On August 5th, Twitter KOL Gary posted that investors should realize that the commercial expansion of PFPs-type NFTs will only help the project party generate revenue, but will not bring any benefits to the holders, so PFPs should not be seen as stocks.
In response, Luca Netz, CEO of the NFT project "Pudgy Penguins," published a lengthy article refuting this. In the article, Luca Netz systematically elaborated on the importance of brand commercialization for the development of NFT projects from six aspects, including explaining how profits will eventually flow to NFT holders through the "funnel" model and combining supply and demand to explain why some blue-chip NFT projects will gradually trend to zero.
As one of the most eye-catching NFT projects during the bear market, since taking over the project in February last year, Luca Netz has not only emerged from historical shadows but also briefly refreshed the historical peak value of ETH while other PFPs-type projects continued to decline. It is for this reason that Luca Netz's reputation in the NFT industry continues to rise, and many project parties regard him as a role model, hoping to replicate the success of "Pudgy Penguins" through imitation and learning from his operations.
Considering that Luca Netz has systematically outlined his thoughts on the development of NFTs in this recent article, this content may have some reference value for practitioners in the same field. The following is the original content of Luca Netz, translated by Odaily Sunday.
Gary's viewpoint is very bad.
In the following text, I will explain to you why this way of thinking is fundamentally wrong and why this viewpoint is very bad.
To clearly explain my views, I will list six points that directly support "why building a globally renowned brand is the best way for NFT holders to accumulate value."
Point 1: Marketing
NFT is a limited resource, and as interest and demand grow, the NFTs you hold will naturally accumulate value.
NFTs need to be marketed to succeed. Everyone wants instant value conversion, but this is impossible during a deep bear market. When NFTs are in a speculative phase, some announcements may trigger huge interest and demand, ultimately accumulating significant value for NFTs. However, the same measures may not be as effective today.
Is this unique to NFTs? Not really. Many excellent Layer2 projects are releasing major announcements that could have rapidly increased the project's market value two years ago, but today, the same important announcements will hardly have any impact on the secondary market.
In a bear market, every asset class has the same characteristics, and we are not an exception.
From the funnel model in the figure below, it can be seen that marketing can amplify the top of the funnel, which is the starting point for the accumulation of NFT demand and value. Over time, value will gradually flow down the funnel, ultimately reaching the NFT holders.
Point 2: Emotional Connection
Before we start, there is a data point about collectibles worth mentioning. As of today, the total size of the global collectibles market has reached $426 billion. This market is not built on liquidity or instant dopamine secretion, but on emotional connections.
To increase the value of your NFT, you need to optimize two things:
First is demand, which can be achieved by implementing various marketing activities to gradually increase the project's visibility.
Second is holding, which is driven by emotional connections. This includes emotional connections with community members and with interactive experiences, content, and characters. If we can establish sufficient emotional connections between holders and NFTs, the emotional value will eventually surpass monetary gains, making it priceless.
If you can create enough demand and have compelling emotional connections, you can create the best value appreciation mechanism in the world.
Look at the image below. If you see your child reacting like this to a "Pudgy Penguin" toy, would you sell it and rush to other shitcoins? Would this reaction make you believe more in the project's long-term vision?
Point 3: Sustainability
This point is often the most overlooked.
Understanding sustainability can help you understand what killed your favorite blue-chip projects in 2020-2021, and the answer lies in "dilution." "Dilution" arises from a project's inability to generate external revenue, ultimately leading them to issue more NFTs.
Unfortunately, when the growth in demand cannot match the growth in supply, the ecosystem tends towards zero.
Creating a sustainable brand can effectively mitigate the greatest risk for NFT holders—unnecessary "dilution" to maintain and advance the business.
Demand > Supply = NFT value rises;
Supply > Demand = NFT tends towards zero.
Establishing a sustainable revenue model -> investing in marketing -> creating more demand -> NFT value growth.
This is not difficult to understand.
Point 4: Touchpoints
Essentially, this is just basic work, but I believe that if you can create enough touchpoints (opportunities for users to interact with the project's IP), this will translate into the greatest upward momentum when market conditions turn favorable.
Let's take Pudgy Toys as an example. I often hear doubts about Pudgy Toys: "Luca, no one will buy your toy and then buy your NFT, what's the benefit for holders?"
Yes, they won't do that today, but I don't need them to do that now. But when the NFT bull market returns and traders start accumulating collectibles, what do you think they are most likely to buy? I think they are most likely to choose the NFTs they see most often. Once they have a lot of funds, they will buy them.
More brand collaborations, more products and content—these are excellent ways to create more touchpoints.
Point 5: Experiences
In the NFT cultural system, everyone desires various free benefits, but unfortunately, these are no longer sustainable with royalty consumption.
If I cannot create real external cash flow by building a successful brand, I cannot create more and better experiences for holders without "diluting" their interests. But if I can build a successful brand, I can use the continuous revenue to supplement the treasury reserves and provide more and better experiences for the community.
The entire value transmission process is as follows:
- Create free memorable experiences for holders -> non-holders' FOMO -> they want to participate -> they buy NFTs -> NFT value rises -> holders' interests grow.
Point 6: Game
To me, one thing is obvious: 90% of NFT traders do not understand what is happening in this field and where the real upside potential lies.
This is both a game for institutions and retail traders. If you think that the 150 ETH floor of BAYC is driven by retail demand, then you are clearly mistaken.
What most people don't know is that the world's largest funds have made huge investments in intellectual property. Intellectual property is a good tool to resist economic downturns and has been proven to be a good asset class for fund diversification.
You need to ask yourself how your project can attract funds that are currently or will seek to include NFTs in the next generation of intellectual property investment portfolios. Do you really think game theory and Ponzi economics will excite institutional capital? If you think so, then you don't understand the true potential of these assets and this game.
Attracting arbitrageurs = short-term success;
Attracting institutions = long-term success.
In my view, in the future, these funds will seek NFTs that can meet existing intellectual property needs and create new models using blockchain technology for Web3 IP.
Attracting one institution is far better than attracting 500 arbitrageurs.
Conclusion
I know these arguments may seem biased because I am defending my position, but you must remember that we purchased "Pudgy Penguins" for $2.5 million, and our sole purpose in buying this project is to be the first and set the benchmark for the NFT field.
Considering this, we spent many months critically thinking about the best approach to achieve this goal. In the end, this is our conclusion.
If you want a Ponzi shitcoin, then go create a better one.
If you want to be part of the new era of culture, community, and intellectual property, then NFTs are your battlefield.
The reason for publishing this article is to refute the claim that "brand commercialization will not bring benefits to NFT holders." I believe that over time, the NFT field will realize that this is the correct way to incubate the next generation of NFTs.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
