A new ERC721 standard moving the market from rugs to refunds.
0x01 About The Project
ERC721R allows minters to return the minted NFT for a refund.The goal of ERC721R is to add refund functionality to the ERC721 and ERC1155 standards. This repo contains community-provided examples you can use in your own NFT smart contract.
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2/ As the NFT space continues to develop and the market enlarges, more and more fraudsters have taken to exploit the space with rugs. But rug pulls are actually a very recent innovation in scamming!
rugs made up 37% of all crypto scams last year, versus just 1% in 2020! Rug pulls took $2.8B(!!) in crypto from victims last year. And there’s a lot of reasons to believe that these numbers are only continuing to go up this year.
see below chart
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If we want NFTs to go mainstream, we must figure out a way to stop rugs. The way we do this is through creating accountability. Yes, stay an anon builder if you’d like to. Doxxed teams rug too. But, for God’s sake, anon, show some accountability to your minters.
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NFTs need a refund period, just like any other product. A time for buyers to decide if the team they just gave their ETH to actually deserves it. This is a check on the massive amounts of upside collections get when launching their mint. A way to hold teams accountable.
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ERC721R is this accountability. It’s an upgraded ERC721 contract that allows for refunds directly from the mint contract. Now, with only a few clicks, collectors can refund minted NFTs from any collection that decides to integrate, no questions asked.
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How does it work? ERC721R allows collections to decide how large of a refund they would like to give, and for how long the refund period is open.
For example, at CryptoFighters, we’ve decided to use ERC721R to issue 100% refunds to minters within the first 45 days.
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ERC721R is completely trustless. No need to formally request a refund, send an email, or wait a few days for the ETH to clear. It’s just like staking and unstaking — return the NFT to the original minting contract within the refund period, and that’s it! Your ETH is back.
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That means that you, the minter, get your ETH back while the collection gets their NFT back! Collections can then decide how to use this newly refunded NFT. They can reissue it, use it for partnerships and giveaways, or just burn it.
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For collectors, the benefits of ERC721R are pretty straightforward: minimized rug pull risk during the refund period. It also sets a more stable floor price for the collection.
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For collections, the benefit is primarily signaling to collectors that you are unlikely to rug them, helping you build a more committed community and sell out faster. Also a refund helps support a floor price during the initial refund period.
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Refunds aren’t a completely new idea to NFTs.
implemented refunds to launch their access passes, with only 5% refunding (all were immediately relisted and resold).
is also a pioneer and added refunds to their launch with only 10% refunding. who we’ll be working closely with to further develop ERC721R, is using the standard for their upcoming mint. They’re working on revolutionizing ad space via NFTs. Check them out.
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We see ERC721R not being one specific contract, but rather a collection of contracts. We are using http://ERC721R.org to track all anti-rug contracts, only including in our repos versions we feel fairly embody the spirit of ERC721R.
Motivation
The NFT space needs greater accountability. The space faces too many rugpulls and for the health of the NFT ecosystem as a whole we need better mechanisms to prevent these from happening.
Offering refunds provides greater protection for buyers and more legitimacy for creators.
The Azuki ERC721A provided gas improvements to the original ERC721 standard. ERC721R provides trustless refunds.
How it works in practice
When you mint an NFT in an ERC721R collection the funds are held by the smart contract in escrow. The creators are unable to withdraw the funds till the waiting period has been completed. During this waiting period the buyer is able to return their NFT to the smart contract and receive their ETH back.
If the creators decide to rug, buyers will request their funds back before the waiting period has completed only losing gas costs for the transactions.
Benefits
For buyers:
- Low risk purchase (worst case scenario you get your money back minus gas costs)
- Protects against rug pulls
- Forces greater accountability from creators to deliver
For sellers:
- Builds trust with buyers
A benefit to both:
- The project floor price is unlikely to drop below the mint price while refunds are open.
- Short term flippers leave the project early leaving a high quality core intact.
ref:https://twitter.com/CryptoFighters/status/1513183463851003904
