Author: Lorraine
Preface:
The inspiration for writing this piece came from hearing friends around me frowning and scratching their heads, pondering: "Should I buy a monkey (BAYC) at this time? Monkeys are still too expensive, or should I buy Azuki?"
This also happened to pique my curiosity and thirst for knowledge, so I embarked on understanding the ins and outs of NFTs in a sea of information and came to a conclusion.
As a crypto novice, a literally newww fresher, I forced myself to quickly learn and distill the key points in this process, to summarize and conclude, and after filtering through my brain, I came up with some thoughts based on my second understanding.
It can be said that this content may seem dry and not very interesting to read, but looking back at the entire path, you can clearly see where I started picking mushrooms after falling into the rabbit hole, what wildflowers I touched along the way, and what pine cones I picked, finally returning home with a basket full of things.
You may ask if they are useful. This is not an assignment that someone else has ordered me to complete, but it is my desire to verify the results of my stage research using the Feynman learning method, which never goes out of style.
Perhaps there is not a single thing in the basket that can be eaten, but many things may not be so utilitarian as to be conclusively judged by their usefulness. It at least satisfies my original desire for knowledge, my curiosity has been gradually satisfied by myself, and it also makes me realize that in the future, I should not raise such big themes and should find smaller points to write about, which is worth it.
The Web3 world is like a dense black forest nurtured by blockchain infrastructure, and NFTs are like a Passcard in the hands of newcomers, if you are interested, follow this article and take a stroll into the first rabbit hole in the forest called PFP NFT together~
Main text:
Looking back over the past year, although NFT projects continue to emerge, the splashes they create are not as impressive as before, and more and more people are becoming disillusioned with them.
Indeed, in the bear market, in addition to looking at new opportunities for new projects and scrolling through Twitter, there is also a question that is most commonly mentioned and discussed: "Should I buy NFTs at this time?"
In fact, NFTs have many different subcategories, and the most widely discussed and controversial in the market is PFP. PFP (Profile Picture) NFT refers to NFTs used as personal avatars, and it is also the most easily recognizable and understandable form of NFT for those outside the Web3 community.
However, since the Fed began raising interest rates in 2022, the bear market in the crypto market has not only accelerated the decline in coin prices, but also accelerated the bubble in the NFT market.
In Q3 2023, the NFT market trading volume hit a new low.
As the floor prices of those previously high-flying blue-chip PFP NFTs, such as Bored Ape Yacht Club (BAYC), Azuki, CryptoPunks, and Doodles, gradually fell in the face of the current oversupply in the market, the question of whether to enter the market in a timely manner or continue to wait has become a point of contradiction for everyone.
Should I buy NFTs at this time?
The doubts hidden behind it can be summarized as follows:
- Is the current price of NFTs already at the floor, or will there be even lower prices?
- If I buy NFTs at the current low, will it surge back to historical highs when the next bull market arrives, allowing me to sell and achieve financial freedom?
- Will the narrative about small pictures become outdated? Can NFTs still catch the next cycle of market growth?
- Besides the intuitive avatar properties of PFP NFTs, will they generate other value, and is it worth it for me to spend several ETH to get involved?
When the above doubts are summarized into important keywords and the train of thought is clarified, it can be seen that everyone's doubts about NFTs ultimately revolve around these two points—
- Practical/application value
- Future market premium space
When discussions around NFTs begin to be strongly tied to "value," it also means that current users are no longer easily buying into the narrative logic that floated in the bull market in the past. If there is no more practical utility, if there are no more visible applications, then all of it can be seen as one bubble after another.
The allure of a hundredfold return in a bull market is tempting, and as long as you enter the NFT market when it is hot, it is highly likely that you will not return empty-handed. Any small picture can be sold for a good price, so people driven by FOMO mentality are unlikely to listen to overly conservative and fair arguments.
The bear market, on the other hand, is not without its opportunities. It is only in a less noisy environment that one can calm down and reflect: What was my original intention in getting involved in NFTs? Looking back at the NFT projects that were once popular with today's perspective, are they perfect enough to withstand scrutiny? Are those holders really diamond hands or just cherishing their own broom?
