#358: MegaETH and the Fluffle Mint
🧲 How teams are using NFTs to represent ownership in a network
NFTs ≠ equity…or could it?
NFTs are a lot of things. They represent ownership, culture, creativity, membership, a receipt, and many other things. However, when it comes to the concept of NFTs and ownership, it gradually became clear that holding or owning a NFT did not mean the holder owned a share of the company that issued it.
NFTs ≠ equity.
As the NFT ecosystem matured, that tune slowly changed. With careful legal guidance, select projects explored how NFTs could be converted into equity ownership.
Truth Arts’ Operation Resurrection
In February 2024, Truth Arts (of Goblintown fame) announced Operation Resurrection, giving Truth ecosystem NFT holders the opportunity to burn their NFTs for future equity rights in the company or IP ownership.
Truth team conducted a snapshot of eligible holders and collections on February 20th, 2024
Holders of the eligible collections had a 30-day window to burn their eligible NFTs for future equity rights in Truth Arts Inc or IP ownership
This initiative was opt-in. Holders could also decide to take no action, and continue holding the NFT or sell at later date
Holders who burned their Truth ecosystem NFTs receive a SAFE (Simple Agreement for Future Equity), allowing these holders-turned-investors the ability to purchase equity in the company at a later date
The SAFEs are worth between $100 to $50,000 based on the NFTs burnt
Participants had to complete a KYC process in partnership with Republic
Participants who burned their NFTs received soulbound NFTs with identical art on Base, giving these holders continued access to token-gated experiences and perks in the future
Rektguy and Rekt Brands
On January 1st, 2024 Rekt Brands announced that Rektguy NFT holders would be gifted equity in the company.
The snapshot was originally taken on October 26, 2023, and the announcement of the snapshot was made on December 4, 2023
The first venture under Rekt Brands was Rekt Drinks, which launched in October 2023
Participants could claim 100 Common Shares for each Rektguy NFT held at snapshot
Rekt Brands worked with DealMaker to conduct the equity distribution, which followed Regulation CF
With the stereotype that NFTs are just pretty pictures of membership into a community dispelled, what did MegaETH do with its Fluffle mint to represent ownership of a network?
What is MegaETH?
MegaETH is another Ethereum Layer-2 blockchain, branding itself as ‘the first real-time blockchain’. What makes MegaETH different than the other Layer-2s? They claim the chain can support 100k+ transactions per second with sub 10-millisecond blocktimes (<0.01 second).
I first came across MegaETH last year, thanks to the CTO’s social posts explaining complex technical concepts in a friendly and entertaining TikTok-like format.
It’s pretty rare to see technical people put themselves in front of a camera in such entertaining fashion, so it piqued my interest. Not to mention they raised a $20 million seed round.
MegaETH’s community round
As impressive as those numbers and announcement shared above are, the Layer-2 (and emerging Layer-3) space is crowded. There are 140+ of them across the Ethereum ecosystem, all fighting for a limited number of users, capital, and time.
How could MegaETH be a worthy recipient of this pie that might not be growing fast enough to support all of them?
Community, duh! A buzzword that we’ve grown tired of over the past few years, but in many ways need more of today.
One of the ways MegaETH earned its stripes was through a community fundraising round in December through Echo, a community fundraising platform for crypto projects. The community round gave qualified investors similar terms as the VC investors of the $20 million seed round and raised $10 million in a couple minutes from 3,200 investors.
This move by the MegaETH team showed that maybe, just maybeee there’s another way to approach fundraising and community building in the saturated space of new blockchains and ecosystems.
And MegaETH took it one step further with the Fluffle mint.
MegaETH and The Fluffle
Earlier this month, the MegaETH team announced details for The Fluffle, the flagship NFT collection for the ecosystem:
10,000 soulbound NFTs
Cost 1 ETH (~$2650)
Cumulatively represent at least 5% of the network
Divided into two mint installments: retroactive and proactive
So for those who missed out on the Echo investment opportunity, this was a pleasant surprise!
More importantly, what made this mint interesting beyond the potential for financial gains down the road?
Skin in the game
Eligible wallets had to commit 1 ETH to mint a Fluffle. As expensive as it was at face value, for many (myself included) the risk/reward was worth it for many because these minters/investors of the 10k collection get a minimum of 5% of the token allocation in return.
This mint showed that MegaETH was taking a different approach to getting its growing community involved early on with financial capital. Not just time, bots, or content.
The more serious the community member, the more serious the commitment. And although non-financial commitments are vital for community-building, financial commitments are directly measurable and can be made even prior to a project launching, which is where MegaETH is currently at.
