Written by: Dao Ge

During the "May Day" holiday, a project named "Unipeg" (unipeg.art) suddenly became popular online.

This project is built on Uniswap V4. Its mechanism is very unique, as it is both an NFT and an ERC-20 token.

It is considered an NFT because, like the NFT projects we are familiar with, it consists of a total of 10,000 artworks (unicorns made of pixels).

However, behind each NFT is not the ERC-721 or ERC-1155 tokens that we know, but rather it is anchored to a complete Unipeg token (uPEG). This means that when a user holds one complete Unipeg token, their wallet corresponds to a unicorn's image. The Unipeg token is the ERC-20 token that we are familiar with.

All Unipeg tokens are traded on Uniswap.

When a user buys uPEG tokens on Uniswap (for example, buying 1.2 uPEG), the integer part (1 uPEG) corresponds to a unicorn, while the remaining decimal part (0.2 uPEG) becomes token fragments that do not represent any unicorn.

If a user sells their 1 scattered uPEG, the unicorn represented by that uPEG will permanently disappear.

Similarly, if a user buys tokens and does not buy whole numbers of uPEG tokens, they will not receive a unicorn.

(For details on the mechanism of token and unicorn formation, please refer to the link at the end of the article.)

Under this mechanism, one inevitable situation is that the unicorns will become fewer and fewer, ultimately leaving only fragment tokens of uPEG in the Uniswap trading pool.

Due to this unique operational mechanism, after the project was exposed, participants rushed to purchase rare unicorns, causing the token price to rise several times within a few days.

This increase hadn’t been seen for a long time in both the NFT and ERC-20 arenas.

After the project gained popularity, an "episode" occurred.

A hacker took advantage of a mechanism within the contract, cleverly washing the trading repeatedly in a short time, continuously filtering out rare unicorns. This triggered a panic sell-off among token holders, leading to a significant price drop, and after the event calmed down slightly, the price gradually stabilized.

Simply based on the NFT value of this project, according to past experience, I believe it can stabilize and rise in the long term only if it meets one of the following two conditions:

- The project possesses an impeccable uniqueness and primacy within the entire ecosystem, like CryptoPunks.

- The project can gradually develop a vast ecosystem such that any participant in this ecosystem in the future cannot avoid this NFT.

Let’s first look at the first condition.

Looking back, among the many NFT projects we have gone through (regardless of whether in the Ethereum ecosystem or Bitcoin ecosystem), there are very few NFTs that can truly achieve the uniqueness and primacy of CryptoPunks.

This difficulty is very high.

Even among the once immensely popular Bitcoin NFTs, it is still hard to find any that can rival CryptoPunks in historical value and have strong consensus.

Thus, for this unicorn to meet this condition, the difficulty is not small.

Now let’s look at the second condition.

Aside from CryptoPunks, most NFTs need a continually growing and expanding ecosystem to maintain their price over a long time and continue to appreciate.

I once had high hopes for Bored Apes. However, based on the practical experience over the years, at least up to now, it has not succeeded.

I also had high hopes for the Bitcoin ecosystem, believing that if Bitcoin could develop its own ecosystem, the NFTs within it would also have great potential. Yet, practical experience over the years has proven that at least up to now, it has not succeeded either.

The only one still making consistent efforts and occasionally creating small peaks in the NFT ecosystem is Pudgy Penguins.

It has been persistent and has made several efforts so far. However, the lasting impact of each effort has not been long, and when the influence fades, its NFTs drop again.

I can only say that this project is still persevering, but I cannot say it has succeeded.

So from this perspective, it is still too early to judge how the value of this unicorn will be in the future.

But if we move away from the investment value of the project, this project is remarkable in terms of ecological innovation.

“The beauty of DeFi lies in the fact that the platform it is built upon, Ethereum, is an open and permissionless platform. As long as there is this platform, the seeds of innovation will continually be sown, and there will always be a few exceptional individuals and talented teams who will sweep across the annals of history, creating exceptionally powerful projects that will be forever recorded in history.” (April 22, "My Attitude Towards DeFi: Cautious Now, Bright Future").

The innovation of this project is an unprecedented innovation in the DeFi ecosystem and is something never seen in the real world.

Although we cannot currently prove whether this innovation has practical application value or in what scenarios it can be used, it precisely proves once again that this is a platform that carries innovation and where innovations can erupt at any time.

As long as there is such a platform, we will certainly see more astonishing masterpieces, and we will again see works that overturn the world.

Reference link:

https://x.com/798_eth/status/2050019560125063290

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