In this article, we will briefly review the important project situations in the PFP NFT market and the possible trends for the future.
The value of PFP NFTs
To understand the value of PFP NFTs, we can learn from history and see how those leading NFT projects positioned their value when they were first launched.
2.1 Background and value definition of four blue-chip PFP NFTs
2.1.1 CryptoPunks
In the summer of 2017, the two founders of Larva Labs created 10,000 different 24x24 pixel series avatars ⌈CryptoPunks⌋ inspired by early 1970s punk art in London.
Later, with the surge in Ether, the founders boldly attempted to upload them to the Ethereum blockchain, pioneering the exploration of non-fungible tokens.
It can be said that at that time, they followed the surge in coin prices and sniffed out the speculation. Thanks to being the "first to eat crabs" on the Ethereum smart contract, this groundbreaking classic NFT gradually acquired the label of "OG in the crypto circle" and a narrative.
Subsequently, CryptoPunk #5822 was even certified by Guinness as the most expensive NFT collectible, selling for a high price of $23.7 million (valued at 8000 ETH at the time), setting a new record for the unit price of PFP NFT transactions.
2.1.2 BAYC
On April 30, 2021, 10,000 ⌈Bored Ape Yacht Club (BAYC)⌋ NFTs were released.
Different from the narrative genes of CryptoPunks, each unique ape in BAYC is not only a symbol of identity in the virtual world, but holders also have the opportunity to join the "Yacht Club" and enjoy the benefits of the BAYC club. For example, holding a BAYC NFT grants full commercial usage rights, allowing the sale of merchandise and commercial transactions using its image.
From this, it can be seen that the BAYC team has taken a step further in exploring the value of NFTs, finding an anchor point that can be closely tied to community members by granting "individual IP commercialization rights."
2.1.3 Doodles
Six months later, on October 17, 2021, 10,000 colorful ⌈Doodles⌋ NFTs created by three Canadian artists were launched.
Burnt Toast, responsible for animation design, had previously collaborated with many top companies such as Google, WhatsApp, and Snapchat, and his personal work had received widespread acclaim from fans.
Understanding the audience's preferences, he continued to incorporate bold outlines, colorful palettes, and childlike doodles into the Doodles' character design.
Unlike the highly personalized and serious NFT images in the past, this highly colorful and approachable appearance quickly gained market recognition.
Just as BAYC has its own club, Doodles also focuses on Discord community operations: announcing the official development roadmap to NFT holders, establishing a community treasury "Doodlebank" for brand promotion, and granting holders the right to vote on project proposals, and more.
At this stage, it can be seen that Doodles, benefiting from the perfect coordination of design and marketing by the three founders, as well as the team's dedicated community management, has great openness and inclusiveness. It has also made many active and innovative explorations, with the ambition to build the brand into a global entertainment media group, laying the foundation for future cross-border entertainment projects (such as comics, TV shows, music, etc.).
2.1.4 Azuki
On January 12, 2022, the Chiru Labs team (a group of artists and developers from Los Angeles with strong expertise in crypto, technology, and gaming) released 10,000 ⌈Azuki⌋ NFTs inspired by Japanese anime.
Azuki, meaning "red bean" in Japanese.
The main creative team's approach is very different from the direction of the previous NFTs. Azuki, with its exquisite art style and fusion of Eastern and Western cultures, has attracted many collectors who appreciate East Asian culture. Its aesthetic value has been highly praised, and within a month of its release, sales reached $300 million, surpassing CryptoPunks and BAYC at one point.
In addition to its refreshing art style, AZUKI has taken innovative community operations to the extreme, creating a virtual world called "The Garden," where holders will have priority access to physical airdrops and event tickets for future projects.
Furthermore, AZUKI's marketing strategy extends to the use of the ERC-721A contract, the establishment of the virtual world "The Ruins," the concept of the virtual city "Hilumia," collaboration with Web2 fashion brands, the fragmentation of the IP #Bobu into $Bobu tokens, and the launch of the Beanz series of NFTs, and more.
Just before the project's launch, Azuki wrote in an official post:
"We rise together.
