Author: William M. Peaster, Senior Writer at Bankless

Translator: Jiahuan, ChainCatcher

Fake World Assets (FWA) is an on-chain random NFT acquisition protocol launched by TokenWorks. Depositors place NFTs along with a certain amount of ETH into a fund pool, and purchasers randomly obtain an NFT position based on the pool price, then choose to either keep the NFT or accept a buyback offer from the original depositor. The author of this article discloses that he is an FWA user and $FWA holder, thus the conclusions reflect a clear supportive stance.

Some skeptics regard TokenWorks' Fake World Assets as a product that will only be popular for a short time: yet another on-chain application relying on random draws and token rewards to attract users, which will lose popularity once the initial $FWA reward period ends.

It's important to disclose my interests: I am an FWA user and hold $FWA, therefore the following text may inevitably carry a supporter’s bias. However, I believe that the past month has provided enough evidence to show that this project is not just a fleeting trend.

As I mentioned last month in the Beginner's Guide to FWA, the biggest question at the project's launch was whether this on-chain gacha mechanism could continue to operate after the 15-day initial $FWA reward distribution period ended.

Now, FWA has been live on Ethereum for over a month, the initial reward period has concluded, yet its token economic flywheel hasn't stopped; rather, it continues to operate and adjust. Meanwhile, the platform has begun to accumulate observable real business data, and an expanding ecosystem built around the core protocol is also developing.

Here are my main reasons for being bullish on FWA at this moment, along with several key clues to watch for going forward.

1. Small volume, yet ranked among the top for revenue

According to the FWA Pulse data dashboard, FWA has accumulated over 17,239 ETH in transaction volume, completing over 162,000 draws; currently, there are still more than 5,400 active positions with a locked value of about 1,108 ETH.

The fees accumulated by the protocol have exceeded 1,777 ETH, of which approximately 406 ETH has been used for the buyback of $FWA, and another 138 ETH remains in reserve. For a protocol that has been live for only a month, these figures are quite significant.

FWA has also become a significant source of Gas consumption on the Ethereum mainnet. On July 25, during its most active period, it briefly became the largest single Gas consumer in the entire network, surpassing Tether and Circle. The community jokingly remarked that FWA needs to create on-chain activities to "save Ethereum." Regardless of whether one enjoys random NFT draws, this at least proves that the Ethereum mainnet can still accommodate activity spikes brought by new applications.

Anonymous analyst Purposeful subsequently organized early data on FWA from revenue and valuation perspectives. Calculating based on token holder income, FWA has repeatedly ranked among the highest revenue protocols on Ethereum; on certain dates, its revenue even exceeded the total of Pendle, Sky, and Uniswap and entered the top ten in revenue across the entire crypto industry.

Purposeful pointed out that if measured by the fully diluted valuation to annualized token holder income ratio, $FWA has valuation multiples of approximately 1.3x, 1.3x, and 2.3x based on 24-hour, 7-day, and 30-day data annualized; some comparable protocols range from 29 to 237 times. According to this logic, even if FWA's revenue does not grow significantly, as long as the market assigns a valuation level closer to that of similar protocols, it could result in a substantial value reassessment.

2. Developers are voluntarily building the ecosystem

One of the most noteworthy changes in FWA over the past month is the increasing number of third-party developers starting to build products on top of the core protocol. These projects are not led by TokenWorks, but rather grow spontaneously by leveraging the protocol's permissionless composability.

Representative projects that have emerged so far include:

• FWAAH: An alternative frontend developed by Austin Griffith.

• Pull Pool: A shared draw tool launched by on-chain artist ripe. Participants can pool ETH to speed up their acquisition of FWA positions and share the proceeds and $FWA rewards by contribution ratio.

• LFWA: A liquidity FWA treasury launched by madame/acc, which acquires $FWA and ticket fees through large shared positions while setting up a "King of the Hill" mini-game: purchasing a ticket allows one to temporarily become the "King," and if no one challenges within a specified time, they can receive treasury rewards.

