FWA Offers Up to 2000x Rewards, Earns 1000 ETH in a Week

A two-person team that has never raised funds has completed 16 projects, with the highest reaching a market value of $300 million. Can FWA succeed this time?

Written by: Sanqing, Foresight News

The Ethereum protocol Fake World Assets (FWA), which relaunched on July 20, has created an NFT lottery machine. Depositors lock NFTs along with an ETH deposit in a pool, and others can pay to draw from it. If they win, they can keep the NFT or sell it back to the depositor for 85% of the deposit, with the proceeds available in ETH or the protocol's token, FWA. According to DefiLlama data, FWA has generated a total of $5.98 million in fees since its launch, with a TVL of $5.49 million and total revenue reaching $1.45 million. FWA's 24-hour protocol revenue even surpassed that of Collector Crypt on Solana at one point.

The most expensive position in the protocol has a deposit of 276 ETH. Winning it allows a return of 234.6 ETH, which is more than 2000 times the ticket price, but the odds of winning are about one in 18 million. As of the time of writing, there are 6,979 active positions in the pool with 2,087 ETH in deposits, and the protocol has accrued 1,114.1 ETH in revenue. According to GMGN data, FWA is priced at approximately $0.02, with a market value of about $20 million, having peaked at $38.79 million.

Fifteen Previous Projects and One Lost Punk

TokenWorks is a studio founded by Adam (@Rhynotic) and Teto (@tetonotsorry), claiming to be "a testing ground for financial ideas on-chain." The homepage lists only three projects, but digging into the archive page reveals 15 project reviews, ranging from Circle in October 2024 to this May, averaging one every six weeks. FWA is their 16th project.

The most notable previous project was PunkStrategy in September 2025: it charged a 10% buy-sell tax on tokens, with 80% used to buy CryptoPunks at floor prices, reselling them at a 20% markup, and using the proceeds to buy back and burn tokens, which once pushed the token's market value to $300 million.

On July 28, the team announced a change: ERC20 tokens can now be wrapped into NFTs and deposited into the pool, with their own PNKSTR being the first supported.

FWA's most recent project before this was Ten Thousand Tokens, launched on May 14, 2026, with 10,000 NFTs priced at 0.01 ETH each. Holders had to destroy their NFTs to issue tokens on the platform. On the first day, over 100 tokens were issued, with one reaching a market value of $1 million, but then it fizzled out.

In their review, the team wrote, "I really liked the concept of this project, and it was hard to see it fail," attributing the failure to insufficient trading volume on the platform to make the protocol interesting. However, the team promised, "Even if the platform is gone, these NFTs will continue to exist in some form within TokenWorks."

Two months later, FWA launched. Ten Thousand Tokens became the largest collection in the pool, with 2,552 positions accounting for 37.8% of the share and a 38.8% chance of winning. These NFTs were originally minted at 0.01 ETH, but the median deposit in the pool is now 0.1 ETH.

There is still an unused path in the whitelist: destroying a certain number of Ten Thousand Tokens will allow new NFT series to be added to the pool. The required number is currently set to zero, effectively closing it; once increased, this batch of NFTs that has been hard to sell will regain a continuous destruction outlet.

Thus, the inventory from the team's previous failed project became the prize pool for this one.

FWA's launch was not without its challenges. On July 3, 2026, during its first launch, someone discovered they could change the protocol state before the Chainlink callback transaction, directing the draw result to the most valuable position in the pool, CryptoPunk #5450, which was worth about $66,000 at the time. The random number provided by Chainlink was fine, but the protocol state was tampered with before it took effect.

The protocol switched to a withdrawal-only mode at block 25452023, and the team announced full compensation. On July 8, a new contract was open-sourced with a white hat bounty, and the audit was completed on the 15th, with purchases resuming on the 20th.

For Depositors: Deposit as Prize and Odds

According to the official documentation, a position is an NFT locked with an ETH deposit. This deposit serves three roles: it is the repurchase price promised by the depositor, it is their own principal, and it also determines how easily the position can be drawn. The weight of the winning probability is inversely proportional to the deposit.

The price of a lottery ticket equals the harmonic mean of all deposits in the pool multiplied by 1.1. The harmonic mean is calculated by taking the reciprocal of each number, averaging them, and then taking the reciprocal again. It is characterized by being dominated by smaller numbers: suppose there are 9 positions each with a deposit of 0.05 ETH and 1 with a deposit of 100 ETH, the arithmetic mean is 10 ETH, while the harmonic mean is only 0.056 ETH.