We build together.
We grow together."
Unlike the other projects, the Azuki team's innovations are bolder, and their efficiency in pushing the boundaries during the hype cycle, constantly surprising holders.
They are truly nurturing their own garden, using innovative marketing, community cohesion, and immersive metaverse narratives to create a fertile land, nurturing every blade of grass with care. Everything is community-driven, aiming to build a highly decentralized brand.
Seeing the project team steadily achieving each milestone on the roadmap, Azuki's holders seem to have found their original intention in getting involved here.
Under the premise of a community of shared interests, every small action of community members is closely linked to the value of NFTs in their wallets with luxury attributes. The sense of ownership of each holder is also infinitely nurtured, proud of this unique community identity, and actively promoting the project in various ways. The thriving atmosphere created by this positive cycle is exactly the decentralized wonderland that Azuki wants to create.
2.2 Summary:
Summarizing the more typical past PFP blue-chip NFT projects, it can be seen that the project teams have increasingly packed their projects with rich content and their visions have become more complex and grand.
They have not only put in a lot of effort in the design of personal images for external display, but have also made bold breakthroughs in technological innovation and innovative marketing.
They hope to create a closed-loop narrative that can transcend cycles and stably occupy the market in the long term, and they also hope that the IP can continue to thrive and endure.
Returning to the discussion of the "application value" of PFP NFTs, it can be seen that the project teams have gradually defaulted to the consensus that "holding our NFTs gives you more than just an avatar."
2.3 Besides the value of avatars, what other value can PFP NFTs have?
2.3.1 Commercial value linked to the physical world
In BAYC, holding an NFT allows you to enter the club and also grants the right to apply the IP in offline commercial scenarios.
As Yuga Labs put it, "Many bored ape holders have an entrepreneurial spirit and use PFP to create independent physical businesses." The general public can use PFP images as iconic symbols for offline businesses, and major brands such as Li-Ning and Adidas have also released collaborative clothing with BAYC.
By leveraging BAYC's global visibility to promote their physical businesses, holders can achieve a sense of accomplishment both online and offline, maximizing their satisfaction. This may be the most tangible way to maximize the sense of achievement for holders.
2.3.2 Airdrop Benefits of Derivative Tokens
After the release of the first generation NFTs, many project teams immediately launched second-generation NFTs as early bird rewards and airdropped them to first-generation holders.
For example, six months after Doodles was launched, the project team initiated the Dooplicator airdrop program for Doodles OG holders.
The Dooplicator NFT is defined as a functional graffiti machine that can be used to hatch various wearable items, allowing Doodles OG holders to customize their NFT images. This initiative aimed to attract a wider audience and provide a better interactive experience, laying the groundwork for the official launch of Doodles 2.
After its release, the Dooplicator's floor price on the secondary market was 0.66 ETH, and at its peak, the average price reached 3.89 ETH.
As mentioned earlier, AZUKI also followed a similar strategy. Two months after the release of Azuki, Chiru Labs launched a series of 20,000 Beanz NFTs. Beanz, defined as Azuki's sidekick, was airdropped for free to 10,000 Azuki holders, and the remaining half was sold publicly. Beanz was briefly traded on Opensea at an average price of 6.4 ETH.
In a way, airdrop benefits of derivative tokens can be seen as an investment value chip that provides additional benefits for purchasing NFTs.
Initiatives like Beanz, which offer a "buy one, get one free" approach, not only avoid diluting the value of existing NFTs but also lower the entry barrier for new participants, increase liquidity, and attract more exposure and attention to the project, ultimately reflected in the rise of NFT prices, creating a win-win situation for all parties involved.
2.3.3 Access Pass to Future Potential Features of the Project
As many project teams plan many future major actions in their grand Roadmap, each milestone to be achieved is a prominent signpost.
For example, Doodles aims to build the company into a global entertainment media group, and subsequent initiatives are closely related to this theme. They appointed Julian Holguin, former president of Billboard, as CEO, acquired the Emmy-nominated animation studio "Golden Wolf" to expand Doodles' licensing rights, and even collaborated with Columbia Records to release Doodles records.
