Unipeg Explodes in Popularity: A Complete Analysis of the New Dual-Asset Model

During the “May Day” holiday, a project called “Unipeg” (unipeg.art) suddenly went viral online.

This is a project built on Uniswap V4. The mechanism of this project is very unique; it is both an NFT and an ERC-20 token.

Calling it an NFT is because, like the NFT projects we are familiar with, it is an art piece with a total of 10k units (a unicorn composed of pixels).

But behind each NFT is not the ERC-721 or ERC-1155 tokens we know, but a full Unipeg token (uPEG) anchored to it. That is, when a user holds a full Unipeg token, their wallet corresponds to a unicorn image. And this Unipeg token is a well-known ERC-20 token.

All Unipeg tokens are traded on Uniswap.

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

If the user sells off the fractional parts of their 1 uPEG, the unicorn represented by that uPEG will disappear forever.

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

(For the formation mechanism of this token and unicorn, see the link at the end of the article.)

Under this mechanism, an inevitable situation is that: unicorns will become fewer and fewer, and eventually, the entire Uniswap trading pool will only contain uPEG fragment tokens.

Due to this unique operation mechanism, after the project was exposed, participants rushed to buy rare unicorns, causing the token price to increase dozens of times within a few days.

This surge has not been seen in either the NFT sector or the ERC-20 sector for a long time.

After the project became popular, an “interlude” also occurred.

A hacker exploited a mechanism in the contract, cleverly conducting repeated wash trading in a short period, continuously filtering out rare unicorns. This triggered panic selling among token holders, leading to a sharp drop in price, which gradually stabilized after the incident subsided.

Purely in terms of the NFT value of this project, based on past experience, I think its price can only stabilize and rise long-term if one of the following two conditions is met:

• The project has an impeccable and highly consensus-driven uniqueness and primacy in the entire ecosystem, like CryptoPunks.

• The project can gradually develop a large ecosystem, so that any future participant in this ecosystem cannot avoid this NFT.

Let’s look at the first condition.

Looking back, among all the NFT projects we’ve experienced (whether in the Ethereum ecosystem or Bitcoin ecosystem), very few NFTs can reach the level of uniqueness and primacy of CryptoPunks.

This is extremely difficult.

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

So, it’s not easy for this unicorn to meet this condition.

Now, the second condition.

Apart from CryptoPunks, most NFTs need a continuously growing and expanding ecosystem to maintain long-term value and appreciation.

I once had high hopes for Bored Apes. But from years of practice, at least so far, it has not succeeded.

I also once had high hopes for the Bitcoin ecosystem, believing that if Bitcoin could develop its own ecosystem, its NFTs would have great potential. But years of practice have also proven that, at least so far, it has not succeeded.

The only project still actively pushing forward and occasionally creating small waves in the NFT ecosystem is Pudgy Penguins.

It has been working hard and persisting, and has made multiple efforts so far. But each effort’s influence does not last long, and after the influence wanes, its NFTs fall back again.

I can only say that this project is still persisting, but it cannot be said to have succeeded.

From this perspective, it is still too early to judge what the future value of this unicorn will be.

But aside from the investment value of the project, in terms of ecological innovation, this project is remarkable.

“DeFi’s strength lies in the fact that the platform supporting it, Ethereum, is open and permissionless. As long as this platform exists, the seeds of innovation will continue to be planted, and a few genius individuals and teams will carve through history, creating some extraordinarily powerful projects that will be recorded in history” (from April 22, “My Attitude Towards DeFi: Cautiously Optimistic Now, Bright Future Ahead”).

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

Although we cannot yet prove whether this innovation has practical value or in what scenarios it can be applied, it once again demonstrates that this is a platform capable of supporting innovation and potentially erupting with new breakthroughs at any time.

As long as such a platform exists, we will once again see astonishing masterpieces and world-changing works.