⚙️Reserve System Mechanics
Complex systems need simple solutions
Last updated
Complex systems need simple solutions
Last updated
Wega's approach to token design is rooted in the belief that tokens should add efficiency and value to the overall operation of the platform - and ultimately, deliver a seamless user experience. Way too often we find projects creating tokens when there was no specific need for such. With Wega, we want to keep token development where it's needed to enhance the efficiency of the platform.
The Wega NFT betting platform will introduce an NFT reserve system that will incorporate the following components:
The Wega NFT Reserve Vault
Fractionalization contracts
Oracle
Wega NFT Fractional Reserve Token
Distribution
The Wega NFT Reserve Vault will be a smart contract used to process and time-lock all of the NFT deposits that are part of the Reserve Token system. The vault contract will be tasked with time locking NFTs deposits, keeping track and matching deposits with their owners, keeping track of expiry dates, and enabling NFT redemption (reconstitution). In short the contract is responsible for the following tasks:
Locking NFTs
keeping track of locked NFTs and owner
keeping track of redemption deadlines (expiry dates)
NFT redemption (reconstitution)
Exposing the most recent price of the reserve fractions token
The Wega NFT Token Reserve System includes contracts known as the Fractionalizer and Reconstructor. These contracts are essential for fractionalizing and reconstituting the NFTs in the vault. Once an NFT gets locked in the reserve vault only the original owner can redeem it within the time deposit period. These contracts are responsible for the process of fractionalizing the NFT into smaller fractions represented by the reserve token, WR-NFT. These fractions enables the original NFT owner to place bets in Wega's betting ecosystem. After playing a few games the user has basically 3 options. They can redeem their NFT within their time lock period through the reconstructor contract in exchange for their WR-NFT tokens. Potentially they can also extend the lock period and continue playing. Alternatively they can also keep the tokens and allow the time lock to expire. This in return releases the NFT to our lootstore and makes it openly accesible to anyone that wants to purchase this NFT.
A Wega player can issue fungible tokens in the form or WR-NFT by fractionalizing their NFT. After a fee is paid, the user then receives a decomposed version of their NFT in the form of ERC20 fractional reserve tokens. Wega’s approach in fractionalization involves the idea of fractional shares as applied in platforms such as masterworks. The fractional shares of an NFT in the Wega ecosystem are based on the floor price at the LOCK step of the fractionalization process and a fixed multiplier. The total number of shares (WR-NFT) a user can receive is based on the following formula:
WR-NFTtotal = P * M
Where, P refers to the floor price of the NFT at the locking step, and M refers to a fixed arbitrary multiplier. For example, in a scenario where the multiplier is 1000 and for an NFT that has a floor price of 1eth. A user/player can receive around 1 * 1000 WR-NFTs.
Unlike traditional NFT markets, the NFTs that form part of the Wega NFT reserve system cannot be purchased. Instead, they can only be reconstituted (recomposed). The process of recomposition involves the burning of the WR-NFT equivalent to the amount that was received in the fractionalization step. For example, if an NFT was fractionalized for 5000 WR-NFT, it would be required to burn 5000 WR-NFT to reconstitute the NFT.
An oracle is a third-party service that provides external data to smart contracts on the blockchain. They act as a bridge between the blockchain and the outside world, enabling the blockchain to interact with outside data sources and execute transactions accordingly. For example, if a smart contract specifies that payment should be released when the temperature reaches a certain level, an oracle can be used to check the temperature and trigger the payment.
In the case of WEGA chainlink oracles are utilized to provide the latest floor price for NFT collections. This floor price will be used to determine the total value of NFTs in the vault as well as single NFTs at the fractionalization step.
Even though we don't believe a platform token is needed at this stage this form of fractilization issues a token. This refers to the ERC20 token smart contract that will power the Wega betting platform. However, as you may have read already it has a very specific function within the ecosystem. Essentially, WR-NFT reflects the total number of NFT fractions locked in the reserve vault.
The supply of the WR-NFT is tied to the total of NFTs stored in the vault. When NFTs are fractionalized, the total supply of the token increases as the fractions grow, and when these NFTs are reconstituted, the total supply of the token decreases as fractions are burned in the reconstitution process.
The price of WR-NFT is determined by the total value of Ethereum (or other native currency) of the locked NFTs, divided by the total supply of WR-NFT. The formula to calculate this is:
P = T/S
where P is the current price, T is the total value of NFTs locked in the reserve, and S is the total supply of WR-NFT.
The total value of the NFTs in the reserve system will be calculated on-chain, using data feeds from third-party oracles (e.g. Chainlink). On-chain oracles provide the reserve system with trustless and verifiable floor price feeds on NFT collections, which will be utilized to determine the total value that all the locked NFTs represent.
Its of outmost importance for the projects long term success to insure liquidity for these WR-NFT token. For this reason we will be using different ways of distributing the supply of WR-NFT:
Fractionalization
Peer-to-peer in-house marketplace (fractions decentralized market)
Third-party decentralized marketplaces
Fractionalization
This enables the users to mint their own WR-NFT token by locking qualified NFTs in the Wega Reserve vault. As previously mentioned in exchange for locking their NFT, we give them return fractional pieces of the total vault. With these fractals, they can proceed to engage in the ecosystem of services we provide.
p2p market place
Essentially this is a simple liquidity pool contract that keeps a record of wr-nfts for sale. If players want to sell their wr-nfts they can lock their nfts in the pool and make them available for purchase over the counter by the public. The price of wr-nft at this point will be solely depended on the total value of nfts locked against the total supply of wr-nft.
Third-party decentralized exchanges
Since WR-NFT is an erc20 token it can be exchanged on decentralised market making platforms like uniswap. While at initial deployment of the automated market maker liquidity pool can create price imbalance between third-party and the real price at the vault, these should over time balance out because of arbitrage.