When renowned and highly professional individuals from the audiovisual field are invited to take the helm, it shows that they are serious about building the brand.
Three months after the release of Doodles NFTs, the official announcement stated that Doodles 2 would be released on the Flow blockchain.
Compared to a single NFT, Doodles 2 is more like a new game map, where each graffiti avatar is customizable and dynamic, with the vision of moving beyond the Ethereum ecosystem to lower the barrier for everyone to have their own digital identity.
Subsequently, the official launched a new project called Space Doodles, referred to as "Non-dilutive expansion content for Doodles."
Unlike the typical issuance of additional avatar images, Space Doodles are new images based on the original Doodles NFTs, meaning that only Doodles holders can obtain them.
Holders can use the Doodle Bot smart contract to package their Doodle NFTs, and the randomly generated spaceship will be combined with the original Doodle to create a Space Doodle NFT.
This can be understood as replacing the original Doodles image with an astronaut animated version of Doodles, enriching the visual presentation with dynamic effects and a cosmic scene. This is an important upgrade closely aligned with the narrative of Doodles 2, allowing holders to experience the basic gameplay and worldview of Doodles 2 in a shallow way.
This is a small step for the graffiti characters to explore space, and a big leap for the entire Doodles universe in the Web3 galaxy.
Although the future path outlined in the blueprint is not yet clear, the potential is limitless and full of imagination. Early adopters of NFTs can have these invisible "passports," enjoying early access to explore the metaverse world and catch a glimpse of what the "future" might look like.
Premium Market Space for Future PFP NFTs
The development of most projects in the Web3 ecosystem relies on the economic environment of the cryptocurrency market, and NFTs are no exception.
In addition, the current environment has seen a sharp decline in NFT royalty income, so it is still premature and immature to discuss the future premium market space for NFTs. However, we can infer some potential opportunities for gaining a premium advantage in the future from the current status of blue-chip projects in the market, as mentioned above.
3.1 Current Status of Blue-Chip NFTs
Comparing the average transaction volume on Opensea over the past year for the four classic blue-chip NFTs listed above, it can be seen that during the bear market of the past year, the unit prices of these projects also experienced a significant decline:
The overall NFT market transaction volume has significantly decreased, showing a state of "stock consumption."
As of now, according to the OpenSea 30-day NFT circulation transaction volume rankings, BAYC, CryptoPunks, and AZUKI are still in the Top 10, while Doodles has dropped to 22nd place.
The liquidity of these NFTs is the most obvious feedback from the market regarding the investment value judgment of these NFTs.
If we extend the timeline to the entire Q3 of this year, we can see that Yuga Labs' Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) still hold the top positions in the Top 5 NFT series, highlighting their dominant position in the NFT field.
Additionally, AZUKI and CryptoPunks are also ranked 3rd and 4th, respectively.
Even in the midst of a deep bear market, the decline in the floor prices of these iconic blue-chip projects still stimulates the purchasing willingness of a small portion of investors.
So, what new attempts have these project teams made in the deep bear market of this year?
3.1.1 CryptoPunks
Key Points for 2023:
- Firmly holding the throne in the NFT world, following the path of digital art
Since Larva Labs sold the IP of CryptoPunks to Yuga Labs, the developer of Bored Ape Yacht Club, last year, Yuga has provided the long-controversial NFT commercial rights to its holders, allowing holders to use their small images for marketing, services, and other commercial activities.
In addition, Yuga is gradually moving the once "Bitcoin" of NFTs, the "OG" CryptoPunks, closer to the art field.
For example, CryptoPunk #110 was exhibited at the Centre Pompidou in France, and a collaboration with Avant Arte resulted in the "10,000 On-Chain" series of physical print collectibles (the frameless version priced at $639, and the framed version at $1,073).
Yuga Labs also announced plans to donate more Punks to leading art institutions worldwide.
Independent filmmaker Sherone Rabinovitz, after five years of work, released the first episode of the documentary series "Punks As Told By CryptoPunks" in collaboration with Zak Group on October 10. Those interested can watch it on YouTube - "01_Punks As Told By CryptoPunks: Matt & John."
