FWA and the New Market Structure for NFTs | Adam (Rhynotic) and Eric Conner

FWA is an NFT purchasing protocol and global NFT AMM built around whitelisted collections. Depositors pair an NFT with an ETH backing value; buyers pay ETH to draw a random asset from the pool, with Chainlink providing randomness and a Fenwick tree tracking pool positions and purchase odds. Buyers can take the NFT or its backing ETH. Adam (Rhynotic) presents the pool as a possible fallback venue for collections with little or no marketplace bidding, though it does not solve the challenge of finding a fair price for each NFT.

Depositors choose backing values because NFT prices are difficult to establish on-chain. If a value is too low, a buyer may take the NFT and sell it elsewhere; if it is too high, the NFT is less likely to be taken, and buyers may choose the ETH instead. Depositors earn a proportional share of purchases and, Adam says, should on average recover their paired ETH if pricing is fair, but any particular NFT can be taken immediately. They can withdraw the NFT and accrued ETH unless the pool is too hot. In the general pool’s return mechanism, a buyer returning an unwanted NFT receives 90% of its backing value, with the remaining 10% going to the protocol; backing values also affect FWA incentives through a square-root formula that Adam said had not been fully tested.

FWA’s artist-launch model is intended to change how collections reach buyers. Artists can issue NFTs without providing the ETH backing: collectors pledge the collection’s target ETH price, and once it is fully backed, the NFTs enter the pool. If a buyer takes the ETH, the NFT returns to its backer; if the buyer keeps the NFT, the backing ETH goes to the backer minus a 1% pool fee. Artists earn fees while their NFTs are in the pool, which Adam said could on average match the intended mint proceeds. The model aims to reduce dependence on gas wars and rushed whitelist campaigns and to expose smaller artists to buyers outside their own communities. It cannot guarantee demand, however, and NFTs may take time to sell, especially in a cold market. Adam also acknowledged that a backer can lose out when a buyer takes the NFT rather than the ETH, though he expects results to even out across a sufficiently large collection.

The FWA token is meant to bootstrap a decentralized, user-owned protocol by rewarding deposits and purchases. Adam said 100% of protocol fees go toward buying FWA, with about 40% allocated to that day’s purchasers, 30% to depositors, and 30% burned; buybacks occur at one ETH per block. The parameters were still being adjusted, and the token’s value depends on platform use because fee-funded buybacks stop if purchases stop. During the token’s first two weeks, participation was the only way to obtain it, and emissions were intended to encourage deposits and volume. The pool had been live for roughly a month to a month and a half; Adam said purchases declined after the initial hype, although activity continued and NFT-deposit yield remained good.

The main pool is intended to stay broad and simple, with about 6,000 assets, while custom pools could target selected sets such as 30 CryptoPunks. Those features were still being refined and were not expected for the first launch. A test collection of 111 NFTs, each backed at 0.25 ETH, was expected that weekend, followed by Sterling Crispin’s “save Ethereum” collection as the first artist launch. Adam was reviewing the returned launch contract with the auditor and intended to address its recommendations before launch zero. He also wants FWA holders to influence which NFTs enter or remain in the main pool.

The pool already included Pokémon cards, and the speakers discussed Rolexes, luxury bags, and house deeds as possible future assets, provided professional custodians handle them. Counterfeits and custodian failure remain risks; Adam said a buyer could still take the backing ETH in a worst case, leaving the loss with the depositor. FWA launched on Ethereum mainnet because high-value NFTs such as punks are there, despite layer 2 networks’ lower fees and better user experience. Purchases take about a minute while Chainlink callbacks and other processes complete. Adam identified Chainlink as a potential single point of failure: purchases would stop if it failed, but withdrawals would remain possible. The first unaudited version was exploited and funds had to be repaid before the project was audited. Adam said it was too early to know whether FWA could evolve into an OpenSea-style marketplace, and the artist-launch model’s reception and results remained uncertain.