Author: Cookie, The Rhythm
Last month, we detailed the narrative of on-chain TCG cards. "Gacha" is almost the crypto-native "money printer" second only to Hyperliquid and pump.fun:
"CARDS Doubles in 2 Months, Is On-chain TCG the Next Big Narrative After HYPE?"
Last week, the "gacha" wind finally blew onto the Ethereum mainnet. A new protocol called Fake World Assets, launched just over a week ago, has already generated approximately $1.3 million in revenue, ranking 15th on the past 7-day crypto application revenue chart:
Simultaneously, the protocol token $FWA skyrocketed from an initial market cap of around $47,550 to a peak of approximately $38.8 million, an 800x golden dog. Meanwhile, while Collector Cards maintains strong revenue momentum, its token $CARDS has plummeted from a peak near $90 million market cap a month ago to just around $28.87 million.
Why?
FWA's Gameplay
The team behind FWA, TokenWorks, should be familiar. Their previous big hit was "PunkStrategy," which reached a $300 million market cap in a month.
But TokenWorks doesn't always hit a home run. Their last project, TTT (Ten Thousand Tokens), launched around the later stages of the Uniswap v4 hook hype. Its core gameplay was a Launchpad where you needed an NFT to launch a token. There were 10,000 NFTs total, meaning only 10,000 tokens could be launched on the platform. Fees were distributed among token launchers, all NFT holders, and the protocol.
As it failed to produce popular tokens, the NFTs plummeted shortly after launch.
I initially missed FWA too, thinking it was just a simple "NFT gacha" game. But it designed a token flywheel, enabling $FWA to become ponzinomic.
The $FWA token cannot be purchased directly from the outside. To get this token, you must "roll the gacha."
The NFTs in its pool are deposited voluntarily by players. When depositing an NFT, players must also deposit ETH as bilateral liquidity. Essentially, each player depositing assets opens their own pool.
The more ETH deposited, the lower the probability the paired NFT gets drawn. Take this CryptoPunks as an example, it's paired with 276 ETH, corresponding to a mere 0.0000061% chance of being drawn, meaning you'd need over 10 million draws to get it. Since the protocol launched on July 3rd, there have only been 73,884 total draws, averaging just over 3,000 per day.
We can also see this CryptoPunks depositor has earned 12.7213 ETH in just over a day. This income comes from:
- Each draw deducts a fixed 1% fee.
- If someone draws a desirable NFT and keeps it, 1% of the income generated from that depositor's pool is deducted.
- Most players draw mediocre NFTs and immediately sell them back to the depositor at an 85% discount; this price difference forms income.
How much each player depositing NFTs and ETH earns doesn't depend on the deposited amount, but on how long their NFT survives in the pool. As long as the deposited NFT isn't drawn, it keeps sharing profits. Once drawn, dividends stop, and a new NFT needs to be deposited.
To ensure survival in the pool, you need to deposit more ETH, incentivizing the pool to grow thicker.
We can clearly summarize: this is essentially an NFT AMM overlaid with a gacha mechanism.
FWA's Flywheel
The most interesting part about the protocol token $FWA is that it cannot be bought directly from the outside. To get this token, you must genuinely play this NFT gacha machine.
50% of the total token supply was used for initial liquidity, 30% for emissions in the first half-month after launch (daily distribution of 1% each to asset depositors and gacha players), and 20% for early snapshot airdrops.
The broadest way to acquire $FWA is by drawing gacha. As mentioned, when you draw an unwanted NFT, you can sell it back to the depositor at an 85% discount. At this point, you can choose to receive ETH back or $FWA (the protocol automatically buys $FWA with the ETH you would have received).
Most players choose to receive $FWA after selling back unwanted NFTs. Data shows that in the past 7 days, up to 82.3% of operations chose to immediately sell back for $FWA, especially in the very early days when the token price hadn't surged. Recently, as $FWA price rose to highs and entered correction, the choice to receive ETH after immediate sell-back has gradually increased, but receiving $FWA still accounts for over 60% of daily choices.
If we directly calculate the acquisition cost of $FWA, we find each draw is negative expected value. The cost of acquiring $FWA through gacha is actually higher than the daily $FWA price, representing a premium purchase.
However, if you held the acquired $FWA instead of selling immediately, operations between July 20-23 were printing money like crazy. This isn't much different from grinding Blur airdrops despite Offer wear and tear back in the day; it's betting on the token's future rise, trading time for potential. But there's a difference: this is a game with a much shorter, more attention-focused cycle. Once the mechanism is discovered and gains attention, as long as new entrants keep drawing, substantial buy-side pressure for $FWA converts. Later entrants continuously boost the portfolio value of earlier $FWA holders.
This is also why FWA surpassed Collector Cards' token market cap in such a short time. Both core gameplays are gacha, core revenues are discount price differences from immediate buybacks. Collector Cards' theme (Pokémon cards) might even attract a broader audience than NFTs, with better profit performance. However, Collector Cards' token utility is heavily criticized by the community. Besides project buybacks (details undisclosed due to the Clarity Act not passing), Collector Cards' token has almost zero utility.
Even pump.fun's massive daily buybacks weren't fully recognized by the market, let alone Collector Cards' weaker buyback efforts.
Conclusion
FWA's flywheel is unlikely to be sustainable long-term. When the token price rises, everyone rushes in to draw, praising this great innovation saving NFTs. But once the price corrects, when the inherent loss from drawing can't be covered—let alone generate excess returns—by $FWA's continuous rise, the protocol will gradually be forgotten, and the NFT "great revival" will come to an abrupt halt.
However, the more valuable lesson is that profitability is a narrative easily forgotten in the crypto market. If we understand the relationship between attention and buy-side conversion, we might avoid many situations of being caught at the peak.