Perhaps from a temporal perspective, PFP NFTs can be bluntly divided into CryptoPunks and other NFTs in the NFT world.
As the pioneer of NFTs, CryptoPunks, which opened the NFT era and holds a foundational position, seems to have found a low-effort and high-impact path to maintain its high status.
Its leadership role has already given it enough leverage, and the future premium space will likely focus on the historical value exclusivity of CryptoPunks and the scarcity of artistic value.
3.1.2 Bored Ape Yacht Club (BAYC)
Key Points for 2023:
- Deriving a series of blockchain game projects from the Otherside metaverse gaming platform
Since the selling frenzy of BAYC by the whales Franklin and Huang Licheng in 2023 triggered market panic, the price of BAYC has also experienced a sharp decline. How can the community's confidence be stabilized, and innovative solutions be delivered?
To mention BAYC's movements in 2023, we cannot overlook the overall content layout of its parent company, Yuga Labs.
In May 2022, the metaverse project "Otherside" was launched, serving as the foundation for Yuga's numerous projects and increasingly pointing the future direction towards the gaming field.
According to DappRadar data, the Top 5 NFTs ranked by quarterly sales volume all belong to the gaming sector.
The label of "faith recharge" for gamers is closely linked to this, and from this perspective, the intersection of gaming and NFTs is quite extensive. NFTs can provide a good connection to the gaming world, tokenizing the concepts of various functions in the metaverse. This has been the most practically applied scenario this year, and it is not surprising that Yuga is developing in this field.
On January 18, BAYC launched the new game "Dookey Dash," a web-based parkour game similar to Temple Run. Players must hold a "BAYC Sewer Pass," with a total supply of only 30,000. The pass can be obtained for free by BAYC/MAYC holders or purchased separately on the secondary market (the highest average price was around 6.13 ETH in the second month after the game's launch).
To attract traditional esports players from the Web2 era, the game also offers high prize money, which has increased the value of BAYC and related tokens as the popularity soared.
Returning to Yuga Labs itself, whether it's pioneering virtual land with Otherdeed NFTs, launching the 2D strategy game "Legends of the Mara (LotM)," or collaborating with the popular Web2 game IP "Dungeons & Dragons" for MAYC, Yuga is fully outlining its blueprint in the gaming field.
It is not difficult to speculate that Yuga Labs will also focus on its metaverse gaming platform Otherside in the future, heavily investing in the premium space of future IPs in the gaming sector, actively seeking partnerships with third-party collaborators, integrating popular IP projects such as BAYC, MAYC, Meebits, and CryptoPunks, and developing more immersive entertainment experiences around the combination of NFTs and blockchain games, forming a vast original universe gaming matrix.
3.1.3 Doodles
Key Points for 2023:
- Doodles 2 will migrate to the Flow blockchain - Co-founders sticking to their principles and playing the good cop with the community
For Doodles, after completing a $540 million financing at a valuation of $7.04 billion in September last year, it announced in January of this year that Doodles 2 will be released on the Flow blockchain.
While claiming to lower the entry barrier to reach a broader audience and to build Doodles into a global entertainment media company, apart from issuing press releases, hiring a group of high-profile executives, and collaborating with Crocs to produce holey shoes, there seems to be no new actions.
The decision to migrate the new project to a new blockchain has caused dissatisfaction among community members, leading to a lot of FUD emotions. Co-founder @poopie even provided his own highly personalized response to the community's thirteen questions on Twitter, ending with the sentiment "Don't expect us to go with the flow," displaying a confident (negative) attitude that is somewhat misunderstood but also independent.
The community's perception of the project's operations is crucial for PFP NFT projects. When the management bluntly responds to their supporters and fails to deliver tangible results, it seems reasonable for the floor price to plummet by over -80%.
Based on this information, the future market premium space for Doodles seems quite elusive at the moment. Unless the founding team can appease the emotions of the community members and deliver some effective results, and if Doodles 2 can truly attract more new users and attention after the cross-chain migration, only then can it evoke the "Coloring the world with joy" sentiment that was often mentioned at the beginning, allowing the colorful doodle characters to roam once again in a sky full of joy and imagination.
