Fractionalisation & Rerolls

Bricks can be exchanged for a TAOX NFT or crushed into fungible Clay Coins in the workshop. This means that a TAOX NFT can be fractionalised into either 5 Brick NFTs or 500 CLAY.

Basics of TAOX Fractionalisation

TAOX NFTs and Brick NFTs are not dynamically minted or burnt. Instead, the TAOX smart contract component stores all available TAOX NFTs and Brick NFTs. When you fractionalise a TAOX NFT, it gets deposited into the smart contract and 5 Brick NFTs are withdrawn. Similarly, you can deposit 5 Brick NFTs and a TAOX NFT will be withdrawn from the smart contract component.

However, CLAY fungible tokens can be newly minted and burnt. When a user fractionalises a Brick NFT, they mint 100 CLAY tokens. When a user wants to convert CLAY into a Brick NFT, 100 CLAY tokens are burnt.

Rerolls

As there is a pool of NFTs stored in the smart contract that users can switch between, it means that its possible to swap a TAOX NFT for 5 Bricks and then swap those back for a different TAOX NFT stored in the smart contract. The reroll process is 'pseudo-random', this means that it is possible to pre-determine which TAOX NFT you will get when you deposit 5 Brick NFTs. However, the pseudo-random process is designed to offer only a narrow window of opportunity and aims to incentivise trading and burning of TAOX assets. The philosphy is that any attempt to 'game' the system indirectly rewards other users and the complexity of 'gaming' the system may still be described as relying on an element of luck.

Each Brick NFT has a unique integer associated with it, e.g. #1, #2, #3, etc. When depositing 5 Brick NFTs these numbers contribute to the randomisation process to decide which TAOX NFT is withdrawn from the contract. The smart contract adds the integers together, hashes integers and takes input from the current time, all to generate a roll number. The roll number is then used to select which TAOX NFT to withdraw.

This means that in order to pre-determine to your advantage which TAOX NFT you might receive, you need to not only monitor available TAOX NFTs stored in the smart contract and calculate the exact time at which to make your transaction, but also you must also potentially barter and trade Brick NFTs with other users in order to obtain the required integers.

To avoid users seeing what TAOX NFT they will receive in the transaction manifest on their Radix Wallet, the TAOX NFT is instead automatically airdropped to the account when the bricks are deposited. Sophisticated users may use relevant network APIs to see beforehand which TAOX NFT will be deposited to their account - however, it is not guaranteed to work as other users are also rerolling and interacting with the smart contract, which could cause their pending transactions to fail.

Burning impacts

There is a small fee of 10 XRD charged when depositing 5 Brick NFTs to receive a TAOX and a fee of 5 XRD when fractionalising a Brick NFT into CLAY. These fees are directly used to buy CLAY tokens from the market and are regularly burnt on a unspecified schedule (to avoid front-running). CLAY is also burnt as part of the degradation dynamics.

By burning CLAY tokens, the maximum potential circulating supplies of all assets are reduced. This means the smart contract will begin to permanently pool TAOX NFTs and Brick NFTs that can only be accessed by swapping in other assets. However, it will no longer be possible for all TAOX NFTs and Brick NFTs to be circulating. The maximum potential supply of CLAY will reduce permanently.

See the following conversions and fees below.