Hi everyone. Markets rallied broadly over the past 24 hours, led by lending protocols and Ethereum ecosystem tokens as EVM activity continued to strengthen. We also take a closer look at one of CT’s hottest new protocols, Fake World Assets, where NFT gacha mechanics have already generated more than $14M of activity in just a few days. We examine how the model works, why activity has exploded, and whether its fee-driven flywheel can survive once emissions disappear. 

The board was almost entirely green over the last 24 hours. 21 of 25 crypto indices closed higher, the three equity-linked indices sat flat with US markets shut, and Solana Eco was the only decliner at -1.41%. Sectors climbed steadily through the European and US hours, faded into the evening, then gapped higher together in the closing stretch.

Lending led at 9.49%, with Ethereum Eco effectively tied at 9.45%. The two ran together all session on shared lending exposure, the same pairing that led the board last Wednesday. Euler was the standout component. EUL spiked 32% intraday and closed up roughly 14% after Upbit opened a KRW market for the token on Sunday, taking its gain on the week to about 90%.

That left nearly 11 percentage points between Ethereum Eco and Solana Eco on the day, as EVM activity gained share through Robinhood Chain, with apps such as Pons attracting onchain attention. 

— Shaunda

The NFT Gacha Experiment

This week, we take a look at one of Crypto Twitter's hottest new protocols, Fake World Assets (FWA). Think of it as bringing the gacha mechanics that have proven so successful on Collector Crypt to NFTs.

Depositors deposit an NFT together with some ETH, creating a position that purchasers can acquire at random by paying a fixed acquisition fee of 0.16 ETH. The more ETH backing a position has, the less likely it is to be selected, allowing depositors to stay in the pool longer and earn more fees. Every acquisition fee is shared equally across all active positions, regardless of how much ETH they are backed by, while depositors also earn FWA token rewards.

The concept has resonated quickly. Just days after launch, more than 6K NFTs have been deposited, including collections such as CryptoPunks, BAYC, Pudgy Penguins, and Azuki. 

Combined, they are backed by roughly $3.7M of ETH, with both NFT deposits and ETH backing continuing to trend higher.

Once a purchaser receives an NFT, they have two choices. They can either keep it or immediately sell it back to the original depositor for 85% of its ETH backing. That payout can be received in ETH or automatically converted into FWA.

The early data has been remarkable. Purchasers have spent $14.6M across more than 74K acquisitions.

What’s even more surprising is that around 70% of purchasers are choosing to convert their winnings to FWA. In one example, a user won a CryptoPunk after spending just 0.16 ETH, yet still chose to receive FWA rather than keep the NFT or cash out in ETH.

That decision is important because it creates the protocol's buy pressure. FWA cannot be freely bought by outside traders today. Instead, the protocol buys FWA from the Uniswap pool whenever a purchaser opts to receive rewards in the token instead of ETH. Since launch, that dynamic has helped push FWA up roughly 270% in just three days.

After the initial 15-day emission period, the protocol intends to replace token incentives with fee-funded buybacks. It generates revenue from acquisition fees, settlement fees when purchasers keep an NFT, and a portion of the value retained when purchasers choose to sell an NFT back instead. This revenue can then be used to buy back FWA from the open market. The protocol has generated $1.3M in net revenue so far. 

Repurchased tokens are distributed 40% to depositors, 40% to purchasers, and 20% are permanently burned. If protocol activity continues to grow, higher fee generation results in more buybacks, larger rewards for active users, and a steadily declining token supply, creating a self-reinforcing flywheel.

The main risk is that the protocol's flywheel could work in reverse. Once the initial 15-day emissions end, LPs and purchasers will increasingly rely on protocol-funded buybacks for rewards. If those rewards become less attractive, activity could slow. A weaker token price would also encourage purchasers to take ETH instead of FWA, reducing protocol buy pressure. Fewer users means lower fee generation, smaller buybacks, and even less incentive to participate. 

Whether the protocol can sustain activity without emissions will be the true test of the protocol and ultimately determine whether this becomes a durable marketplace or simply a fun experiment. 

— Kunal

Aerodrome Q2 Token Holder Report

Blockworks Advisory concludes that Aerodrome strengthened its competitive position in Q2 despite weaker near-term profitability, with trading activity, Base market share, governance participation, and long-term holder commitment all improving. The report attributes the softer financial performance to lower fee capture and higher emissions rather than weakening demand, arguing that the protocol's core franchise remains healthy as it transitions to a new economic model. Looking ahead, it identifies the Aero upgrade, Predictive Allocation, and the AER Engine as the key catalysts that must convert recovered trading activity into higher fee capture, stronger holder yields, and improved protocol economics. 

FWA turns the onchain market into a pack rip where anyone can be the house

The author argues that Fake World Assets (FWA) transforms the traditional gacha model by allowing anyone to become both the player and the house, using ETH-backed NFTs to create permissionless, self-pricing prize pools. The paper contends that this design solves a longstanding problem in NFT markets by enabling assets of vastly different values to coexist in the same pool while giving holders a way to earn yield without selling their NFTs. While it notes that important features such as protocol buybacks and token purchases remain disabled and key parameters are still centrally controlled, it concludes that FWA introduces a novel distribution mechanism that could reshape how digital collectibles are supplied, monetized, and accessed onchain.