3.1.4 Azuki
Key Points for 2023:
- The rough Elementals project diluted the value of a generation of Azuki, losing the support of the community
For the Azuki project team, 2023 can be considered a historic year. The launch of the Azuki Elementals NFT series in June, due to the lack of innovative images, repeated minting processes, and poor user experience, greatly undermined the loyalty of the community. For more details, refer to the article "Azuki Encounters Trust Crisis: New Work Questioned, Price Plummets" in the Planet Daily.
The significant mistakes made by the management team may have been due to the development team being overly praised by the community, leading to arrogance, or perhaps the team forgot the original focus on community-first content in the bear market, focusing on short-term gains. In any case, this move has disappointed many holders, leading to a significant drop in the floor price.
Azuki has always emphasized TTP (Trust the process) to the community, but it seems to have tarnished its reputation due to its inconsistent actions.
However, there will always be followers for something. While the departure of members is undoubtedly a great loss for the team, how to quickly adjust the pace, appease the remaining members, and support the community to the maximum extent, building trust and mutual support for "post-disaster reconstruction," is crucial.
It is reported that from November to March next year, the Azuki official will support five offline events for community groups in different Asian regions and launch the AzukiPassport.
When both sides have seen each other at their worst and the remaining loyal holders admit their mistakes and sincerely face them, and when they prioritize the community-first principle and work together to build a better future, perhaps this is the best start.
Azuki has been a good student who has submitted many high-quality answers. Its unique fusion of culture, exquisite art style, and vibrant community has always been its trump card. If it can continue to blend its accumulated essence with continuous innovation and make steady progress, I believe the future market premium value will recognize this craftsmanship spirit.
3.2 Conclusion
In the overall economic downturn of the cryptocurrency market this year, the liquidity of blue-chip NFT projects has become even worse, with declines exceeding half of their previous levels.
Perhaps after the bursting of the bubble during the prosperous period, these NFTs have finally returned to the price levels where they should have been all along.
Each project has encountered significant changes and challenges, and they are all exploring paths other than the narrative of JPEG avatars to support and fill their grand blueprints. Only by addressing these urgent problems can they discuss the future market premium space.
No matter how beautiful the vision and blueprint are, and no matter how large and round the pie is, the long-term delivery of constructive projects is essential to maintain the patience and enthusiasm of holders.
When the survival environment becomes harsh and funds are flowing out, how to stick to the original intention and fulfill promises step by step in a market downturn, while also managing the community well, is a challenge that every project must face.
PFP NFTs are symbols of value used to showcase scarcity and are an excellent medium for attracting and expanding users from outside the circle.
When the market is quiet, if the project team also remains silent and does not make any noise, it will only accelerate the abandonment by holders.
Continuously attracting fresh blood is an inspiring feat, rather than preying on old users as cash cows. Are there no good projects in the market this year that have done this?
Actually, there are. The standout performer in the NFT market this year is undoubtedly Pudgy Penguins.
Analysis of Outstanding NFT Cases in 2023 - Pudgy Penguins
4.1 What are Pudgy Penguins?
In late July 2021, Pudgy Penguins were officially launched and soon caught the wave of NFT proliferation, with an increase of over a hundred times.
However, the founding team gradually became embroiled in scandals, and Pudgy Penguins experienced a sharp drop in floor prices and a change in ownership through acquisition. Subsequently, under the leadership of the new CEO Luca Netz, Pudgy Penguins began to transform gradually and also showed unique insights and effectiveness in marketing.
Although the price has fluctuated and oscillated, Pudgy Penguins experienced a surge in July this year, with the highest average price reaching 10.48 ETH. From Q3, the overall trend has been positive.
4.2 What did Pudgy Penguins do right?
- Marketing
Thanks to Luca's previous experience in aggressive and brutal continuous entrepreneurship, he understands that NFTs need long-term marketing to succeed.
Different from other projects, Pudgy Penguins' youthful marketing efforts have been thorough, such as increasing the Instagram account's followers by 700,000 in a year, uploading a series of popular Pudgy Penguin emoji GIFs on Giphy, and simultaneously releasing short videos and visual content related to IP derivatives.
