Fracton Protocol Academy - Blind Box and People’s BAYC

The previous article introduced some parts of the fractionalization fundraising of Fracton Protocol. This article will explain further the fundraising process by introducing two critical elements of Fracton - People’s BAYC and Blind Box.

For ease of expression, we will use BAYC as our target NFT to be fractionalized. The following rules will apply to other NFT collections, such as CryptoPunks, Sandbox, and Otherdeed.

What is People’s BAYC?

Each People’s BAYC represents a 1/1000 ownership of a BAYC in the BAYC Vault, i.e., a user can redeem a BAYC from the BAYC Vault in Fracton Protocol with 1000 People’s BAYC. You might wonder - the fundraising is conducted through selling the Blind Boxes; where does the People’s BAYC come from?

When the fundraising succeeds, i.e., 1000 Blind Boxes are minted, Fracton will use the ETH from the fundraising pool to randomly purchase a BAYC around floor price and deposit the BAYC into the BAYC Vault. The random selection of BAYC aims to prevent price conspiracy. When the newly acquired BAYC is deposited to the Vault, the smart contracts will grant permission for opening the Blind Box, and users will be able to instantly open their Blind Boxes on our website.

Blind Box - People's BAYC?

The full name of Blind Box is “Blind Box - People’s BAYC”. Blind Box, as well as People’s BAYC, is an ERC-1155 token. Blind Box exists to isolate the possible impact of the new fundraising on the valuation of the existing People’s BAYC and to ensure that each People’s BAYC is backed by its share of the actual BAYC NFT, with the share of ownership remaining constant.

Imagine raising funds directly through People’s BAYC - if a round of fundraising fails, there won’t be new BAYC added to the Vault, while a certain amount of People’s BAYC is minted and circulating in the market. As a result, the number of People’s BAYC versus the number of BAYC in Fracton’s Vault is no longer 1000:1. Therefore, the Blind Box mechanism resolves this problem by acting as a reservoir to absorb the additional funds before a BAYC is added to the Vault. As a result, this mechanism only allows the conversion to People’s BAYC when that value can be pegged to an actual BAYC in the Vault with a constant ratio, that is, 1000:1.

For the NFTs of the same collection, there will be different fundraising rounds, and each round runs independently. A failed round does not affect subsequent rounds, while People’s BAYC has no rounds and is considered undifferentiated fractions that users can use to redeem random BAYCs from the Vault.

To summarize, there are similarities between the Blind Box and People’s BAYC, with the major difference being that the Blind Box is pegged to the value of the target BAYCs that have yet been purchased. In contrast, People’s BAYC is pegged to the value of BAYCs acquired in Fracton’s BAYC Vault.

Step-by-Step Guide

  • Click Convert on the top of the page, then you can see your collections of Blind Box and People’s BAYC.
  • Click Sell in Market, switching to the cooperative marketplace to trade your Blind Boxes.
  • Once the BAYC is deposited into the treasury, the Open button will be active, and you are allowed to open your Blind Boxes in this round.
  • Click Open, and your wallet will ask you to confirm the action.
  • If the convert transaction succeeds, you’ll see the People's BAYC information in another pop-up.

By the way, both People’s BAYC and Blind Box can be exchanged for ERC-20 BAYC Fractions - hiBAYC through Fracton’s unique Meta-Swap function on our website. We will introduce more details on this in our next article.

Next Chapter - hiBAYC

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