1. The Collapse of NFTs
The final cry of NFTs ended with the issuance of Pudgy Penguins. Doodles' recent token issuance on Solana only caused some ripples, and Yuga Labs' subtraction continues, this time even affecting the most iconic IP, CryptoPunks.
The BitCoin NFTs in the last wave of NFT revival have nearly gone to zero. Those once-crazy narratives have indeed faded into oblivion, no longer attracting attention.
The vision of 10K PFP was once beautiful: a well-sized community helping a bottom-up IP project reach the world, which is completely different from the traditional IP projects that invested heavily in content support.
For example, Disney's Marvel Universe, Star Wars, and various animated characters often require years of accumulation and countless funds to engrain these IPs in people's hearts, ultimately turning them into a gold mine.
NFTs are completely different; they have a very low entry threshold. The speed of creating an IP and assetizing IP is remarkably fast. Creators only need to pay some gas fees to list their artworks for sale on Opensea. There are no galleries, no toy companies, no movie companies, and no need for any professional teams. An IP and a new artist are born.
Three or four years ago, we also witnessed some bottom-up IPs gaining popularity in the top entertainment circle of Europe, America, Japan, and South Korea. A grassroots artist could achieve a counterattack through NFTs. For me, as a Z generation who grew up watching Japanese anime, being able to participate in IP investment and incubation through Crypto, which was previously inaccessible to ordinary people, is also a very dreamy thing.
However, after the 'crazy nesting dolls' of BAYC and the disastrous launch of Azuki's sub-series Elemental, the ambiguous status of NFTs became clearer. They no longer resemble a form of equity or investment; instead, they seem more like an expensive luxury item with membership benefits. Meanwhile, project parties expect us to continuously buy sub-series to support their subsequent investments in building the core value of the IP roadmap.
The seeds of contradiction were sown here. The project parties know that creating content is expensive, but without content, IP will die. The sub-series released every few months continuously drains the OG series holders, tormenting every community member. Waiting for content feedback may take many years, or perhaps this feedback will never come. The cracks begin to widen, and those beautiful fantasies start to shatter with the decline of the floor price, leaving only various disputes.
2. The Ace MCN of the IP industry - PoP MART
If we view NFTs as luxury trendy toys for the Z generation, the reasons for their success and failure become clearer. In this fast-food era, having no content is not necessarily a bad thing, as merely relying on appearance can quickly attract buyers. For instance, the artistic style of Azuki quite aligns with Asian aesthetics, and under this consensus, this grassroots-produced NFT series could follow BAYC to become the third-largest blue chip.
In the real world, renowned trendy toys like Bearbrick, B.Duck, and Molly also have no content support, yet they became immensely popular due to their unique designs.
However, trends are always fleeting. Without content as a core value, these IPs may become outdated at any time. Limited by the culture of the cryptocurrency circle and the extremely low success rate of NFTs, project parties often revolve around an IP, creating derivatives. However, the reality is that the core hasn't even formed a prototype, and this trend passes by.
Of course, some PFP projects also exist that have sufficient content support, like Japanese NFTs. In the past, I've seen at least four or five projects holding well-known Japanese anime IPs hoping to shine in the NFT market. However, they seem to have not considered that the fan base of the IP is almost entirely incompatible with this circle. The second point is that there are already too many derivatives of Japanese anime, making it difficult for fans to choose. Why would they spend hundreds of times the price to buy a small image?
Of course, the most important point is the third one. This small image can only be an image, and the future empowering imaginative space is zero. Even if you buy a high-priced NFT, you can only gain access to the metaverse 'SIDE-G'. Wanda's profits from models, games, and animations have nothing to do with you. The community will not be part of the IP incubation. In the entire Gundam fan community, they are even considered outliers. In this regard, the pain points of GameFi are also very similar.
Thus, PFP projects have become a false proposition, only the pragmatic spark of the little penguin continues to strive. So does this little image have another path? I believe PoP MART might provide a different answer.
This small square store originated from the Beijing O'Mart shopping center and achieved a turnaround through the agency of Sonny Angel. This single series contributed nearly 30% of PoP MART's sales at the time. The envious copyright holder withdrew the exclusive agency rights a year later, but this move instead led to the birth of an IP empire.
Wang Ning (founder of PoP MART) had a simple idea at this time: to create proprietary IPs that cannot be taken away. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch its first self-owned trendy toy series - Molly. This little girl with a pouting image instantly became popular nationwide. Through the excitement of uncertainty brought by the blind box mechanism and dopamine drive, PoP MART started its first rocket-like rise. By 2019, Molly's single IP annual sales reached 456 million yuan, becoming the core source of income for PoP MART at that time.
This approach, which combines Japanese capsule toys and high-end trendy toys for collaboration, became quite common in the following years of the NFT craze. Artists design the basic elements, then hand them over to the project parties to combine into series of images for sale and operation. NFTs are generally launched in blind box form at the initial stage, with project parties releasing various rare combinations of images to enhance players' purchasing desires.
The two simply differ in terms of sales formats, but tens of thousands of NFT projects and various blue chips have generally failed. Yet PoP MART is now experiencing a second spring. Why?
