Recently, the term “scams” has come to refer to NFTs.
With the development of fraudulent ventures on the market, many non-fungible token collectors have been victims of rug pulls, in which the creators of a digital asset quit the business and flee with the funds of investors.
An environment fraught with FOMO (“fear of missing out”), incompetent customers, and unscrupulous individuals eager to take advantage of them has hurt the reputation of those attempting to help this business thrive.
On April 10, the company behind the “CryptoFighters Alliance” play-to-earn game tweeted about a new token standard they developed: ERC-721R. In barely three days, they received over 1,330 organic retweets and 3,000 likes, with a mix of praise and criticism.
The guarantee of a refund under the ERC-721R standard might be a new starting point for this industry, giving customers greater protection and producers more trust.
What exactly is the CryptoFighters Alliance, and what does it represent
According to the crew, the CryptoFighters Alliance was created in 2018, before Web 3 became a thing, but has remained mainly obscure since then. What seems to failed project that the team disregarded from 2018 to the middle of 2021 is suddenly resurrected, owing to their newest invention: ERC-721R.
The CryptoFighters team stresses its long history and has proof of it on various social media sites. People are prepared to pay for it as well. Is the project’s early release date sufficient to validate it, or is this new standard only a marketing ploy? It’s a tough question to answer. With a two-year hiatus in their operations, one might argue that the CryptoFighters team was not adequately engaged.
Nonetheless, the importance of ERC-721R cannot be overstated. It has a thoroughly doxxed developer as well as other high-profile individuals, including NFT influencer Zeneca. This might be a new beginning for CryptoFighters Alliance and the larger non-fungible token market, with eth applauding the initiative. However, not everyone was blown away. According to the Popeye Twitter account, which has over 149,000 followers, ERC-721R “has so many fundamental flaws.”
With individuals rushing to get as many ERC-721R NFTs as possible, FOMO-ing on the idea that whoever implements this new standard first will become the alpha dog, more investigation of the standard is required.
What are ERCs, exactly?
Before we begin, here’s a little primer on ERCs for those who aren’t acquainted with them. The acronym for Ethereum Requests for Comments (ERC) is Ethereum Requests for Comments. ERCs are Ethereum developer community concepts for developing apps on top of the blockchain. A smart contract may be developed by anybody, but ERCs are meant to raise standards by allowing predictable communication amongst ecosystem applications. ERC-20, the standard for creating fungible tokens that may be exchanged on the Ethereum network, and ERC-721, the standard for creating NFTs, are two of the most well-known ERCs.
What is ERC-721R, exactly?
ERC-721R is the most current update to the ERC-721 standard for NFTs, combining the fee-saving features of its predecessor, ERC-721A, with an additional security feature.
According to the standard’s official website, ERC-721R “adds trustless refunds to NFT smart contracts, allowing minters to return the NFTs created for a cost within a given refund time.” This is intended to prevent quick rug pulls, which are a common kind of fraud.
What exactly is the ERC-721R protocol, and how does it operate?
The ERC-721R template features a mechanism that locks money donated to a smart contract for a certain number of days, known as the “refund period.” During that time, any minters – or main buyers who acquire NFTs directly from their creators – may recover their money back, but the smart contract’s owner will be unable to withdraw some or all of the funds from the wallet.
On the surface, ERC-721R seems to be every NFT collector’s dream come true, but let’s go back to Popeye’s basic issues.
In the same tweet as the one described above, Popeye stressed the possibility that some users might “max mint” and initiate a refund “the second they can’t sell their remaining tokens above floor pricing,” the lowest price for an item from a collection. In theory, this might be highly damaging to a lot of real-world initiatives from the start, putting an additional strain on entrepreneurs and artists.
Meanix. eth is a cryptocurrency that Meanix invented.
Tuesday, April 19, 2022, 9:22 a.m.
Don’t miss CoinDesk’s Consensus 2022, the year’s must-attend crypto and blockchain event, which takes place from June 9 to 12 in Austin, TX.
Recently, the term “scams” has come to refer to NFTs.
With the development of fraudulent ventures on the market, many non-fungible token collectors have been victims of rug pulls, in which the creators of a digital asset quit the business and flee with the funds of investors.
An environment replete with FOMO (“fear of missing out”), incompetent customers, and unscrupulous individuals eager to take advantage of them has hurt the reputation of those attempting to help this business thrive.
On April 10, the company behind the “CryptoFighters Alliance” play-to-earn game tweeted about a new token standard they developed: ERC-721R. In barely three days, they received over 1,330 organic retweets and 3,000 likes, with a mix of praise and criticism.
Meanix, a 21-year-old “all-out NFTs enthusiast,” sees himself as “halfway between blockchain and music.” He enjoys reading comments on Twitter and Instagram.
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The guarantee of a refund under the ERC-721R standard might be a new starting point for this industry, giving customers greater protection and producers more trust.
Is the buzz, however, justified? Let us have a look.
What exactly is the CryptoFighters Alliance, and what does it represent?
First, some context.
According to the crew, the CryptoFighters Alliance was created in 2018, before Web 3 became a thing, but has remained mainly obscure since then. What seems to be a failed project that the team disregarded from 2018 to the middle of 2021 is suddenly resurrected, owing to their newest invention: ERC-721R.
