Author: YBB Capital Researcher Zeke
1. The collapse of NFT
The last cry of NFT ended with the issuance of Pudgy Penguins’ tokens, and the recent issuance of Doodles’ tokens on Solana only made a few splashes. Yuga Labs’ subtraction continues, this time even the most soulful IP, Cryptopunks. The 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 had a beautiful vision in the past, that a community of just the right size would help a bottom-up IP project go global, which is completely different from the traditional IP projects that first spent money on content support. For example, Disney's Marvel Universe, Star Wars, and various animated characters often require years of accumulation and countless funds to make these IPs deeply rooted in people's hearts and eventually become a gold mine.
NFT is completely different. It has a very low entry barrier and can build an IP and turn it into an asset very quickly. Creators only need to pay some gas to sell their artworks on Opensea. There is no need for galleries, toy companies, film companies, or any professional teams. An IP and a new artist are born.
We have also witnessed three or four years ago that some bottom-up IPs became popular in the top entertainment circles in Europe, America, Japan and South Korea. A grassroots artist can also achieve a comeback through NFT. For me, as a Generation Z who grew up watching Japanese movies, it is a very dreamy thing to be able to participate in IP investment and incubation that ordinary people could not access through Crypto.
But later, after BAYC's "Crazy Nesting 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 purchase sub-series to support their subsequent continuous investment in the Roadmap of the 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 is constantly sucking blood from the 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 in the floor price, and all that was left was all kinds of quarrels.
2. PoP MART, the Ace MCN of IP
If we regard NFT as a luxury trendy toy for Generation Z, its success and failure 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 become the third largest blue chip after BAYC. 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 fleeting. Without content as the 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 NFT, project parties often continue to make derivatives around an IP. But the reality is that the core has not even taken shape, and this trend 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 little penguin is still working hard. So is there another way out for small pictures? I think PoP MART may provide a different answer.
This small shop originated in Beijing Oumeihui Shopping Center, and it turned around by acting as the agent of 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 that 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 mouth instantly became popular all over the country, through the stimulation of uncertainty and dopamine drive of blind box gameplay. 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 that time.
This combination of Japanese-style capsule toys and high-end trendy toys has also become common in the NFT craze in the past few years. The basic elements are designed by the artist 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 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 experiencing a second spring, why?
I once attributed the reason to the difficulty of implementation and the high purchase threshold. The former has no problem at present, but the latter is not the case. NFT also had its Free Mint period. Goblintown and MIMIC SHHANS were both gold dogs during that period. Creators made a lot of money just by taking commissions from transactions. Many NFTs in the Inscription Era are more decentralized on this basis, but this cannot stop the decline of NFT. It is very simple to form and join an IP community, but the difficulty 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 became 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 with Harry Potter, Disney, League of Legends, etc.
People's preferences are always fickle, and the life of IP is limited, but what if I have hundreds of choices? Today, Labubu is very popular in Europe, America and Southeast Asia, and its peripheral dolls are as valuable as plastic Moutai. Yuga Labs' ideal state was finally realized in Web2, and all this is not accidental.
We should rethink what is IP business, what is the roadmap of NFT, 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 towards the community.
Pudgy Penguins' success lies in pragmatism, pragmatism, and pragmatism. NFT itself cannot make any technical difference. No matter how clever the Mint process 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, these are all cool, but these projects with a starting cost of hundreds of millions will only ask the community members to pay for them.
This extremely compressed world is too impetuous, and everyone wants to achieve success in a hurry. Holders want to make a lot of money, and project owners 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. The original team of Pudgy Penguins was also such an impetuous grassroots team. After their 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 brought 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 are unwilling to let go.
So, I hate the word "falsification", as if some things should never exist. Electric cars used to be stupid, and Siri on my phone was stupid too. But it doesn't prevent the whole city from being full of green-plate cars now, let alone AI.
Web3 will still try many so-called falsified tracks in the future, but it lacks a suitable project party.
Path
The path to success is simple, but the path to success is also difficult. PFP's next stop will eventually have to break away from some of Crypto's inherent logical frameworks. 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 masses. 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 cryptocurrency circle and the properties of NFT itself, it is really helpless to hold on to an IP until old age. How can we make more use of these PFPs? How can we expand a project into an IP factory? This may require us to accept some new concepts and introduce more technologies and gameplay.
5. Is issuing coins the last stop?
I still don’t understand what the meaning of NFT token issuance 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 liquidity exit method.
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 a vicious cycle of NFT price decline, gold farming income price decline, and token price decline.
For OG NFT holders, although the tokens have taken away some dividends and rights, most of them will also receive a large amount of airdrops during the TGE, so no one complains. But in the long run, as mentioned in the fourth paragraph, this is a dilution, and the distribution like Azuki's Anime is even more of a robbery.
Short-term popularity is important, but the long-term survival of the project is more important. Don’t let coin issuance become the last stop.
Conclusion
In this fast-paced, dopamine-fueled 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 a cyber Moutai, but the reality is a 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.
