Fused Hounds: Hostage Exchange [VOTE]

[Duke]

SUMMARY:

A stockpile of 1698 Fused Hounds are allocated to Serum Corp. Within those are two Megas, three Legendaries and a wide variety of rare assets.

An early order of governance has been to determine their fate. SIP001 - The Jailbreak Service - allows prospective buyers to bid for travelling bands of Fused Hounds.

In addition to that, we intend to create a Hostage Exchange - powered by $SERUM - that further unlocks the stockpile for the benefit of existing holders.

Outcomes from this SIP stand to raise direct funds for Serum Corp, promote the FH collection, install deflationary mechanics, and circulate some of the more sought-after IP.

This will run concurrently with SIP001.

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PROGRESS:

• SSC have unpacked and amended this SIP with the Ranks [17/11/25]

• SSC have reviewed and amended this SIP with Duke [24/11/25]

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OPPORTUNITY:

Mobilise the Fused Hounds in Serum Corp’s custody to benefit the community treasury and wider IP of the Mutant Cartel World:

• Stimulate the community treasury for community ventures

• Circulate the most sought-after IP from the locked assets in the collection

• Bring further attention to the FH collection

• 100% of the profits will be allocated to Serum Corp.

• A further use case for $SERUM

• Introduce a deflationary mechanic across the collections of the MCW

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FUNDING:

100% of profits go to the community treasury.

Costs would be advanced by Novel Labs and recouped from profits of the exchange to cover the outlined costs.

Implementing the custom exchange platform, along with its respective UI, marketing and maintenance, is estimated at $20,000. Cost overview will be unpacked publicly.

Spend allocation will be reported and costs will not be taken as profit.

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GTM:

The marketing of SIP002 will be anchored closely to the marketing of SIP001 and augment those efforts.

This is a service and will be narratively themed as a hostage negotiation. It will be present in the UI and supporting story driven material.

The exchange is intended to run as a constant service once it opens. Promotional content will spotlight the release of high profile prisoners (Epics & Legendaries) from detention.

SIP004 - due to be raised in December 2025 - will specifically incentivise content marketing efforts and supplement all SIPs.

Marketing efforts by Novel Labs will also assist in SIP002, and also coincide with a staggered release of further 3D Fused Hound customisation.

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TIMELINE:

Six working weeks for implementation and will remain open.

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BARTERING TRADE:

Introducing trade-up mechanics that are commonly employed in successful games.

Hounds, materials, Fused Hounds, and Serum can be combined in various bundles to level up your asset.

Action	Cost	Output
Trade up for FH	1 Hound ++ $SERUM	Random Common FH
Trade up for FH	2 Hounds + $SERUM	Random Common FH
Target specific FH	2 Hounds + Material	Targeted Common
Trade to Rare	2 FH + Material	Random Rare
Target Rare	2 FH + Material + $SERUM	Target Rare
Legendary Path	4-6 FH + $SERUM	Random Legendary
Mega Collector Path	2 Legendaries ++ $SERUM	Mega attempt

• Rarity levels are defined as Common (501 - 5000), Rare (15 - 500), and Epics which account for the Legendaries and Megas.

• Mutant Hounds and Fusing Materials will be burnt to create Fused Hounds.

• $SERUM token will be burnt

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DETAILS:

• A base fee is payable in $SERUM, $APE, stables, and Fiat to operate the exchange.

• Base fee will be further discounted and incentivised if paying in $SERUM.

• 100% of profits go directly to Serum Corp treasury to benefit the community.

• Rarity of the FHs will be classified as Epic, Rare, and Common

• Commons available can be swapped 1:1 for any of your FHs

• Exchanges can be made in $SERUM, $APE, Eth, Stables, and fiat.

• Epic and Rare costs will be variable to their rarity and determined by Novel Labs and the SSC

• Prices will be visible ahead of the Hostage Exchange being opened.

• Exchanging a Fused Hound for a Mega or Legendary will include a custom price, determined by the SSC and Novel based on the specific asset.

