Behind the Scenes: Ethlizards’ Strategic Decision to Redeploy Their Main Collections for Long-Term Creator Royalties

With the changes by @Blur_io & @OpenSea to creator royalties, many projects face the problem of effectively zero royalties (0.5%) on their collection. This plus declining floor prices presents an existential crisis for many small and mid-sized NFT projects. While major collections were able to relinquish this revenue stream, Ethlizards uses royalties to fund early-stage projects in Web3 gaming. Failing to support both the existing community and the builders pushing the sector forward was not an option for Ethlizards. Here’s how the Ethlizards approached this challenge and how other builders might adapt the process to their needs!

Ethlizards developed a comprehensive plan that successfully redeployed both the Genesis and V2 collections on April 1, 2023. To address creator royalties being upheld, Ethlizards would launch a replacement collection of NFTs that uses the operator filter, which automatically blocks any marketplace that does not upload the royalties as instructed by EIP-2981. To ensure that the new NFTs were in the hands of the right holders, the redeployment process had to be solidly designed and executed. Four core focus areas made this work:

1. Research
2. Planning
3. Communication
4. Technical Execution & Security

Research

Ethlizards identified 4 viable approaches during the research stage:

Option A: Opt-In Royalties via Wrapper Contract — Publicized by Gabriel Leydon’s Limit Break here https://medium.com/limit-break/introducing-opt-in-programmable-royalties-and-more-through-staking-by-limit-break-3a166e3749e3

• This is a simple and fairly elegant solution for those who don’t want to impact the original collection by deploying a ‘wrapper’ contract that allows users to stake inside and receive a new NFT with enforced royalties.
• Advantages are that the original collections remain fully intact. Deployment is very straightforward and costs no gas fees for the project.
• Disadvantages are that having two collections may confuse the current community and definitely confuses potential entrants. Current marketplace approaches mean that the original collections can’t be delisted. This also requires staking action on behalf of the owner.

Option B: Opt-In Royalties via Burn Mechanic — Publicized by ZenAcademy and SpaceApes among others

• This is a similar solution to the Opt-In Wrapper option except that instead of wrapping the original collection it’s a burn mechanic. This gradually reduces the number of original NFTs over time.
• The advantages and disadvantages are similar to Option A. Additionally, this mechanic is more familiar to those in the industry as it’s been used a lot more. The concept of a 1-for-1 swap is probably more appealing to some and avoids issues with the second collection being outstanding.

Option C: Integration of Redeployment with Staking Launch

• Ethlizards was launching a staking solution for revenue sharing among active community participants in a similar time frame as the redeployment. By combining the redeployment with the staking launch, a single transaction to stake and either burn or lock the original NFT was possible.
• The advantages are that many community lizards would be included in staking (roughly 50% at the time of publication) so adoption would be high. No additional gas fees for the project and a reduction in gas costs for stakers.
• The disadvantages are that it forces users to stake (including a lock-up period) to receive the new NFT. Users staking are, by definition, less likely to sell anyways which means most NFTs being traded still don’t have enforced royalties. Additionally, this process would take a prolonged time period waiting for staking and withdrawals.

Option D: Airdrop Redeployment

• Mint and then airdrop a new collection to current holders with the same meta-data as the existing collection.
• Advantages to this method include allowing collaboration with marketplaces for the original collections to be delisted (or bids halted depending on the marketplace) after the airdrop is completed resulting in less confusion for community members and new users. The community has to do nothing for this to work so it’s smooth for both active and inactive members.
• Disadvantages are that the project incurs the airdrop gas fees. Much more communication is necessary during the redeployment period. There is also a high risk of transactions going on during the redeployment process resulting in risk to buyers and/or sellers — this requires an extra technical step to resolve (temporary owner transfer functionality)
• Prior to redeployment, Ethlizards identified only one other project that had recently redeployed successfully on Ethereum L1 (KPRVerse).

While the lack of projects that had attempted this strategy was concerning (lack of Lindy effect) — Ethlizards identified Option D as the best long-term selection for the project. Most of the disadvantages were short-term in nature and were able to be mitigated through effective…

Planning

For projects using an airdrop redeployment strategy, the core goal is to avoid any transactions that result in a mismatch of intentions and satisfaction between buyer or seller. This can occur from any of the following:

• Two collections being tradeable at the same time on any marketplace resulting in duplicate transactions intended for the same NFT, of which only the new collection is now valid.
• NFT owners accepting individual or collection offers on the original NFT after the new one was airdropped.
• Third-party solutions such as lending or loan protocols resulting in new or original NFTs not finding their way back into the right owners’ hands and/or a disinclination for repayment of loans due to a ‘worthless’ original NFT.
• Other unforeseen security risks or unintended outcomes.

Ethlizards needed to ensure that anyone attempting to purchase an Ethlizards NFT received the right NFT at the intended price. The process was designed as follows:

Phase 1: Pre-Airdrop

• Finalization of launch plan.
• Advance notice to community members and the public of the redeployment.
• Audit of new contracts and Testnet testing of process.
• Deploy the new contract on Mainnet, but not mint the replacement NFTs.
• Change the metadata of original collection contracts to redirect to the new contract, update the NFT images to include a warning graphic and text indicating the original collection is being migrated.
• Contact marketplaces to begin disabling offers or delisting the original collection.
• Allow several days for original collection offers to fall off, Ethlizards waited just over 72 hours.