Rather than relying on forced activities or task farming, we’re emphasizing conviction and commitment—to both MegaETH and the broader industry. We’ve established multiple avenues to distribute and decentralize the MegaETH network.
Fluffles are dynamic
Fluffles evolve based on the holder’s activity on the network and are customizable with unlockable wearables. More activity ➡️ evolved stage ➡️ greater rewards.
Increased activity leads to accelerated vesting and a larger allocation in the tokens allocated to the Fluffle, which has a minimum of 5% allocated. This suggests the most active Fluffle holders will receive a larger proportion of the 5%+ allocation and accelerated vesting. And if all holders are active, the allocation increases as well.
To break it down further, we see multiple layers of what dynamic means:
And if you do nothing that’s fine too since you’ve shown your commitment early on with the 1 ETH mint. You just receive a smaller proportion of the token allocation compared to active counterparts.
Multi-installment mint
The MegaETH team also approached the mint from a different angle with a multi-installment approach:
Retroactive: 5,000 NFTs
80,000 whitelisted addresses eligible for mint (this number was reduced significantly through enforcing the 1 ETH wallet requirement and a RNG raffle process)
Qualified addresses were categorized into 1 of 4 personas based on their onchain activity: DiamondHands, MegaMind, Architect, and Kernel.
Proactive: 5,000 NFTs
Will occur in a few months
Mint allocation will be provided to and determined by the teams and project in the MegaETH ecosystem, the Mega Mafia
An additional mint allocation will be reserved for users based on social media activity
Both installments
Each installment has 2-day mint process
Day 1 is a guaranteed allocation for dedicated supporters, partners, and community members. A portion of guaranteed allocation are free mints.
Day 2 is a larger whitelisted group of wallets with a first come first serve model
The Fluffle mint for the Retroactive installment was on February 11th and 12th
Choosing your Fluffle during the mint
To this day, mints are largely randomized with a set of pre-established traits and pre-determined rarities.
Since these NFTs are soulbound, the team saw this as an opportunity for the user to have more agency in selecting their Fluffle in a few ways:
Tribes
Minters could choose between 16 different Tribes, each with their own description and unique traits that come with it. I chose ‘The Wanderer’ because that’s what I do on the blockchain 😉
Tribes may seem like a cosmetic detail for now, but they will be helpful for deeper engagement across MegaETH for sub-community development, bootstrapping competition dynamics from ecosystem apps, or additional incentives (eg: most active Tribe gets a token allocation boost).
Trait combinations
After selecting the tribe, minters chose between a wide range of trait combinations. And because these are soulbound NFTs it makes sense to let them choose a Fluffle that’s more aesthetically pleasing. There were hundreds of Fluffle combinations per tribe so the chance of duplicates will be fairly low.
Name
Of course, if this rabbit is gonna be your forever companion on MegaETH, it deserves a name! I was feeling uncreative at the time, so I figured the perfect name for my wanderer would be…The Wanderer, lol.
This degree of agency in the minting process gives the holder a deeper emotional tie beyond on top of the core financial incentives.
Fluffle Interactivity
Fluffles are already Tamogatchi-like elements, as holders can:
Feed their Fluffle once per day (easy way to measure consistent engagement)
Change outfits
Chat
These base actions already suggest there could be a variety of ways to build on top of them as the ecosystem grows:
Feeding your Fluffle different foods based on onchain activity with varying point values towards evolution
Receiving different clothing items based on app interactions
Chatting with your Fluffle to unlock Easter Eggs, clues, or a quest-related action for MegaETH apps or campaigns
I know we’re not kids anymore, but hey people like this stuff and they’re incentivized lol 🤷♂️
Fluffles will be an ecosystem magnet
As the flagship NFT collection on MegaETH, these users will be the defacto airdrop magnet, whitelist recipient, and early access ticket for the whole MegaETH ecosystem.
Fluffles aren’t just an airdrop magnet, they are MegaETH’s ecosystem magnet (and possible future beneficiaries of other initiatives outside of MegaETH as well).
Bootstrapping ecosystems with quality users
MegaETH’s approach to bootstrapping its early community with higher quality users through the Fluffle mint is one worth tracking and taking inspiration from.
Through the mint, the team has differentiated their blockchain vs. hundreds of alternatives through their approach, added a robust layer of qualified users on top of the typical speculators and farmers, created dynamic win-win incentive mechanisms, and given average Joe’s and Jane’s like myself to have more skin in the game as investors.
I promise I won’t become a default MegaETH maxi just because I have a Fluffle, but I will be leaning into the ecosystem as they get closer to launching 🐰
See you Thursday!