The End and Restart of NFT

Author: YBB Capital Researcher Zeke Source: medium

1. The collapse of NFT

The last cry of NFT ended with the issuance of Pudgy Penguins’ tokens. The recent issuance of Doodles’ tokens on Solana only made some splashes. Yuga Labs’ subtraction continues, this time even the most soulful IP, Cryptopunks. Those Bitcoin NFTs in the last wave of NFT revival are almost zero. These once crazy narratives have indeed long gone into desolation and no one cares about them anymore.

10k PFP used to have a beautiful vision, a community of just the right size to help a bottom-up IP project go global, which is completely different from the traditional IP projects that first spent money to support content. For example, Disney's Marvel Universe, Star Wars, and various animated characters often require years of precipitation and countless funds to make these IPs deeply rooted in the hearts of the people and eventually become a gold mine.

NFT is completely different. It has a very low entry threshold, and the speed of shaping an IP and assetizing IP is quite fast. Creators only need to pay some Gas to sell their artworks on Opensea. There are no galleries, toy companies, film companies, or any professional teams. An IP and a new artist are born.

We also witnessed three or four years ago that some bottom-up IPs were popular in the top entertainment circles in Europe, America, Japan and South Korea. A grassroots artist can also achieve a counterattack from an amateur with NFT. For me, as a Generation Z who grew up watching Japanese movies, it is a dream to be able to participate in IP investment and incubation that ordinary people could not access through Crypto.

But after BAYC's "Crazy Dolls" and Azuki's disastrous sub-series Elemental were released. The vague status of NFT gradually became clear. It is not like a kind of equity or investment, but more like an expensive luxury with membership benefits. The project party also hopes that we can continue to buy sub-series to support their subsequent roadmap of spending money on IP value core. The seeds of contradiction were planted here. The project party knew that it was expensive to make content, but if they did not make content, the IP would die. The sub-series released every few months are constantly sucking blood from OG series holders, torturing everyone in the community. It may take many years to wait for the feedback brought by the content, or perhaps this feedback will never come. The cracks began to grow, and those beautiful fantasies began to shatter with the decline of the floor price, and all that was left was all kinds of quarrels.

Second, the trump card of IP MCN-PoP MART

If NFT is regarded as a luxury trendy toy of Generation Z, its causes and failures are clearer. In the era of fast food, it is not a bad thing to have no content. After all, the appearance alone can quickly attract buyers. For example, Azuki's painting style is quite in line with the aesthetics of Asians. Under the consensus, this grassroots NFT series can also follow BAYC and become the third largest blue chip. In the real world, well-known trendy toys such as Bearbrick, B.Duck, and Molly also have no content support, but they all rely on their unique appearance to become popular.

However, trends are always a gust of wind. Without content as the core value, these IPs may become outdated at any time. Limited by the culture of the currency circle and the extremely low success rate of NFT, project parties often continue to make derivatives around an IP. But the reality is that the core has not yet taken shape, and the wind has passed.

Of course, there is also a type of PFP project that has sufficient content support, Japanese NFT. In the past, I have seen at least four or five projects with well-known Japanese comic IPs hoping to make great achievements in the NFT market, but they don’t seem to have thought about the fact that the fan base of IP is almost completely incompatible with this circle. The second point is that there are already too many peripherals of Japanese anime to choose from. Why should fans spend hundreds of times the price to buy a small picture? Of course, the most important point is the third point. This small picture can only be a picture, and the imagination space for future empowerment is 0. Even if you buy a Gundam NFT, you can only get the entrance to the Gundam metaverse "SIDE-G". Wanda’s profits from models, games, and animations naturally have nothing to do with you, and the community will not be a member of IP incubation, and it is even an outlier in the entire Gundam fan group. At this point, GameFi’s pain points are actually very similar.

So far, the PFP project has become a false proposition, and only the pragmatic fire of the little penguin is still working hard. So is there another way out for small pictures? I think PoP MART may have given a different answer.

This small grid shop originated in Beijing Oumeihui Shopping Center and achieved a turnaround by relying on the agency Sonny Angel. This series alone contributed nearly 30% of PoP MART's sales at the time. The jealous copyright owner took back 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 his own IP, an IP that others could not take away. In 2016, PoP MART cooperated with Hong Kong designer Wang Xinming to launch its first independent trendy toy series - Molly. This little girl with a pouting image instantly became popular all over the country, driven by the uncertainty of blind box gameplay and dopamine. PoP MART began its first rocket-like rise. By 2019, the annual sales of Molly's single IP had reached 456 million yuan, becoming the core source of income for PoP MART at this time.

This combination of Japanese-style capsule toys and high-end trendy toys has also been common in the NFT craze in the following years. The basic elements are designed by artists and then handed over to the project party to combine into a series of pictures for sale and operation. NFTs are generally in the form of blind boxes in the initial launch stage. The project party will release pictures of various rare combinations to enhance the players' desire to buy.

The two are just different in the form of sale, but tens of thousands of NFT projects and various blue chips have generally failed. And PoP MART is now ushering in a second spring, why?

