, went live this week with each position backed by 0.25 ETH. Per the official recap report by Adam, 591 wallets made 17,735 total purchase attempts chasing the drop, producing the second-most 1D spins + ETH spent on FWA to date (if my math's correct).

Of course, then, more drops like this can function as significant catalysts and not mere gimmicks. The next release on the slate here is Sterling Crispin's Save ETH, a 1,000 piece fully onchain collection centered around preserving Ethereum's early history (and paired with a card game). It's due to drop tomorrow at noon EST, so keep it on your radar.

🛠️ More official features bodes for more potential

The success FWA has achieved so far has come upon its initial infra foundations. However, the TokenWorks team can still build around and expand upon the underlying protocol in all sorts of different official ways.

For example, we know the dev duo is on the verge of rolling out greater pool customization options, starting with user-owned pools. This advance itself opens the door to a slew of other features and possibilities.

Moreover, FWAIR PFPs can be staked to gain early access to deploying custom pools to FWA, which points to how the protocol itself and its growing synergies can increasingly foster a demand nexus for NFTs in multiple senses: it focuses spin activity toward old NFTs, collecting activity toward new NFTs, and holding activity toward perk NFTs, etc.

🐂 Bullish tidings

Can FWA transform from just a gacha game to a major collectibles market? Can the main pool keep meaningfully diversifying? Can the token flywheel keep spinning long into the future?

These are open questions we'll have to wait and see about. But what we can know already is that FWA has accrued considerable fundamentals even after its emissions phase ended. It's got a third-party ecosystem brewing and new features coming into the fold, all while being good for Ethereum itself via gas consumption and not just for people who enjoy the gacha.

Add everything I've outlined up, and my rating here is definitively Bullish. A month in, FWA hasn't ended up as a flash in the pan, instead bringing an electricity to the NFT scene we haven't seen in years.

Personally, I'm most interested in tracking whether the FWAIR Launches format catches on as a big distribution channel, and what other primitives get built on top of the core protocol going forward (whether officially through TokenWorks or unofficially through the community).

My bottom line is that if you've written FWA off as a novelty, or just haven't looked closely yet, it warrants a second look at the very least. And if you're keen on more content on this one, be sure to keep an eye on the podcast as we've got a special episode on FWA coming out next week!