800x Golden Dog: 'Card Draw' Saves NFT Trading

Written by: Cookie, Rhythm

Last month, we detailed the on-chain TCG card narrative, where "card draw" has become almost the only crypto-native "money printer" next to Hyperliquid and pump.fun:

"CARDS increased 5 times in 2 months. Is on-chain TCG cards another major narrative after HYPE?"

Last week, the wind of "card draw" finally reached the ETH mainnet. A new protocol called Fake World Assets, which has been online for just over a week, has generated approximately $1.3 million in revenue, ranking 15th in the crypto application revenue chart for the past 7 days:

At the same time, the protocol token $FWA has skyrocketed from an initial market cap of about $47,550 to a peak of approximately $38.8 million, an 800x golden dog. Meanwhile, Collector Cards, while still maintaining strong revenue momentum, has seen its token $CARDS drop from a high of nearly $90 million in market cap a month ago to just about $28.87 million now.

Why?

FWA's Gameplay

The team behind FWA, TokenWorks, should be familiar to many. Their last project was PunkStrategy, which reached a peak market cap of $300 million in just a month.

However, TokenWorks does not always produce a hit. Their previous project, TTT (Ten Thousand Tokens), was launched during the mid to late phase of the Uniswap v4 hook craze, and its gameplay was essentially a Launchpad where only NFT holders could issue tokens, with a total of 10,000 NFTs corresponding to 10,000 tokens, and fees distributed among the token issuers, all NFT holders, and the protocol.

Due to the lack of popular targets, the NFTs plummeted shortly after the platform launched.

I initially missed out on FWA, thinking it was just a simple "NFT card draw" game. However, it designed a token flywheel that allows $FWA to operate in a Ponzi-like manner.

The $FWA token cannot be directly purchased from external sources. To obtain this token, one must participate in "card draws."

The NFTs in this pool are voluntarily deposited by players. When depositing NFTs, players must also deposit ETH as bilateral liquidity. This means that each player depositing assets effectively opens their own pool.

The more ETH deposited, the lower the probability of the corresponding NFT being drawn. For example, with this CryptoPunk, there are 276 ETH paired with it, giving it a draw probability of only 0.0000061%, meaning it would take over 10 million draws to potentially win it. Since the protocol began operating on July 3, there have only been 73,884 draws in total, averaging over 3,000 draws per day.

At the same time, we can see that the depositor of this CryptoPunk has already earned 12.7213 ETH in revenue over just over a day. This revenue comes from:

• A fixed fee of 1% is deducted every time someone draws.
• If someone draws a satisfactory NFT and chooses to keep it, 1% of the income generated by the player who deposited that NFT is deducted.
• Most players draw common NFTs and immediately sell them back to the corresponding depositors at an 85% discount, with the price difference forming the income.

As for how much each player depositing NFTs and ETH into the protocol can earn, it does not depend on the amount of assets deposited but rather on how long the deposited NFTs can remain in the pool. If the NFTs are not drawn, they can continuously share profits. If drawn, the dividends stop, and new NFTs must be deposited.

To ensure that their NFTs can stay in the pool longer, players need to deposit more ETH, which incentivizes the pool to grow thicker.

In summary, this mechanism resembles an NFT AMM layered with a card draw mechanism.

FWA's Flywheel

The most interesting aspect of the protocol token $FWA is that it cannot be directly purchased from external sources. To obtain this token, one must genuinely engage with this NFT gacha machine.

50% of the total supply of the token is used to add initial liquidity, 30% is allocated for emissions in the first half month after launch (1% daily for asset depositors and card drawers), and 20% is for early snapshot airdrops.

The most common way to acquire $FWA is to draw cards, and as mentioned earlier, when players draw unwanted NFTs, they can sell them back to the NFT depositors at an 85% discount. At this point, they can choose to receive ETH back or receive $FWA (the protocol automatically converts the returned ETH into $FWA).

Most players choose to take $FWA after selling back unwanted NFTs. Data shows that in the past 7 days, as high as 82.3% of operations involved selling back to acquire $FWA, especially in the early days when the token price had not yet launched. In recent days, as the price of $FWA has risen to a high and entered a correction, the choice to receive ETH after selling back has gradually increased, but the choice to acquire $FWA still accounts for over 60% on a daily basis.

If we directly calculate the cost of acquiring $FWA, we find that each draw is actually a negative expectation; the cost of acquiring $FWA through draws is actually higher than the day's $FWA price, representing a premium purchase.

However, if one holds onto $FWA after acquiring it instead of selling it immediately, during the period from July 20 to 23, each draw for $FWA was essentially a money-printing operation. This is not much different from the previous Blur airdrop, where participants gambled on the subsequent token's potential to soar, betting time against space. However, there is a significant difference, as this is a game with a much shorter betting cycle and primarily focuses on attention—if this mechanism can quickly be discovered and become a focal point of attention, as long as new participants come in to draw cards, there will be a large amount of buying pressure for $FWA. New entrants will continuously push up the value of the holdings of those who already own $FWA.

This is also why FWA was able to surpass the market cap of Collector Cards' tokens in such a short time. Both have card drawing as their core gameplay, and both generate income from immediate repurchase at a discount, even though the drawing content of Collector Cards (Pokémon cards) may attract a broader audience than NFTs, and its profit performance is better. However, the utility of Collector Cards' tokens has been widely criticized by the community. Aside from the project team's repurchase (which has also been delayed due to the Clarity Act not passing, thus not disclosing specific details), the utility of Collector Cards' tokens is nearly zero.

Even with pump.fun's previous large daily repurchases, the market did not recognize it, let alone the much weaker repurchase efforts of Collector Cards.

Conclusion

The flywheel of FWA is likely to be difficult to sustain in the long term. When the token price rises, everyone rushes in to draw cards, praising this great innovation that saves NFTs. But once the token price falls, the losses from card draws cannot be covered by the continuous rise of $FWA, and this protocol will gradually be forgotten, halting the "great revival" of NFTs.

However, the more valuable lesson we can learn from this is that profitability is a narrative that is easily forgotten in the cryptocurrency market. If we understand the relationship between attention and buying pressure conversion, we might avoid many situations where people get stuck at the peak.