TokenWorks, the two-person team behind NFT gacha protocol Fake World Assets, said it will send 80% of future protocol fees to FWA token buybacks and spend 327 ETH, about $610,000, buying the token for a team reserve.
The move came after holders learned that the team’s original plan for FWA’s trading debut allocated none of the roughly $3.2 million earned during the protocol’s two-week launch to buybacks. That disclosure triggered a selloff that pushed the token to a record low.
According to CoinGecko, FWA traded at $0.0083 on Tuesday after touching an all-time low of $0.0066 overnight. The token was down 43% over 24 hours, 78% below its July 26 peak of $0.03856, and carried a market capitalization of about $8 million.
The clash centers on a familiar question in token launches: how much protocol revenue should reach token holders. It also arrived as one of the key drivers behind FWA’s rise was running out. The project’s 15-day emissions program, which distributed 30% of supply to users, ends today, the same day external purchases of the token open at 3 p.m. ET.
Fee allocation became the pressure point
Fake World Assets, relaunched on July 20, lets users deposit ETH-backed NFTs into a pool while buyers pay for randomized draws settled through Chainlink’s verifiable random function. Winners can keep the NFT or sell it back for most of its backing, while losing pulls earn FWA rewards.
DefiLlama data shows the protocol generated $8.8 million in fees over the past 30 days and holds $5 million in total value locked. The Defiant previously reported that, at its peak, the project briefly ranked behind only Sky in daily revenue among Ethereum protocols.
Original launch plan covered future fees, not past revenue
The selloff started Monday evening, when TokenWorks announced that external FWA purchases, previously limited to protocol participants, would open on Aug. 4. Under that plan, 50% of the team’s share of future protocol fees would be routed to a buyback mechanism.
The buyback proceeds were set to be distributed as follows:
- 70% to purchasers
- 10% to depositors
- 20% burned
TokenWorks also said the fee on each purchase would drop from 5% to 2.5%, while the depositor bid would rise from 85% to 90% of backing. Gacha purchases were paused from 9 a.m. to 12 p.m. ET on Tuesday to let depositors withdraw before the changes took effect.
What the announcement did not address was the treatment of fees already collected.
Cirrus, an NFT trader with more than 103,000 followers on X, wrote: “So as it stands 0% of the 2000e in fees generated the last two weeks are going towards buybacks.” He added: “Looks like I punched a roundtrip ticket from high 5 fig pnl to mid 5 fig loss.”
Team response shifted within hours
About an hour later, TokenWorks co-founder Adam, known as Rhynotic on X, replied by rejecting retroactive distributions while increasing the buyback allocation for future fees.
“There is no percentage of retroactive fees that would satisfy everyone,” he wrote, adding that he did not think a one-off buyback “would do anything other than temporarily increase the token price, only for people to sell into it.”
Instead, he committed to routing up to 80% of future protocol fees to buybacks and using 10% of TokenWorks’ accumulated fees to build a team reserve. He also said the team held no FWA and that he personally owned about 1% of supply.
By Tuesday morning, after what he described as “an intense night,” Adam raised the reserve commitment again. He said TokenWorks would use 30% of the fees it has earned so far, or 327 ETH, to buy FWA over 30 days through a contract deployed today.
Revenue split disclosed: 63% to TokenWorks
Adam also published the protocol’s revenue breakdown. Of the 1,735 ETH in protocol revenue, worth about $3.2 million:
- 63% went to TokenWorks
- 30% went to S02 holders
- 7% went to co-developer Teto
S02 is a soulbound NFT the team launched in February at 1 ETH each to fund its experiments in exchange for a share of revenue.
“TokenWorks has a huge financial incentive to continue working on FWA,” Adam wrote. He added: “Since we'll be redirecting 80% of future protocol fees to buybacks of the token, it makes sense for TokenWorks to hold as much of the token as possible.”
The reversal eased at least some of the criticism. On Tuesday morning, Cirrus wrote: “This is a pretty good outcome tbh,” and followed with: “Respect to Adam for listening to his users.”
Researchers questioned ownership and emissions
Kunal Doshi, a researcher at Blockworks Research, said the dispute reflects a principal-agent problem: a team that owns none of the token supply has little reason to spend revenue buying it back.
He argued that the reserve pledge did not change the picture much, putting it at around $230,000, or roughly 2.5% of FWA’s fully diluted valuation. “Would you buy a stock if the management team only owned 2.5% of the company?” he said.
Doshi also challenged the token design. In his view, distributing 30% of supply over 15 days translated to about $300,000 in daily incentives against roughly $100,000 in daily revenue. He expects liquidity providers to withdraw and gacha purchases to slow once emissions end. “We're already seeing early signs of that,” he wrote.
Team says it will keep building
Adam wrote that TokenWorks “has historically launched an idea once a month for over a year.” He also said the self-funded team had previously spent four months focused on PunkStrategy, part of the NFTStrategy ecosystem that reached a $202 million market capitalization last October.
In Monday’s announcement, the team wrote: “Thank you for helping us make Ethereum fun again.”