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SUCCESS METRICS:

Success for this SIP will be defined by the following indicators:

• Funds generated for Serum Corp

• Exchange volume

• Arbitrage between the exchange and the FH floor

• Tracking market activity for the FH collection

• Hounds burnt

[codeiaks]

solid proposal, love the direction.

a few points i’d like clarity on before it goes to voting:

• how will the exchange handle cases where multiple holders go for the same fh, will it be fcfs, or different mechanics for high demand pieces? if fcfs will anti-botting be in place?
• pricing: how will nl and ssc determine the variable rates for different category, will it be a transparent framework or table that holders can reference?

overall

[NFD]

@NFD

Hey, exchange will be a FCFS process. There is already a proposed auction mechanism so if people want to compete on specific assets prior to an exchange then the auction is likely the most appropriate method. Re pricing, yes there will be a transparent methodology.

For posterity, and for other readers, it’s worth me stating that the revenue derived from this initiative is for the benefit of the community treasury. That means there is no incentive for NL and/or SSC to directionally influence price setting; they are not beneficiaries.

Hey, exchange will be a FCFS process. There is already a proposed auction mechanism so if people want to compete on specific assets prior to an exchange then the auction is likely the most appropriate method. Re pricing, yes there will be a transparent methodology.

For posterity, and for other readers, it’s worth me stating that the revenue derived from this initiative is for the benefit of the community treasury. That means there is no incentive for NL and/or SSC to directionally influence price setting; they are not beneficiaries.

[mooods]

I support the proposal to create an exchange platform. Here are some ideas:

1. Combining Assets to Access Rare Pieces Allow holders to combine multiple assets (Fused Hounds or other Cartel collections) + tokens ($SERUM, $APE, ETH) to obtain higher rarity pieces (Epic, Legendary, Mega). Why?

• Portfolio diversification: Holders can use less rare or less liquid assets to access grails without resorting to WETH sales.

• Cross-collection valuation: Collections gain utility.

• Reduced selling pressure: Fewer assets sold to bots.

2. A Sustainable Community Platform Transform this platform into a durable community marketplace, where all Cartel asset holders can exchange and deposit assets, with incentive mechanisms to stimulate activity. Objectives:

• Provide liquidity to the DAO while enhancing the value of collections.

• Create a circular economy where every asset has utility.

3. Mechanisms to Stimulate Exchanges and Engagement To make the platform attractive and sustainable, here are some concrete ideas:

a) Quests and Rewards (Inspired by OpenSea) Mechanism: Holders can complete quests (e.g., “Exchange 3 assets in 1 week,” “Deposit 1 rare asset”) to unlock exclusive drops (NFTs, tokens, event access). Advantage:

• Stimulates activity on the platform.

• Creates scarcity for rewards, increasing their value.

b) Advantages for Oath Holders Mechanism: Oath pass holders enjoy exclusive privileges:

• VIP priority access to assets sold by the DAO.

• VIP fee reductions.

• A limit of 1 exchange proposal per Oath held.

c) Limits to Balance the Market To prevent abuse and ensure a healthy market:

• Limited number of exchanges to avoid overload risks.

• “Lock” delay: 24 hours between depositing an asset and using it in an exchange.

• Progressive fees:

  • 2% for “Common”

  • 5% for “Rare”

  • 10% for “Epic” (payable in $SERUM for discounts).

[0xfatman]

Solid proposal. As the FHs that are part of the exchange program gets a rarity attributed to them, will our own FHs get the same? If I hold a grail FH, but want to exchange it for another of Epic rarity, or a Mega/Legendary, will my FH be able to count as one of Epic rarity?

[knowix]

My Position: Opposed current structure risks harming long-term value

I appreciate the intent behind the SIP02 unlocking treasury assets and creating utility for $SERUM and FHs is a direction I fully support. However, I am strongly against this proposal in its current form for several key reasons that I believe materially impact the ecosystem.

1. Current market conditions make pricing destructive

The FH floor is currently ~$188. That creates an impossible situation:

• Pricing the rare assets low signals that this is what we believe the collection is worth → permanently damages perceived value and kills future growth.

• Pricing them high becomes unrealistic relative to the market → no participation, no value created.

In short: we’d be setting a market price for premium assets at the weakest point in the collection’s history. That can cement the weakness, not reverse it.

We should not create a mechanism that forces us to publicly devalue the IP we are trying to grow.

2. The focus should be expansion, not redistribution

This proposal mostly benefits current holders by letting them acquire rares cheaply.
That doesn’t drive ecosystem growth it recycles value internally.