Traditional Web2 social media platforms have completely forgotten their origins in Web3 NFTs, diligently creating high-quality innovative content and attracting a large audience of real-world users. These accumulations have also greatly helped subsequent sales of physical products.
- Emotional Connection
Not sticking to treating NFTs as expensive digital toys for adults, but using meme marketing and IP derivative output mentioned above to expand the audience to the general public, even children, overall making it more youthful.
- Sustainable External Sources of Income
Not seeking profits by blindly issuing new NFTs, diluting the existing NFT value, but finding more sustainable sources of income, leading the project to scale up efficiently and steadily.
Founder Luca's marketing insights are very practical, and Web3Brand's Ruby and Star have carefully organized and analyzed the key points. I strongly recommend that those interested in the marketing journey of Pudgy Penguins should read: "The widespread adoption of NFTs will come from the love of IP: Pudgy Penguin CEO shares the business model design of Web3 IP."
In addition to the strategic shift, Pudgy Penguins have also been actively cultivating offline presence.
In February of this year, Pudgy Penguins partnered with Retail Monster to launch its IP product Pudgy Toyline in global retail stores.
Then in May, Pudgy Penguins completed a $9 million financing round led by 1kx and announced that the funds would be used to expand its intellectual property, team size, and "provide more services to its community." Its physical dolls, "Pudgy Toys," will also be available on the Amazon marketplace.
The response to this groundbreaking move has been very positive, with 20,000 items sold within just 2 days of the product launch. It even won the Toy Insider's Best Summer Toy Award in 2023, beating Barbie dolls, LEGO, and Pokémon in the new product sales rankings.
In September, Pudgy Penguins announced that its toy products would be available in 2,000 Walmart stores in the United States.
The innovative linkage of Pudgy Penguins with the physical industry has brought sustained enthusiasm to its IP, and this recognition is also reflected in the increase in trading unit prices in the secondary market.
Pudgy Penguins' out-of-the-box marketing has set a great example for many NFT projects facing innovation bottlenecks. It is very clear about its strengths, values the maximization of intellectual property in the new era, and the cultural construction, and the differentiated strategies it can employ. More importantly, it is indeed practicing every step of its roadmap, not letting those plans become mere fantasies.
Conclusion
Returning to the initial question of the article: "Should I buy NFTs at this time?"
5.1
If you genuinely love the IP and the images themselves, perhaps this question does not exist. With prices almost halved in the bear market, now might even be the best time to get involved. However, if it is with an investment mindset, but still with an outdated view, focusing on the past PFP narrative, then perhaps it must be acknowledged that the boom of buying and soaring in 2021 to early 2022 is unlikely to be repeated.
I was deeply impressed by this Q&A from @Christianeth. His point is probably that the biggest problem facing NFTs is that they are still immature.
In the traditional Web 2 world, building an IP often takes a long time, but in Web 3, everything is accelerated. BAYC and Azuki took less than a year to grow into benchmark IPs in this wild and fertile soil. However, people have not yet realized that these teams are not very professional. In other words, when the trend took off, many problems were overlooked or even covered up. They are ultimately lacking in experience and talented individuals, and these need to be honed and refined over time.
5.2
But unlike some who decry "NFT is dead," I believe that NFT will continue to exist in the future.
Originating from the art field, it represents an innovation that gives digital life to content IP. It is a tool based on infrastructure with wide applicability, used to solve some problems that could not be well addressed in the past. Foundational technologies that are inspiring will not become obsolete; they can be optimized and iterated, always leading the way in an emerging field.
5.3
In the future, PFP NFTs will definitely need to strategically minimize their most superficial "small image" characteristics, and even consider it as the most basic and least worthy node in the entire narrative. What should attract users is its content creation prospects, IP intellectual property, more practicality, and the potential for multi-scenario applications, and more…
Only in this way can it force the development team to create more interesting and promising new concepts, and open up more and longer-term paths.
