Fake World Assets Guide: How the NFT Gacha Platform Works

Fake World Assets (FWA) is an Ethereum-based platform that creates a different approach to buying and selling NFTs. Rather than simply choosing which NFT to buy, users participate in pools to draw an NFT selected at random.

This guide explains what Fake World Assets is, how the pools and NFT gacha works, how randomness determines outcome, and any risks users should understand before participating.

What is Fake World Assets?

Fake World Assets (FWA) is an Ethereum-based protocol built by TokenWorks. It runs an on-chain gacha, essentially a verifiable and randomized NFT allocation system that allows users to pay a floating fee to receive a random NFT drawn from a shared pool. The pool contains some popular collections, including CryptoPunks and Lil Pudgys. NFTs are backed by ETH, which influences the probability of an NFT being drawn and funds a standing bid that the purchaser can accept to sell the NFT back.

Which NFTs are available?

The main pool and custom pools have separate inventories and admission rules. Additionally, due to the nature of depositing NFTs, the mix of those available constantly changes. The main pool has included popular NFT collections such as:

• CryptoPunks

• Lil Pudgys

• Azuki

• Doodles

• Bored Ape Yacht Club

You can check the pool’s rules and inventories before purchasing.

How does Fake World Assets work?

Fake World Assets works through a series of steps: an NFT is deposited, ETH backing is assigned, the purchaser pays the acquisition fee, an NFT position is randomly selected, and the purchaser chooses how to settle.

Here’s how it works in more detail:

Depositors supply eligible NFTs to the pool and pair them with an ETH backing. In V2, the listing price is capped at a collection’s floor price plus 10%. This backing is committed to the position and funds a pre-funded standing bid using a smart contract that can be accepted when the NFT is allocated. Depositors are paid a reward from the fees while their NFT is held in the pool.

Randomness is skewed to ETH backing: an NFT with a lower-backed position is more likely to be drawn than one with higher backing. This creates a trade-off for the depositors when backing their NFTs: higher backing reduces the likelihood of their NFT being selected but can allow the position to remain in the pool longer to earn fees, while lower backing increases selection probability.

Purchasers then pay a floating rate, based on the expected ETH backing of the selected position plus the pool’s configured surcharge, to receive a randomly selected NFT. 

FWA uses Chainlink VRF to supply verifiable randomness and select the allocated position. Acquisitions in the main pool are processed in the order requested, meaning each one needs to be fulfilled and processed before the next.

Once the NFT is allocated, purchasers can choose their settlement: they can keep the NFT or accept the standing bid for most of its ETH backing paid out in ETH (90% of backing) or $FWA (92.5%).

Custom pools

Fake World Assets lets creators operate Custom Pools outside of the Main Pool. These fall into two categories:

• Standard pools: Creators supply the NFTs and decide the prices. Purchasers receive an NFT.

• Buyback pools: Creators supply the NFTs and provide ETH backing for each listing. Purchasers can choose to keep the NFT or take a payout.

FWAIR launch

FWAIR is Fake World Assets’ creator launch mechanism. Artists launch their NFT collection through FWAIR, while supporters provide ETH backing for individual NFTs. Once fully funded, some NFTs may be awarded directly to supporters, while the remaining positions enter the pool. If purchasers choose to keep their NFT, supporters receive 99% of their backing; alternatively, purchasers can take the ETH, and the supporters will receive the NFT. Creators earn from the fees.

What is $FWA?

$FWA is the native ERC-20 token used across the Fake World Assets ecosystem (it does not represent an NFT). $FWA is used for rewards and is provided as an option for standing bids - when purchasers receive an NFT, they can accept the standing bid in $FWA rather than ETH. 

During the 15-day emission phase, FWA only allowed users to actually hold $FWA by actively using the protocol. Of the total supply, 30% was allocated to the original emissions, split equally between depositors and purchasers at 2% of the total supply per day. A large portion of early participants chose to settle their payouts in $FWA, meaning organic participants got the early emissions. From August 2026, external buying opened for $FWA.

Risks of using Fake World Assets

FWA creates a new way to distribute NFTs. However, randomized winnings and smart contracts can create several risks. These include:

• V1 exploit and smart contract vulnerabilities: When FWA V1 opened to purchases in July 2026, an attacker realized they could front-run Chainlink and steer the protocol’s state toward the most valuable NFT in the pool, CryptoPunk #5450, worth $66,000. The protocol, not the Chainlink randomness, was compromised.

• Long-term viability: FWA’s activity and revenue have fluctuated substantially since the original 15-day token emission phase. This creates uncertainty around how much of the protocol’s activity can be sustained without token incentives.

• Random NFTs and high volatility: Users pay to receive a randomly selected NFT. The purchase fee varies according to the pool’s pricing mechanism, while lower-backed positions have higher selection probabilities. As a result, users may pay more than the market value of the NFT they receive.

• Platform changes: FWA is brand new and continually evolving, having already launched a V2, with settings and fee changes, shortly after the V1 launch.

How are transactions on Fake World Assets taxed?

The IRS currently has no guidance on how transactions on Fake World Assets would be taxed. An important and unresolved question is whether they could be treated as a gambling transactions for US tax purposes.

As there is no clarification, the following information is speculative. It is best to consult a tax advisor if you are using Fake World Assets for help with your specific situation.

Treated as gambling

IRS tax rules generally treat gambling winnings as income and wagers as losses. To claim a gambling loss, you need to itemize your deductions, and claiming losses is capped at 90%. It’s best to calculate how much you would save from deductions to see if it is worth it. You will then pay income tax on any winnings you earn at the FMV price when you receive it.

If you decide to sell the NFT for 90%, you have a capital loss.

If you decide to keep the NFT, you trigger an immediate income tax event.

Treated as capital gains

When treating every transaction as a capital gains or loss event, the wager becomes the cost basis of the NFT you receive. If you sell the NFT, the difference between the sale price and the cost basis is your gain or loss.

As you can see, it can all get confusing pretty quickly. You should keep a record of every transaction you make, including acquisition amounts, value of any NFT you receive, sale prices, and transaction dates, to file your tax return. Again, there is currently no specific IRS guidance addressing the federal tax treatment of NFT-gacha transactions such as FWA, so it's best to consult a tax advisor about your specific situation.