Phase 2: Mint & Airdrop

• Mint identical NFTs with only the relevant smart contract updates to the redeployed collection.
• Airdrop new Ethlizards NFTs to users with the same art as the original collection and then point metadata to the original ipfs hash so the new collection uses the same metadata.
• Transfers of the NFT are disabled by default when the contract is initially deployed. This ensures the new Ethlizards NFTs could not be traded or sold until the full migration process has been completed.

Phase 3: Marketplace Coordination and Trading Restart

• Collaborate with relevant marketplaces to delist the original collections and migrate overall collection data.
• Gather details and research any transfers that may need to be manually performed by the project due to sales during the migration.
• Turn on transfers on the new collection.
• Manually process sales (quickly) that occurred via bids during the redeployment timeframe using owner transfer functionality temporarily built into the contract.
• Notify community that trading the new collection is clear.

Phase 4: Closedown

• Manually move any NFTs stuck in loan, shorting, or lending platform protocols after transaction finalization while keeping in mind that ownership of NFTs in a lending platform must wait for terms to complete to identify the correct owner.
• Deactivate the owner transfer functionality by setting it to a null address.
• It is important to allow enough time for these issues to be reported and fixed before executing this step; recommended 45–60 day minimum. A deadline is critically important as this should NOT be permanently enabled and reported to community when set to null — thus removing the project’s ability to further manually transfer any NFTs.
• Enjoy enforced royalties on the new collection!

Having a plan is great but also requires others being kept in the loop through effective…

Communication

Transparency in communication was essential. The Ethlizards community is made up of a highly sophisticated group of Web3 builders, investors, traders, and gamers. As such, discussions of potential loopholes or user actions were vetted out extensively beforehand. The following communication protocol was enacted:

January and February — Internal community announcements and discussions of planned redeployment; Alignment with marketplaces on redeployment plans

March 2 — Redeployment reminder and general timeline shared

March 22 — Announcement of details and community steps for redeployment process

March 27 — Announcement of start of redeployment including timing details

March 29 — Airdrop process started with artwork and meta-data updates

March 30 — Airdrop process completed and audited; Marketplace communication for disabling bids

April 1 — Redeployment process complete and trading re-enabled

March 28 — April 3 — Daily status updates & highly active community support/engagement with troubleshooting and questions

April 1 — 30 — Redeployment issue threads active and reviewed for user questions; External engagement with loan, lending, and shorting platforms

Regardless of the quality of planning and communication, even the best projects can’t work without strong…

Technical Execution and Security

Ethlizards used a standard ERC-721 smart contract with a range of functions to execute the airdrop. The standard airdrop function was fairly simple taking an array of owners and a corresponding array of tokenIDs, and then minted the owner their respective ID. This script ran with 250 inputs and was finished in under 10 minutes.

Additional functionality included the locked transfers and the owner transfer function. An additional hook in the _beforeTokenTransfer function disabled transfers during the time before the old collections were delisted. The mint transaction was excluded from this to ensure minting to users via the airdrop was still enabled. Furthermore, a temporary owner transfer function was included, which was able to transfer any token from any address to another address. This function was separated from the classic onlyOwner modifier and is able to have the keys to the function burned, ensuring complete immutability of all NFTs (by setting owner transfer function to null address). As for keeping royalties intact, the guide laid out by Opensea on incorporating their operator filter was sufficient with no custom details.

For Ethlizards, audits were performed on both the smart contract and the redeployment process by Krum. Being cavalier with code changes in a process as risky as touching every single NFT of a collection should NEVER be done without a keen eye to security. This caused a nearly two-week delay to the Ethlizards redeployment process and a few minor complaints within the community. However, security is more important than speed in an area this risky and projects would do well to take a big-picture view on the impacts from a missed security oversight.

Additionally, through Ethlizards effective planning and communication process, the team was able to rescue all Ethlizard NFTs caught in the NFTfi escrow protocol. This was accomplished by utilization of the ‘owner transfer’ function, which was enabled for such eventualities for a planned 60 days after the launch of the redeployed collections.

Bonus

Ethlizards did not want the original collection NFTs to be wasted in holder wallets with no utility. Therefore, the art was updated and an unannounced future utility has been planned for them that will be beneficial within the project ecosystem as it expands through gamification and partnerships.

Wrap-up

In conclusion, the redeployment process is not one that should be undertaken lightly. However, development of a comprehensive plan, solid communication, a core focus on community, strong execution, and a long-term mindset are enough to see it through.

Ethlizards remains committed to the betterment of the Web3 industry and especially the gaming sector. Any projects wishing to get more information on this redeployment process or vision are encouraged to reach out directly for support and information sharing. #LizBop

About

The Ethlizards project is positioned at the nexus of innovative projects within the Web3 gaming landscape. Ethlizards brings together an exceptional mix of avid gamers, visionary builders, and savvy investors, establishing itself as a highly esteemed partner in the GameFi ecosystem. Our unique position spans various verticals, encompassing Web3 game studios, infrastructure partners, venture capitalists, and gaming organizations. We seamlessly blend the best aspects of VCs and Web3 gaming guilds/DAOs while co-developing solutions with our partners.

Ethlizards is fostering a community that features successful investors, project founders, and a multitude of individuals actively committed to creating and contributing value. Our distinguished partners and advisors, including founders of major Web3 projects, remain actively involved at all protocol levels. At Ethlizards, we firmly believe that an exclusive focus on value extraction in Web3 is counterproductive. Through our early-stage GameFi portfolio activities, we ensure the long-term success of the DAO, while our short-term strategies prioritize gamification, product development, and extensive partnership growth. This holistic approach positions us to thrive amidst the industry’s rapid expansion in the coming years.

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