I once attributed the reasons to difficulties in landing and high purchase thresholds. The former seems to have no issues currently, while the latter is not true at all. NFTs also had their Free Mint period, with Goblintown and MIMIC SHHANS being the golden dogs of that time. Creators earned a fortune just from transaction commissions. Many NFTs from the inscription era were even more decentralized, but this did not prevent the decline of NFTs. Forming and joining an IP community is quite easy; the challenge lies in continuation.
Therefore, I think we may have made a mistake in the model. After the first rocket-like rise, Molly also did not elevate PoP MART to glory. The company's stock price has fallen from 2021 to 2024, just like NFTs.
But PoP MART made a comeback, relying on a complete IP wall. Today, PoP MART has 12 proprietary IPs, including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, along with 25 exclusive IPs like THE MONSTERS (including Labubu), PUCKY, and SATYR RORY, and over 50 non-exclusive co-branded IPs with Harry Potter, Disney, League of Legends, etc.
Human preferences are always fickle, and the life of IP is limited. But what if I have hundreds of choices? Today, Labubu is exploding in popularity in Europe, America, and Southeast Asia, with the value retention of its surrounding dolls comparable to plastic Moutai. Yuga Labs' ideal situation ultimately materialized in Web2, but none of this was accidental.
We need to rethink what an IP business is, what the NFT roadmap is, and why PoP MART can achieve such heights without content support.
3. Pudgy Penguins
Last year, I also participated in the little penguin event in Hong Kong, where this NFT project was always so enthusiastic towards the community.
The success of Pudgy Penguins lies in being pragmatic, pragmatic, and pragmatic. NFTs themselves do not differentiate much in terms of technology. Regardless of how cleverly designed the minting process is, in the end, it's still just a JPG. The difficulty of NFTs lies in the realization of IP, which is hundreds of times more challenging than creating 10K PFPs. Yuga Labs wants to build a Metaverse, Azuki wants to make anime, okay, that's cool, but these projects, which start at billions in costs, will only ask the community's family members to pay.
This extremely compressed world is too restless. Everyone wants quick success; holders want to make a lot of money, and project parties want to achieve success in one step. Very few blue-chip projects are willing to humble themselves, and in the end, the more anxious they are, the worse they fall. The original team of Pudgy Penguins was also such an impatient grassroots team. After their reputation suffered, they sold the little penguin at a low price.
At this point, the little penguin met its true owner, Luca Netz. This individual, with years of experience in physical marketing, brought the little penguin back to its rightful height. Luca Netz is genuinely building a brand; he operates a company for NFT holders, from marketing to plush toys to future games. Every step of the little penguin is solid, the company can profit, and the holders can profit as well. There is nothing particularly special about it; it is just doing what it should do. Therefore, it has been proven that bottom-up IP can exist in Web3, but many project parties are too proud to lower their stance.
Thus, I dislike the term 'discredit' as if some things should never exist. Electric cars used to be quite foolish, and Siri in my phone was also quite foolish, but that does not prevent green-plate cars from populating the entire city today, and AI needs no further mention.
Many so-called discredited tracks will still be tried by Web3 in the future; it just lacks a suitable project party.
4. Path
The path to success is simple yet difficult. The next stop for PFP must transcend some inherent logical frameworks of Crypto. To become the next Web3 Disney requires a lot of accumulation. Whether NFT scarcity is counterproductive in the process of reaching the masses has been discussed in my previous articles.
If it is defined as a trendy toy consumer product, then the limitation of 10K may be too great. If it is defined as a unique asset and fundraising method of Web3, then the IP must ultimately transform into physical consumer goods to fulfill promises to the community, rather than a bunch of strange sub-series.
Given the unique culture of the cryptocurrency circle and the attributes of NFTs, it is indeed unfortunate to hold onto an IP for a lifetime. How can we create more value from these PFPs? How can we expand a project into an IP factory? Perhaps we need to embrace some new ideas and introduce more technologies and gameplay.
5. Is issuing a coin the last stop?
What is the significance of NFT issuing coins? I still don't understand it. This situation resembles a form of exploitation from the upper tier to the lower tier and is a dilution of the value of OG NFTs. I can only interpret it as the project seeking a convenient liquidity exit.
From APE to DOOD, every case is invariably a variant of air tokens. Their empowerment often involves staking to obtain some on-chain trading dividends, purchasing items in the Metaverse, governance rights, etc. In an ideal scenario, it is a perfect cycle among holders, stakers, and developers. However, in reality, it resembles air, caught in a dead loop of NFT price drops, gold mining profit declines, and token price drops.
For OG NFT holders, although the tokens have taken away some dividends and rights, most will receive a large airdrop at TGE, so no one complains. However, in the long term, as mentioned in the fourth paragraph, this is a dilution, and the distribution, like Azuki's Anime, is even more of a blatant robbery.
Short-term popularity is important, but the long-term survival of the project is even more crucial. Don't let issuing coins be the last stop.
Conclusion
In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging IPs in Web2. Under this era, NFTs should thrive well, as they possess many irreplaceable characteristics.
Four years ago, I regarded it as Cyber Moutai, but the reality is Cyber Tulip. Few are willing to manage the ruins, but I believe that beneath the ruins lies the next Labubu.
#CryptoPunks #PudgyPenguins #Doodles #azuki
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