• FWAP: Fake World Asset Pools, developed by Quit and Jameson. This shared pool pairs NFTs and ETH from depositors based on minimum support amounts before placing them into FWA, with executors continuously managing these positions and distributing profits and $FWA rewards among participants.

• Gacha Battles: A multiplayer winner-takes-all game developed by Eric Conner. Players draw NFTs directly from the FWA real-time fund pool, and the player who holds the highest position based on ETH support amount wins the entire prize pool for that round.

• FWA.gg: Another layer of gaming application developed by hov, which adds a one-on-one card pack battle and a continuously growing prize pool on top of the FWA draw mechanism, with plans to incorporate an on-chain prediction market in the future.

These projects are neither developed by TokenWorks nor actively solicited by the team. For a protocol still in its early stages, this spontaneous, decentralized, and creative development activity is a crucial indicator of its potential for establishing long-term viability.

3. FWAIR opens new issuance and distribution paths for NFTs

The latest mechanism launched by FWA, FWAIR Launches, allows a new NFT series to directly enter the shared random draw pool of FWA without needing to go through a traditional minting process.

The basic logic is: supporters provide support using ETH for positions in the series to be issued, and once all positions have sufficient support, that series enters the FWA fund pool. From then on, artists don't have to rely solely on one-time sales revenue at issuance but can continuously earn fees from activities within the fund pool.

The first test project, FWAIR PFPs, created by TokenWorks, contains 111 PFPs, with each position supported by 0.25 ETH. According to a recap report released by Adam, a total of 591 wallets initiated 17,735 purchase attempts to acquire this series. The author estimated that this made it the second highest day for draw attempts and ETH expenditure since FWA's launch.

This means more similar issuances have the potential to become growth catalysts for FWA, rather than just short-term gimmicks.

The second FWAIR project is artist Sterling Crispin's Save ETH. This series includes 1,000 fully on-chain NFTs themed around preserving Ethereum's early history, accompanied by a card game, with each position requiring 0.05 ETH in support. At the time of the original release, this series was slated to launch at noon Eastern Time on August 27; TokenWorks subsequently confirmed that the project has opened ETH support to whitelisted wallets.

4. Custom fund pools will open up the next phase of opportunities

The current achievements of FWA are primarily built on the first version of the infrastructure. The two developers at TokenWorks can still continue to expand around the underlying protocol, with the most imminent functionality being the start of “user-owned fund pools,” which will provide more flexible customization options for fund pools.

Previously solicited requirements from the team include: not forcing ETH provision when depositing NFTs, establishing independent fund pools by specific categories, such as Pokémon pool, blue-chip NFT pool, and newly issued pools, as well as setting clear withdrawal deadlines. Once user-owned fund pools are opened, there could further spawn more playstyles and products.

Furthermore, FWAIR PFPs can qualify for early deployment of custom fund pools through staking. This also shows that a more complex collaborative relationship is forming between the FWA protocol and surrounding products: random draws direct demand towards existing NFTs, new series issues attract collecting demand, while NFTs with added functional rights create long-term holding demand.

5. FWA has crossed the "one-time hype" phase

Can FWA grow from an on-chain gacha application into a major digital collectible marketplace? Can the core fund pool continue to include more diverse assets? Will the token economic flywheel continue to operate in the long run? These questions remain unanswered and will require further observation.

However, it can be confirmed at least for now: even though the initial reward period has ended, FWA has still accumulated quite substantial business data; a third-party ecosystem is forming, and new features are being gradually added. Meanwhile, it also brings real activity to the Ethereum mainnet through ongoing Gas consumption, rather than just serving users who enjoy random NFT draws.

Considering all of the above factors, my judgment on FWA is decidedly bullish. A month after its launch, it has not been a fleeting phenomenon; instead, it has brought a level of activity to the NFT market that has been rare in recent years.

Moving forward, I am most concerned about whether FWAIR Launches can become an important NFT distribution channel, and what new mechanisms will appear on top of the core protocol—whether they come from TokenWorks or from community developers.

If you previously viewed FWA as a quirky but brief product or have yet to seriously understand it, then it is at least worth reevaluating.

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