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

**David Hoffman** (0:02)
Bankless Station, I'm here with Adam. He goes by Rhynotic on Twitter. He's the creator of FWA. That's Fake World Assets on Ethereum. Adam, welcome to the show. Awesome, thank you for having me. Excited to be on.
And I'm bringing him out of retirement. We also got Eric Conner. Eric, it's been a while. Good to have you back, my man.

**Eric Conner** (0:19)
Hey, David, good to be back. It's been too long.

**David Hoffman** (0:21)
Eric, I'm tapping you in on this conversation because I know that you are a FWA enthusiast, so I think it'd be pretty cool to have you on the show here. Also, energy is up in the crypto markets, and so we're doing more conversations. Adam, tell me about Fake World Assets. Yeah, so for anyone who's listening doesn't know, it is a NFT purchasing protocol where basically there is a pool of assets that are priced by the depositors, and they are backed by a certain amount of ETH, and then anyone can come in and purchase something randomly from the pool. And if they like it, they can keep it. If they don't like it, they can sell it back into 80, I think it's 90% of the depositors' bid. And it's permissionless, decentralized, will go on forever. There's some parameters I can change, but the goal is to try to get as hands-off as possible.
The random numbers are pulled by Chainlink. It's kind of standard for anyone who's listening, but it's great. It's been going for about a month, month and a half. And I work at Tokenworks. Tokenworks is an on-chain, a financialized studio where we make a product a month. Although when a product takes off like this one, we kind of run with it and work on it as long as it feasibly makes sense. And so it's kind of where we are now. Talk to me just about the broad philosophy about like why you think FWA is cool, why it has legs, why it's captivated people's attention, why it's been successful. Like what's the overall idea? Yeah. I mean, I think people love NFTs. I know it's kind of a hot topic. Some people hate them, but I've been an NFT maxi for years. It's the main thing that keeps me interested. And so collectibles, we've seen Pokemon cards, especially in the last couple of years with like Labooboos and whatnot. Like people like getting a random asset. Like you like getting something, but that just kind of makes sense. And digital assets make more sense than that. Like a lot of these sites, like Collector Crypt, BZ, Courtyard, they're great. Teams are awesome, huge inspiration. But at the end, you kind of end up with this physical asset that if you want to get it delivered, it takes two weeks and it's authenticated. And kind of all of these things are solved by NFTs. And so like if there's digital assets that you want to keep, kind of makes sense to have it in this form. And some people are saying it's kind of the evolution of like an OpenSea type marketplace.
We'll see. It's kind of still a little early to tell.
Regardless, it's been really successful and fun and people really enjoy it. So the consumer behavior that we're going for is like the whole gotcha thing. So like you buy a Pokemon card pack, you get a handful of Pokemon cards. One of them is valuable. Sometimes one of them is very, very valuable. And that's kind of like the dopamine hit that people come back for. We're kind of replicating that consumer behavior with FWA. So you come to FWA and you like buy like a pack or is it you just buy one NFT?

**Adam (Rhynotic)** (3:20)
You can buy multiple, but one.

**David Hoffman** (3:21)
You can buy multiple, sure. But then like you don't really know what you get. And that's kind of the fun. That's the fun speculative gaming aspect to it, correct? Yes. And there are a lot of restrictions and because it's fully on chain. So we use like a, it's called a Fenwick tree to like keep track of all of the positions and the odds of what you're going to get. And so we are kind of restricted in that sense. And that was kind of part of the fun of building it is like, what can, how do we like work with these constraints to make something that people enjoy and still works.
It's kind of resulting in what we have now. But can we just like pop open the hood, just to understand this a little bit better about like, how does an NFT come into the FWA system? ETH also needs to come into the FWA system. Not all of these NFTs are valued equally. Some are valued more than others. Like some are incredibly valued. How does the system, how does just like mechanically, how does all of that work? Yeah, so I mean, part of my inspiration was like a Uniswap V2 pool. And so for people who don't know what that is, like when you add liquidity to a Uniswap V2 pool, you have to basically say, I have this amount of asset and I have this amount of ETH and we're gonna deposit and get LP tokens. And so you're kind of setting the value there. And then obviously if your asset rips, there's like a permanent loss. And if ETH goes up, you make more or whatever.