The purpose of this pricing system is to keep the ticket price close to what buyers are likely to draw. The harmonic mean is similarly dominated by cheaper positions, and the winning rate is inversely proportional to the deposit, so you will almost always draw cheaper positions. However, this also means that the ticket price will not be driven too high by the 276 ETH Punk, as its impact on the price is as small as its probability of being drawn.

The random number is provided by Chainlink VRF, which stands for Verifiable Random Function. It allows nodes to draw lots off-chain while attaching a cryptographic proof. The contract must verify this proof before accepting the number; if it fails, it will not recognize it, and neither the project team, miners, nor users can know the result in advance or change it afterward.

Buyers pay a separate service fee for this. The lottery may not be completed: if the pool is emptied, the ticket price drifts beyond the upper and lower limits set by the buyer at the time of ordering, or if the random number does not return within the deadline, a refund will be triggered. The ticket price will be refunded, but the VRF service fee will not.

For depositors, the service fee for each lottery is evenly distributed among all active positions, regardless of the deposit amount. The documentation clearly states the risks: your NFT may be selected earlier than its implied average lifespan based on its weight, causing earnings to terminate before the service fee can accumulate, and thus the final amount may be lower than your expected share.

The protocol's own revenue comes from three sources: 1% of the lottery fee, a 1% settlement fee when buyers choose to keep the NFT, and the 15% discount deducted when buyers accept the repurchase. The parameter retainedToProtocol determines whether this 15% goes to the protocol or is returned to the depositor, currently defaulting to the protocol.

According to on-chain data, a total of 82,679 positions were created in eight days, with 74,609 already drawn, and only 1,302 taken back by depositors. The corresponding contract indexer's protocolFeesAccrued field shows 1,114.1 ETH. Among them, the lottery fee revenue is 8,184.8 ETH, with a 1% cut of 81.8 ETH, and the remaining 1,032.2 ETH all comes from settlements. This money is distributed by an independent accounting contract on the mainnet at 63%, 7%, and 30% to the main recipient, a fixed secondary recipient, and a batch of NFT holders determined by a snapshot at deployment. The documentation does not specify the identity of the secondary recipient.

For Buyers: Negative EV Lottery, 80% Bet on Coin Price

The expected deposit that buyers hope to draw equals the harmonic mean of all deposits in the pool. The ticket price is 1.1 times that amount, and selling it back only yields 0.85 times. 0.85 divided by 1.1 equals 77.3%, which is the expected return rate for buyers. The size of the pool, what it holds, and when the lottery is drawn do not affect this number.

According to FWA's Pool Explorer, among 63,166 settled choices, only 3,029 chose to keep the NFT, accounting for 4.8%; 9,895 accepted the repurchase and took ETH, accounting for 15.7%; the remaining 50,242, accounting for 79.5%, chose to accept the repurchase but settled in FWA tokens.

This choice has its basis. Mechanically, if this option is chosen, the 85% ETH will not go into the buyer's wallet but will directly buy FWA in the Uniswap pool, then hand the coins to the buyer; if ETH is chosen, the money goes directly to the account. However, the same team's PunkStrategy reached a market value of $300 million, while FWA is still in its 15-day issuance period, so betting on its rise is not impulsive.

The cost is that the ledger changes the valuation unit. The 77.3% return rate describes the path of taking ETH, while only 15.7% of people choose this path. For the other 80%, the final return depends on the price of FWA, and external purchases of FWA are currently closed, allowing only sales. The main buyers right now are precisely these settlements.

There are also two costs that are easily overlooked. First, there is a 7.7% chance of a refund for the lottery, and that VRF service fee is non-refundable. Second, the 10% markup in the ticket price is not fixed to whom it belongs: if less than a minute has passed since the last lottery, it all goes to the depositor; after an hour, it all converts to the buyer's token purchase quota, sliding linearly in between. At this point, buyers can gain this 10%, raising the expected return rate to 86.3%.

The 15-day issuance period will end on August 4. The team stated on July 26 that they plan to open external purchases at that time and allocate part of the revenue for buybacks, distributing it at 40%, 40%, and 20% to depositors, buyers, and burns, while noting that these ratios can all be adjusted at the contract level.

Subsidies will shift from issuance to buybacks, and how much can be bought back depends on how many people are willing to continue participating in the lottery. After August 4, these numbers will have to prove themselves again.