A Beginner's Guide to PunkStrategy and $PNKSTR
One thing I love about Ethereum? You constantly get spoiled with new experiments around the ecosystem.
The latest to catch my eye is the automated PunkStrategy protocol, which mashes together CryptoPunks NFTs and a deflationary fungible token loop.
From TokenWorks (a "playground for onchain financialized ideas" via developer Adam, i.e. Rhynotic on X and Farcaster), PunkStrategy is centered around the $PNKSTR token. Let's break down the basics here.
How PunkStrategy works
Every trade of $PNKSTR on punkstrategy.fun/app or elsewhere skims off a fee that builds up inside the protocol until there's enough ETH to buy a floor 'Punk from the CryptoPunks marketplace.
Once bought, the protocol relists the 'Punk for a markup, and when it eventually sells, all of the ETH goes back into the system to buy and burn $PNKSTR.
The effect is meant to be perpetual, hence the project's Perpetual Punk Machine nickname. If trading in $PNKSTR continues, the protocol keeps scooping 'Punks, relisting them, and burning its token supply.
This approach lets anyone speculate on CryptoPunks without needing +45 ETH for entry, while also dangling the possibility of grinding the 'Punks floor up through repeated buying pressure.
As for the $PNKSTR swap fee, it's 10% on every trade to facilitate PunkStrategy's purchasing power. The protocol also notably spikes its sell tax as high as 90% and then steadily decreases it in the blocks after it makes any 'Punk sales in order to keep MEV bots away.
The initial launch action
TokenWorks released PunkStrategy on Sept. 6th, opening the way for traders to start filling the project's treasury.
Fortunately, an early bug was spotted by community members that could have led to drained ETH, and a patch was developed quickly through a wrapper smart contract, thus avoiding the headaches of a token migration.
Since that initial hiccup, everything's been on track. Yesterday, PunkStrategy made its first acquisition, 'Punk 1628, which was bought for just under 49 ETH and instantly relisted at a 20% premium.
Recall that when that 'Punk sells, all proceeds will be routed back into buying and burning $PNKSTR. Then the flywheel is designed to spin again, 'round and 'round.
In fact, at the time of writing, PunkStrategy had already raised 14.26 ETH toward its second purchase, or ~30% progress considering the current 'Punks floor.
For now, the protocol is aimed at buying 'Punk 4420 next, though the target 'Punk changes depending on the cheapest secondary listing at any given time. So we'll have to wait and see what the next purchase lands on once 100% funding is reached again.
How to join in
Per GeckoTerminal, the $PNKSTR token has a market cap of ~$1.5M at the moment, so the project is still quite small relatively speaking.
In these early days, it's best to approach PunkStrategy like an onchain experiment that hasn't been formally audited. Only spend ETH here that you can afford to lose, and then you won't be seriously affected or disappointed no matter what happens.
That said, partaking is dead simple if you decide to dabble. Head to the app, connect your Ethereum wallet, and then scroll to and click on the "Buy $PNKSTR" button. This will bring up the swap UI like so:
Presently, 1 $PNKSTR token is worth around $0.001, so 0.01 ETH (or ~$40 atm) will currently fetch you nearly 28,000 $PNKSTR.
If you do play, it's a long-term play. The grand idea is to hold $PNKSTR while the protocol's underlying deflationary loop does its buy-and-burns over time, leading to upward price pressure if everything goes as planned.
Whenever you decide to sell, though, it’s worth checking the current 'Punks floor price against the listing prices of any 'Punks that PunkStrategy has relisted.
You want to avoid catching the moment right after the protocol makes a 'Punk sale, when the sell tax spikes to 90% before gradually decaying. This means you’ll want to swap out when relisted 'Punks aren't sitting right on top of the floor price—otherwise you could get clipped by the tax if a sale goes through!