I once attributed the reason to the difficulty of landing and the high threshold for purchase. The former has no problem at present, but the latter is not. NFT also had its Free Mint period. Goblintown and MIMIC SHHANS were both golden dogs of that period. Creators made a lot of money just by taking commissions from transactions. Many NFTs in the Inscription Era were more decentralized on this basis, but this did not stop the decline of NFT. It is very simple to form and join an IP community, but the difficult part is to continue.

So, I think we may have the wrong model. After the first rocket-like rise, Molly did not make PoP MART a god. The stock price of the entire company fell from 21 to 24, just like NFT. But PoP MART has become popular again, relying on a whole wall of IPs. Now PoP MART has 12 self-owned IPs including Molly, DIMOO, BOBO&COCO, YUKI, Hirono, 25 exclusive IPs including THE MONSTERS (including Labubu), PUCKY, SATYR RORY, and more than 50 non-exclusive joint IPs such as Harry Potter, Disney, and League of Legends.

People's preferences are always erratic, and the life of IP is limited, but what if I have hundreds of choices? Today, Labubu is popular in Europe, America and Southeast Asia, and the value preservation of its peripheral dolls can be called plastic Moutai. Yuga Labs' ideal state is finally realized in Web2, but all this is not accidental.

We should rethink what is IP business, what is NFT's Roadmap, and why PoP MART can reach such a high level without content support?

3. Pudgy Penguins

I also participated in the Little Penguin Hong Kong event last year. This NFT project is always so enthusiastic about the community.

The success of Pudgy Penguins lies in pragmatism, pragmatism, and pragmatism. NFT itself cannot make any technical difference. No matter how clever the process design of Mint is, it is still a JPG in the end. The difficulty of NFT is the landing of IP, which is hundreds of times more difficult than making 10K PFP. Yuga Labs wants to do Metaverse, and Azuki wants to do animation. OK, this is all cool, but for these projects that start with a cost of hundreds of millions, they will only ask the families in the community to pay for it.

This extremely compressed world is too impetuous, and everyone wants to rush for success. Holders want to make a lot of money, and project parties want to reach the sky in one step. Few blue-chip projects are willing to bow their heads, and in the end, the more impatient they are, the worse they fall. And the original team of Pudgy Penguins was also such an impetuous grassroots team. After the reputation was damaged, they sold the little penguin at a low price.

At this time, the little penguin met their real owner Luca Netz, a worker with many years of experience in physical marketing, who pulled the little penguin back to the height it should have. Luca Netz is really building a brand, and he runs a company for NFT holders. From marketing to plush toys to future games, every step of the little penguin is solid, the company can make a profit, and the holders can also make a profit. There is nothing special about all this, it is just doing what it should do. Therefore, it turns out that bottom-up IP can exist in Web3, but there are too many project parties who can't let go of their status.

So, I hate the word "falsification", as if some things should never exist. Electric cars used to be stupid, and Siri in my phone was stupid. But it doesn't prevent the whole city from being full of green-plate cars, not to mention AI.

Many so-called falsified tracks, Web3 will still try in the future, but it lacks a suitable project party.

Fourth, the path

The path to success is simple, and the path to success is also difficult. The next stop of PFP will eventually break away from some of the inherent logical frameworks of Crypto. It will take a lot of precipitation to become the next Web3 Disney. I have discussed in my previous articles whether the scarcity of NFT has been counterproductive in the process of moving towards the public. If it is defined as a trendy consumer product, then the limitation of 10K may be too great. If it is defined as an asset and fundraising method unique to Web3, then IP will eventually be transformed into a physical consumer product to fulfill its promise to the community, rather than a bunch of weird sub-series.

Based on the unique culture of the currency circle and the attributes of NFT itself, it is helpless to hold an IP until old age. How to make a fuss on these PFPs? How to expand a project into an IP factory? This may require us to accept some new concepts and introduce more technologies and gameplay.

V. Is issuing coins the last stop?

I still don't understand what the meaning of NFT issuing coins is. This situation is more like an exploitation of the lower by the upper class, and a dilution of the value of OG NFT. I can only understand it as this project looking for a convenient way to exit liquidity.

From APE to DOOD, without exception, they are all like variants of air coins. Their empowerment is often that staking can obtain some on-chain transaction dividends, prop purchases in Metaverse, governance rights, etc. Ideally, it is a perfect cycle of holders → pledgers → developers. But from the actual situation, it is more like air, involved in the dead cycle of NFT price drop, gold farming income drop, and token price drop.

For OG NFT holders, Token has taken away some dividends and rights. However, most of them will also receive a large number of airdrops during TGE, so no one complains. But in the long run, this is just as the fourth paragraph says, this is a dilution, and the distribution like Azuki's Anime is even more of a robbery.

Short-term popularity is important, but the longevity of the project is more important. Don't let the issuance of coins become the last stop.

Conclusion

In this fast-paced, dopamine era, we have witnessed the rise of many emerging Web2 IPs. NFT should grow well in this era, as it has many irreplaceable characteristics. Four years ago, I regarded it as Cyber ​​Moutai, but the reality is Cyber ​​Tulip. Few people are willing to take care of the ruins, but I believe that there must be the next Labubu hidden under the ruins.