**Update: Winners for this event have been announced.**
Following DeFI’s recent impact on the cryptocurrency space, trading card game (TCG) Gods Unchained recently made a call to its community to come up with ideas in an effort to better integrate their in-game assets with other DeFi protocols.
This post is my submission for that challenge.
What’s your idea?
Fungible tokens (ERC20) representing shares of a pool of Gods Unchained cards (or collectibles) deposited in a smartcontract. For the sake of conciseness, they’ll be referred to as Gods Unchained Pools or GUPs. These assets could remain playable and be redeemed back as NFTs (ERC721) at any time.
What problems is it solving?
- Illiquid fractured markets
- Low composability with DeFi protocols
- High fees and inconvenience associated with transfer of large quantities of assets
- Insufficient exposure to scarce, expensive assets for smaller investors (no fractional asset ownership)
Why is your idea valuable?
One of the main issues with NFTs is often also what makes them desirable: their properties’ uniqueness. While NFTs require different specific characteristics, say a card’s mana count, they’re further divided by properties that are often irrelevant to players and investors (specific card id). This makes them illiquid by nature and dramatically reduces their composability with existing protocols.
This proposal shares the advantages of asset-backed securities (ABS) in traditional finance. Consider the following:
- Full genesis set — GUP
- Full legendary set — GUP
- All Death cards — GUP
- DemiGod board — GUP
As fungible assets, these tokens tackle all of the issues raised above (“What problem is it solving”). They could combine any card/asset property of interest to investors and traders.
Case study — An evenly distributed Godlike portfolio by leveraging Balancer
Using GUPs, a Balancer pool could be used to create a portfolio long on the Gods Unchained ecosystem as a whole.
- Wrap each card set based on feature of interest (God)
- Create an evenly distributed Balancer Pool
- Use the highly liquid Balancer pool tokens as collateral in other DeFi products
This would all be achieved while continuously generating Balancer trading fees and BAL governance tokens for offering a better trading experience to users. Traders would benefit by easily swapping between going long God of Light due to the latest buff to “Chosen One” or sell their Death GUPs after Petrify nerfed their favorite core card.
How would it work?
Simple implementation
Anyone could call the mint function by depositing the appropriate, complete, predefined set of cards to a smart contract. In exchange, depositors receive a fungible token that represents a share of the card pool.
Anyone could call the burn function by submitting a full unit of a given fungible token to receive their full set back. Note that the abstracted set property (say specific card ID) would be ignored during the redeeming process.
Ownership of a full share of a GU supported GUP, or pool of GUPs, could grant users the opportunity to play (potentially delegate) with the basket of assets backing the share. This would make GU assets DeFi compatible, without losing in-game usability, while opening the door to more efficient rental markets down the line.
Granular implementation
A more granular implementation of this could generate fungible tokens out of a unique NFT (a mythic card) or pool of NFTs (Gold Echophons). For a unique NFT, the fungible tokens could act as a governance token used to delegate its ownership to a specific user.
Learning from others
Other projects in the space are tackling NFT related challenges as well.
In a similar vein, the Augur Foundry is a UI for minting and wrapping Augur prediction market shares (natively ERC1155) to use in AMMs to improve liquidity, thus accuracy, for those markets.