The collection and the ecosystem succeed only if:

New buyers enter
Volume increases
Floor price recovers
Excitement + velocity return

Everything Novel Labs built is interconnected if FH floors and volume push up, it lifts the entire ecosystem.

Right now the priority isn’t “reward existing holders with rare assets,” it’s re-igniting momentum.

3. The budget and the mindset behind it is part of the problem

I need to be direct here:
A $20K “development & marketing” budget isn’t just insufficient it signals we’re still stuck in the same failed approach that’s held us back for years.

• Web3 is loud.
• It’s attention-driven.
• Distribution and hype are the entire game.

And meanwhile, our strategy has consistently looked like:
“We’ll build it quietly and hope people discover it.”

That approach already failed repeatedly.

Trying to launch meaningful ecosystem mechanics with basically zero real marketing is not lean, not clever, not scrappy it’s choosing to whisper in the same echo chamber we’ve been whispering in for two years.

We cannot keep pretending this works. We tried that strategy already. It didn’t move floor price, didn’t bring new holders, didn’t create meaningful outside excitement.

If anything, it contributed to stagnation and slow value bleed.

If there’s no real budget and no real push, then don’t run the activation at all. Halfbaked launches are worse than doing nothing they reinforce the narrative that nobody cares.

And yes most DAOs receive liquid resources from the parent company to launch.
We’re trying to bootstrap an ecosystem off illiquid NFTs and “good vibes.” That’s not a plan that’s a handicap we keep pretending is normal.

If this ecosystem wants to win, we need to start acting like it.
Voice matters. Reach matters. Perception matters.

Marketing isn’t optional it’s oxygen.

Until we accept that and resource accordingly, we’ll keep seeing the same outcome:

• Excitement spike inside our own community that not care too much (other than a few hundred)

• No outside attention

• Sell pressure

• Floor drifts lower

And we’ll be right back here asking why.

It’s time to step out of this cycle and stop treating marketing like a luxury.
It’s mandatory if we expect growth, new participants, and price recovery.

4. There is a working model to borrow from

The Collar burn showed what works:

• Gamified mechanics

• Excitement + speculation + participation

• Net supply reduction

• Volume spike

• Narrative boost

We should iterate on what already proved successful not pivot to a system that primarily benefits holders waiting to upgrade cheaply.

5. Suggested alternative: Trade-Up Economy (inspired by CS2 + existing fusion mechanics)

CS2’s trade-up ecosystem is a multi billion dollar game economy not by accident.
Trade-ups work because they are:

• Fun + emotional + gamble-driven

• Deflationary

• Floor-supportive

• Volume-catalytic

We already have a fusion mechanic we just need to extend and evolve it:

Example concept (numbers = illustrative):

Action	Cost	Output
Trade up for FH	2 Hounds + $SERUM	Random Common FH
Target specific FH	2 Hounds + Material	Targeted Common
Trade to Epic	2 FH + Material	Random Epic
Target Epic	2 FH + Rare Material	Target Epic
Legendary path	4-6 FH + $SERUM	Random Legendary
Mega collector path	2 Legendaries + large $SERUM stake	Mega attempt

Key properties:

Floor NFTs go to treasury (Soft Burn) → pushes price up
Consumes $SERUM → strengthens token
Supplies go to DAO treasury → assets for future activations
Fun, viral, iterative
Aligns with proven multi-billion-dollar economy design

Most importantly:
It drives demand before distributing rarity.
That’s how you grow a collection not by letting people cheaply upgrade in a down market.

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TLDR:

I oppose SIP-02 in current form, because:

• Pricing rare assets now = forced undervaluation

• Proposal rewards holders instead of growing ecosystem

• $20K spend signals low conviction & guarantees low / no impact

• A trade-up model is more aligned with success mechanics in my opinion: volume, burn, excitement, narrative

Let’s prioritize:

• Raising floor
• Stimulating new participation
• Gamified burn mechanics
• Proven economy design
• Real marketing budget
• DAO treasury growth for future activations

We win when the ecosystem grows not when we distribute rares cheaply during a floor slump.

I say we go bigger, smarter, and with the right mechanics & budget instead of rushing a system that risks signaling weakness.

[Duke]

This proposal has now been updated following several rounds of feedback and suggestions from the SSC and Ranked members.

It’s position strengthens the offering of the recently passed Jailbreak SIP001.