Unipeg Explodes in Popularity, Full Analysis of the New Dual-Asset Model

Article by: Brother Dao

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

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

It is called an NFT because, like the NFT projects we are familiar with, it is an art piece with a total of 10k units (a unicorn made 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 complete Unipeg token, their wallet displays 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 a token fragment, which does not represent any unicorn.

If the user sells the 1 uPEG in fragments, 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 outcome is that: unicorns will become fewer and fewer, and eventually, the entire Uniswap liquidity pool will only contain uPEG fragments.

Due to this unique operation mechanism, after the project was exposed, participants scrambled 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 or ERC-20 sectors for a long time.

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

A hacker exploited a mechanism in the contract to cleverly wash trading repeatedly in a short period, continuously filtering out rare unicorns. This triggered a panic sell-off among token holders, causing the price to plummet, and only after the event slightly subsided did it gradually stabilize.

Regarding 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 into 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 on Ethereum or Bitcoin ecosystems), very few can achieve the kind of uniqueness and primacy that CryptoPunks has.

This is extremely difficult.

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

So, achieving this condition for the unicorn is not easy.

Now, the second condition.

Besides 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 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 impact is not long-lasting; once 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 beyond the project’s investment value, in terms of ecological innovation, this project is remarkable.

“DeFi is great because the platform it is built on, 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 “My Attitude Towards DeFi: Cautious Now, Bright Future Ahead,” April 22).

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 application or in what scenarios it can be used, 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 see more astonishing masterpieces and world-changing works again.