Recently, the word “fraud” has become synonymous with NFTs. It is not surprising that this market is flooded with scam projects, as more and more collectors have been affected by the infamous scam method, where the creators of any project wind up the project and hide with investors’ money. And investors can not only blame the attackers, but also themselves for lack of awareness and, as a result, blind trust.
In the NFT space, FBI (fear of missing out) takes on new meaning as more and more inexperienced buyers enter the market, followed by individuals who try to take advantage of their inexperience.
Back on April 10, the team behind the CryptoFighters Alliance announced that they had created a new token standard , ERC-721R. In just three days, they managed to raise a buzz around this announcement, supported by both praise and criticism. The point is that an ERC-721R guaranteed refund offer could be a new entry point for this market, offering more security for buyers and more legitimacy for creators.
The CryptoFighters Alliance was launched in 2018, before Web3 was a thing, the team boasts, but until 2021 it didn’t seem to do much for its project. Today, the team is back in the public eye to present their newest invention, the ERC-721R.
Many Twitter users are inclined to believe that despite its early launch, it is not enough to provide a new product and require trust. Critics lean toward the team’s lack of involvement in Web3 development, despite the team’s claims to the contrary, stating that their customers have consistently purchased their products during the team’s lull. And one user stated that the ERC-721R “has a lot of fundamental flaws.” He added that a thorough study of this standard was needed.
However, many are inclined to believe that this does not mean that the ERC-721R has no value. Many respected experts in the NFT world, such as Zeneca.eth , have praised the new initiative , which could be a new start not only for the CryptoFighters Alliance, but for the entire NFT industry.
The ERC-721R is the latest development based on the ERC-721 standard for NFTs and incorporates the cost-saving features of the predecessor ERC-721A as well as an additional security feature. According to the official website, the ERC-721R “adds a cashback feature to NFT smart contracts that allows you to cashback NFTs mined at cost within a specified cashback period.” Presumably this could prevent the ragpool that so many projects are so infamously famous for.
According to the developers, their initiative works as follows. ERC-721R is a template that contains a mechanism that blocks funds transferred to a smart contract for a fixed number of days, called a “refund period”. During this period, all primary buyers purchasing NFTs directly from their creators can get their money back, while the smart contract holder cannot withdraw any or most of the funds from the wallet. It still sounds like a dream to many, but Twitter users are asking to pay attention to significant shortcomings.
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For example, some people may “max mint” and initiate a refund “as soon as they can’t sell their remaining tokens above the set price.” On the other hand, smart contract holders can set the return price lower than the price of a mint, and this may result in buyers still not receiving their full investment.
However, at the time of writing, ERC-721R is in beta testing, and according to GitHub, this standard should receive more complex implementations, where the creator can issue a certain percentage of funds in a smart contract every month, or where 10% of funds are released immediately to the creator, and the rest are released later.
The second side of the camp argues, however, as far as sellers are concerned, the main benefit of using the ERC-721R will be increased confidence, which will allow them to build confidence in the market. Also, as the new standard ensures that creators take on more responsibility, we may see potential buyers lean more toward ERC-721R designs in the future. The cashback mechanism is also creating a new dynamic that is still active, as the collection’s floor price is unlikely to fall below the mint price. Until the return period ends or until a large number of original holders sell their NFTs, no author will decide to sell the token below the minting price if the return price is equal and guaranteed.
As a collector, you can now receive refunds within the stipulated time frame for purchased NFTs. Thus, for all buyers, the ERC-721R should be proof of security, offering the best protection against scammers. In fact, this is a lifeline for everyone who invests in this area, supporters of this initiative say.
So in its current state, the ERC-721R seems like a cool idea that could ruin a project, but it could be a fix or two away from becoming the industry standard.
