I’m back from my trip, hope you didn’t miss me too much! 😘 It feels like I’ve missed a lot, and at the same time being away has helped me reset my filter for what’s interesting while the vibes are up.

One development that has piqued my interest over the past few weeks has been TokenWorks’ NFTStrategy product, which has led to this chart and hubbub among certain circles.

Looks like a chart that screams crime or ponzi, but upon further inspection, is the result of the elusive flywheel every token wants. I own some of this token, partially because it’s genuinely interesting and as always, it helps me understand what’s going on.

In order to understand NFTStrategy, we have to understand the team behind it first, TokenWorks.

TokenWorks is the brainchild of the developer Adam Lizek aka Rhynotic on X. It’s part game studio and part research lab, launching projects that expand upon the definition of what ‘onchain fun’ looks like. Another way of thinking about it is they’re an onchain version of MSCHF with tokens as their medium of choice.

The first TokenWorks experiment I came across was the memecoin Circle on the art-focused blockchain, Shape which launched a year ago.

The concept was simple: As the market cap rises, the circle grows. As the market cap drops, the circle shrinks.

And over the past 12 months, Rhynotic and team launched more token-based experiments.

Many of these experiments (which are worth digging into if you’re looking for inspiration, especially since he provides retros on each of them) utilized Uniswap’s v4 Hooks. Without getting into too much technical detail, v4 Hooks allow creators to create customizable parameters when swapping tokens (dynamic fees, fee routing, rewards).

A Tradfi example of what a Hook can do is sorta like bank roundup programs to help consumers save. For example, Bank of America has a Keep the Change Savings Program for debit card purchases. Purchases are rounded up to the nearest dollar and the difference is transferred to the consumer’s savings account, creating a simple way to save.

You’ll understand why the v4 Hook is important for NFTStrategy in a bit 😉

On September 6th, the TokenWorks team introduced PunkStrategy. How does it work?

• PunkStrategy is a protocol that incorporates a mechanism (called the YoYo) that buys and sells CryptoPunks (yes, NFTs are still a thing and CryptoPunks are still worth a lot, like $200k+ lot) and a token, PUNKSTR

• There is a 10% buy and sell tax on the PUNKSTR token (80% of the tax goes towards the protocol, 10% goes towards the team, 10% goes to TokenWorks supporters)

• Once the protocol accumulates enough fees through the trading volume, it purchases the cheapest CryptoPunk and relists it for 2x the purchase price (has since been revised down to 1.2x based on community feedback)

• When the listed CryptoPunk is sold, 100% of the proceeds are used to purchase PNKSTR and burned, reducing the total supply of PNKSTR token

Sounds stupid, right?

2 days later, PunkStrategy acquired its first Punk, acquired its second 5 days after that, and now holds 19 with 2 of them already sold.

After the early kinks were ironed out and there was more inbound interest, TokenWorks announced NFTStrategy:

• Any ERC721 NFT collection can have a NFTStrategy token deployed to it

• The same 10% buy and sell tax applies, and fees are used to purchase the associated token’s NFT collection and are relisted at 1.2x purchase price

• When the listed NFT is sold, the ETH proceeds are used to buy and burn the associated NFTStrategy token

• The 10% token fee has a similar 80/20 breakdown. Of the 20%, half of it (1%) goes to the collection owner as a royalty, and 1% will be used to buy and burn PNKSTR

• To disincentivize snipers at launch, buy fees will start at 95% and decrease by 1% each minute until the standard 10% fee is reached 85 minutes later. This mechanic is courtesy of v4 Hooks and makes things more fair during the early stages (unlike 99.9% of memecoins)

• NFTStrategy will have 3 launch phases

  • Wave 1: Curated collections including Bored Apes, Pudgy Penguins, Dickbutts, Moonbirds, Meebits, Squiggles,

And now we can better understand the ‘Strategy’ in NFTStrategy. It’s a nod to MicroStrategy (now rebranded as Strategy) and their claim to fame of buying more, and more, and more, and….more…Bitcoin. Shoutout to you Mr. Saylor 🙇‍♂️

However, the strategy with these Strategy tokens isn’t to hold onto the acquired NFTs forever. Rather buy and sell in perpetuity, fueled by token swap volume.

Are you more confused after reading this so far? If so, share or subscribe!

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As with anything new, these tokens should be approached cautiously, and plenty of early token holders are shouting from the rooftops of their feed proclaiming these Strategy tokens as the best thing since sliced bread so they can eventually dump them. That said, NFTs (which are still near and dear to my irrational heart) haven’t really had any interesting developments in a while despite having more soul than memecoins. Now we have something interesting that has a lot of people raising their eyebrows.