The CryptoFighters Alliance has a Twitter account
The CryptoFighters team stresses their lengthy history and has proof of it on various social media sites. People are prepared to pay for it as well. Is the project’s early release date sufficient to validate it, or is this new standard only a marketing ploy? It’s a tough question to answer. With a two-year hiatus in their operations, one might argue that the CryptoFighters team was not adequately engaged.
Nonetheless, the importance of ERC-721R cannot be overstated. It has a thoroughly doxxed developer as well as other high-profile individuals, including NFT influencer Zeneca. This might be a new beginning for CryptoFighters Alliance and the larger non-fungible token market, with eth applauding the initiative.
However, not everyone was blown away. According to the Popeye Twitter account, which has over 149,000 followers, ERC-721R “has so many fundamental flaws.”
With individuals rushing to get as many ERC-721R NFTs as possible, FOMO-ing on the idea that whoever implements this new standard first will become the alpha dog, more investigation of the standard is required.
What are ERCs, exactly?
Before we begin, here’s a little primer on ERCs for those who aren’t acquainted with them. The acronym for Ethereum Requests for Comments (ERC) is Ethereum Requests for Comments. ERCs are Ethereum developer community concepts for developing apps on top of the blockchain. A smart contract may be developed by anybody, but ERCs are meant to raise standards by allowing predictable communication amongst ecosystem applications.
ERC-20, the standard for creating fungible tokens that may be exchanged on the Ethereum network, and ERC-721, the standard for creating NFTs, are two of the most well-known ERCs.
What is ERC-721R, exactly?
ERC-721R is the most current update to the ERC-721 standard for NFTs, combining the fee-saving features of its predecessor, ERC-721A, with an additional security feature.
According to the standard’s official website, ERC-721R “adds trustless refunds to NFT smart contracts, allowing minters to return the NFTs created for a cost within a given refund time.” This is intended to prevent quick rug pulls, which are a common kind of fraud.
What exactly is the ERC-721R protocol, and how does it operate?
The ERC-721R template features a mechanism that locks money donated to a smart contract for a certain number of days, known as the “refund period.” During that time, any minters – or main buyers who acquire NFTs directly from their creators – may recover their money back, but the smart contract’s owner will be unable to withdraw some or all of the funds from the wallet.
On the surface, ERC-721R seems to be every NFT collector’s dream come true, but let’s go back to Popeye’s basic issues.
In the same tweet like the one described above, Popeye stressed the possibility that some users might “max mint” and initiate a refund “the second they can’t sell their remaining tokens above floor pricing,” the lowest price for an item from a collection. In theory, this might be highly damaging to a lot of real-world initiatives from the start, putting an additional strain on entrepreneurs and artists.
However, smart contract owners have the option of setting the refund price lower than the mint price, which may result in users not having their whole investment refunded. This technique would still provide collectors a sense of security and comfort since they would not lose everything in the worst-case scenario, but it would also protect actual projects from flippers and potentially high unjustified refund rates.
Furthermore, since ERC-721R is still under beta testing at the time of writing, the standard does not let authors withdraw any funds from the smart contract during the refund period.
Nonetheless, the ERC-721R source repository predicts that the standard will see more advanced implementations in the future, including:
Wearing a vest (the creator will be able to release a certain percentage of the funds in the smart contract each month)
Cliffs are one kind of cliff (10 percent of the funds released immediately for the creator and the rest released at a later date)
The Advantages of ERC-721R for Creators
The main advantage of using ERC-721R for sellers would be increased credibility, which would allow them to build market confidence. Furthermore, since the new standard encourages creators to take on more responsibility, we may see more potential buyers gravitate toward ERC-721R projects in the future.
While the refund mechanism remains in place, it provides a new dynamic since the floor price of the collection is unlikely to go below the minting price. If the refund price is equal and guaranteed until the refund period ends or a significant number of original holders sell their NFTs, no minter will choose to sell the token below the mint price.
Finally, the designers have complete control over the redemption period and other aspects of the NFTs. ERC-721R is merely a template, and as previously said, you may use it as is or modify it to your taste.
Buyer Advantages of ERC-721R
As a collector, you may now get a refund for the NFTs you bought within a set time frame. As a consequence, ERC-721R should serve as proof of security for all consumers, offering enhanced protection against fraud. It’s almost a lifeline for everyone interested in investing in this area.
However, you might still be duped!
As @prishalness, a developer friend of mine, pointed out, authors may pretend to be using ERC-721R, but the smart contract developer may still implement a secondary withdrawal method, for example, evading the refund period protection.
For your protection, do your investigation – DYOR – and delve further into the team’s history before embarking on any endeavor.
ERC-721 standard comparison
I created a visual with Prishalness’ assistance to help readers understand the differences between ERC-721 standards and make more educated decisions while acquiring NFTs on the Ethereum network.
Finally, some ideas
In its current state, ERC-721R seems to be a wonderful idea with the potential to wreck a project, but it may be a tweak or two away from becoming industry standard.
“The reality is that we have refunds in [Web 2], and it works perfectly for firms who use it […] Because the vast majority of customers do not desire [a] refund,” said Elie Steinbock, the ERC-721R standard’s creator.
The market anticipates that producers will be more responsible and that buyers will feel safer. ERC-721R seems to have the ability to benefit both producers and investors by boosting their legitimacy and offering additional protection. However, only time will tell how effective the new standard will be in combatting scammers, as well as if artists would accept it in large numbers.
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