Thread by @TeahouseHost

1/ An NFT hype recently swept through Asia, culminating in quite a few world-class projects (e.g. Phanta Bear).

However, still other projects are getting rekt by hacks or avoidable mistakes.

This thread discusses NFT launch issues and proposes our solution.

Thread: 👇

2/ @hasufl from @paradigm had already explored the subject of “designing effective NFT launches”.

Here, Teahouse further analyzes the top 3 launch challenges: obtaining whitelists, assigning attributes, and avoiding ETH soft rugs.

3/ Challenge 1⃣: Obtaining whitelists
Whitelists can be used to counter bots/scalpers when demand >> supply… but how?

Currently, slots are commonly obtained by:
1.Holding a certain amount of tokens at snapshot – what # is fair? what if a token hasn’t yet launched?

4/ Challenge 1⃣ (cont.)
2.Completing certain on-chain tasks – not suitable for art or early projects
3.Providing off-chain verifications – centralized and time-consuming/costly
4.Lottery followed by first-come-first-serve – lottery difficult to implement in a fair manner

5/ Challenge 1⃣ (cont.)
Teahouse tips:
1.Use a Merkle tree to verify whether a wallet address is in the whitelist – this greatly reduces the cost of deploying the smart contract while only slightly increasing the cost of minting.

6/ Challenge 1⃣ (cont.)
2.Lotteries are “fair” when neither the project owner nor the NFT buyers can influence results in their favor. Teahouse proposes one way to do this:

7/ Challenge 1⃣ (cont.)
a.generate a secret 256-bit random number, r, and the hash, s, of a future block
(or use #Chainlink VRF)
b.publish r & s
c.calculate x = keccak256(r + s + wallet address) for each wallet address
d.sort x and take the n smallest as winners

8/ Challenge 2⃣: Assigning attributes
Attributes must be fairly assigned to “mystery boxes”. Without a good randomization process, buyers can cheat the system and selectively mint NFTs with more desirable attributes, or the project owners can keep the best for themselves.

9/ Challenge 2⃣ (cont.)
For a 10K-PFP type project, a commit-reveal process should be used where the NFTs are pre-minted/allocated. Then, use the same randomization process as for the whitelist lottery to assign attributes prior to reveals, substituting tokenid for wallet address

10/ Challenge 2⃣ (cont.)
For GameFi in-game-items, as the number of NFTs is not set, these usually must be minted on-the-fly to avoid ending up with junk after the top-tier items have been minted. Teahouse recommends using #Chainlink VRF to generate random seeds for each minting.

11/ Challenge 3⃣: Avoiding ETH soft rugs
Some projects “soft rugs” by selling all their ETH from their NFT sale immediately. This is extremely harmful to the entire ecosystem – not only does it cause FUD and give NFT projects a bad name, it also devalues ETH.

12/ Challenge 3⃣ (cont.)
So how do we know if a project can be trusted?
Teahouse believes that NFT project owners should commit by:
1.Setting up a time-locked smart contract that disperses 10-20% of funds per month.

13/ Challenge 3⃣ (cont.)
2.Establishing a smart contract for voting and a roadmap with well-defined milestones. Each time a milestone is met, it can be verified by the community. If voting passes, funds will be released. (Alternatively, vote on not releasing the funds.)

14/ Challenge 3⃣ (cont.)
Furthermore, time-locked ETH can be deposited into projects such as AAVE to get interest-bearing aETH. Of course, Teahouse will provide a similar interest-bearing service. This effectively HODL ETH so that its value will be #UpOnly so #WAGMI!

15/ Zombie @get_turned x Teahouse NFT Fair Launch
Teahouse is promoting NFT fair launches and helping teams without technical background to launch their own NFTs via our secure vaults. Zombie Club, our first partner, is preparing for an awesome debut. Stay tuned!