Besides price go up, what is interesting about NFTStrategy?

Due to the Rhynotic and TokenWorks’ track record, NFTStrategy tokens have gained credibility relatively quickly.

Gondi, a NFT liquidity marketplace (eg: you can borrow and lend against valuable NFTs) lists the NFTs for sale from NFTStrategy collections. This is notable because in its current form, these automatically listed NFTs can only be bought on their respective NFTStrategy site, not on popular marketplace platforms like OpenSea. Could these marketplaces eventually integrate these listings? The chances of this are rising as some of them are holding and listing 100+ NFTs for some collections at this point.

For example ToadzStrategy is the second largest CrypToadz holder, with 154 Toadz and counting.

Although OpenSea hasn’t integrated NFTStrategy listings (yet?), they’ve purchased tokens from each of the respective Strategies and added them to their rewards pool ahead of their TGE.

So what about the 1% of swap fees that go to the collection owner? Amazing deal for little to no effort, right?! Many of the teams are actually using those fees to conduct buys of their own, adding more fuel to the fire:

• Meebits: “MeebCo has publicly committed to use its share to keep accumulating Meebits for our corporate treasury.”

• CryptoDickButts: Used proceeds to buy multiple NFTs listed by their respective Strategy wallet. And if you haven’t heard of DickButts before, now you have and one of these cute genitilia-inspired things is worth ~$6900 (fitting valuation 😂)

• Squiggles: “All fees earned by SquiggleDAO will be reinvested to buy Squiggles listed by SQUIGSTR”

What about the NFTStrategy tokens that will be launching soon? Although this is hypothetical, there’s a possibility that token holders will get some form of recognition and eventual perks (besides potential financial gain), like with Good Vibes Club, one of the more successful NFT projects of 2025.

This whole thing is less than a month old, so it’ll be interesting to see how collections and their teams approach this.

Based on the growing attention NFTStrategy has received, it feels like every collection should be queueing up for a launch and incorporating it into their plans. But not everyone is ready to embrace it.

This morning OSF shared his thoughts about a Strategy token for the Rektguy collection:

And as a former trader he makes a great point: Liquidity matters. For collections that already have or are planning to have a token, a Strategy token may be a short-term shiny object that is ultimately a distraction for the larger vision and goal. On the other hand, other teams may find a way to incorporate it elegantly.

Despite OSF’s valid take, he’s probably delaying the inevitable as anyone will eventually be able to create a Strategy token, whether a team wants it or not. That said, a team’s endorsement, blessing, or direct management will increase its chances of success.

Various elements of NFTStrategy and related concepts aren’t new. Fractional (shut down in 2023) was a platform that allowed fractional NFT ownership, but never really took off. ERC404 is token standard introduced last year that allowed ERC721 tokens (NFTs, non-fungible) convert into ERC20 tokens (fungible ones we swap and trade) but didn’t take off either.

So why is NFTStrategy taking off? Maybe it’s the timing of the launch when the market is ripe for something else to get excited about. Maybe it’s the way TokenWorks has implemented this YoYo mechanic between fungible ERC20s with non-fungible ERC721s from a reputable team. Maybe there’s just enough speculation involved to get people excited.

It’s probably a combination of these factors and more, and Monty has a good take on the ‘it’ factor that I couldn’t put my finger on:

NFTStrategy is more than a protocol, token, or mechanism. It’s a game. And with any game, there’s round the clock commentary (eg: the second punk sale from PunkStrategy was an arbitrage play. The Punk buyer was a token seller, v smart), each Strategy has its own unique strategy, and gives an opportunity for people who want indirect ownership to an asset in a dynamic, interactive way that fractional ownership never did.

If this concept is too abstract to understand, think about sports. There’s the main game, the match itself. Within those games lie the subgames:

• Sports betting which can be broken down further into subgames: prediction markets, sports bets, parlays, prop bets, etc.

• Fantasy sports

• Rivalries between specific teams

As much as this is about financial speculation, there is an entertainment angle that exists that didn’t before because this is all so new, and this shouldn’t be discounted.

And that’s what seems to be happening with these Strategies, with many mechanics yet to be uncovered. A simple example of this is what if a core NFT community, let’s say Moonbirds, airdrops a portion of their upcoming BIRB token (which was just announced today) to BIRBSTR holders? These types of interactions have been explored yet, and one eventually will.

So what’s next for this potential meta for NFTs? It’s unclear, but it seems like it’s still in the early innings and people will build on top of it. If anything, we’re seeing a new flavor of effective incentive alignment that may eventually be applied elsewhere.

See you next week!