A good PFP NFT should be a super gateway, not limited to a niche product for self-entertainment, but boldly throwing out anchors to catch the olive branches of the real world, making efforts to break out and attract more attention. It can serve as a low-threshold bridge, enriching the Web 3 ecosystem and spawning a lot of content and gameplay. As the PFP NFT market bubble gradually dissipates, and as the number of people looking for quick speculative profits decreases, every entrant's choices are more cautious and honest. For them, NFTs have transitioned from luxury auction items to something closer to their true and pure preferences. I believe this will be a more beautiful and long-term-oriented development direction for the entire NFT market.
5.4
There's a quote from Zhang Yiming that I remember very deeply: "Empathy is the foundation, imagination is the sky, and in between are logic and tools."
This is the underlying logic of product development, and it is even more so in the Web3 world.
Empathy is like the community's emotional card, and the better the operation, the more stable the foundation; unlimited and unbounded innovation is the vast sky of Web 3 projects, and content cultivation also requires a lot of imagination.
And currently, the sky of imagination is visibly crowded with various narratives, some excellent, some superficial, and it might be worth letting the bullet fly a little longer; the path in between is logic and tools, that is, the project's complete roadmap and the technical support behind it, and even the solid resources it relies on.
These three complement each other, and each one is indispensable.
So if you were to ask which NFT projects to focus on in the future, I think you can consider whether the project has these qualities:
Good community management + continuous innovation in content + a complete roadmap & solid technology & rich resources
In the rapidly changing market, there are no completely secure things, but at least it is a better guide for you to consider.
5.5
Finally, from a long-term perspective, it can be said that the entire NFT industry is still not mature enough and is currently in the early stages of development.
The various fluctuations in the early stages can be seen as small steps in trial and error. We still have to believe that there are many builders with strong vitality in this soil full of opportunities. Adversity may even stimulate the will. We can look forward with patience and give the projects and project teams time to grow.
Just as mentioned in the pinned tweet by @Christianeth:
"We need to stand up and face the difficulties we have, give more tolerance and confidence to what we loved.
The dawn will arrive."
Divergent Thinking: No Community, No NFT?
From the development history of several NFT projects mentioned in the article, it can be observed that it is interesting that every "dream big" project wants to create differentiated "after-sales service" and will focus on the community.
Ultimately, betting on the community is still about valuing the "people" inside, the living community members. And human nature is complex and fickle, especially in the attention economy of the Web3 world.
6.1
Looking back at the current deep bear market, it is clear that a project can attract attention by creating a beautiful bubble based on narrative. However, no matter how frequent and appealing the story is, if it does not translate into practical action, it will eventually be questioned and abandoned.
Ultimately, any business project is about dealing with human nature, understanding the pain points, seizing weaknesses, following the pleasure points, and ultimately satisfying the itch.
Although not pleasant to say directly, the fundamental aspect of people in trading is greed.
According to Liang Ning's "Thirty Lectures on Product Thinking," human pain points are fear, pleasure points are instant gratification, and itch points are the ability to satisfy the virtual self.
Greed will endlessly nourish unlimited demands, driving people to take various actions. In the NFT trading market, these points can be further detailed as follows:
6.1.1
Fear, like a heavy stone that was originally pressing on your heart, allows negative emotions from all directions to take advantage and repeatedly pound your heart. In trading, this can lead to FOMO (fear of missing out) and may even form a FUD matrix (fear, uncertainty, doubt). Its existence shatters what you originally believed and confuses your thinking with a flood of information. If you cannot overcome fear, the result may be that you passively lose your direction, your mind becomes empty, and you can no longer hold onto your own opinions, simply following someone else's words and setting off in a car on the roadside.
6.1.2
Instant gratification can be reflected in the increase in asset value and positive interactions among community members. For example, holding NFTs that skyrocket and the level of enthusiastic and optimistic market discussions indicate that you have done the right thing and give you a sense of achievement. Similarly, finding many like-minded friends in the community, even though they are strangers and from different places, creates a wonderful chemical reaction of resonance when people with similar interests and visions come together to support and contribute to a common project. It is indescribable and addictive.
6.1.3
Satisfying the virtual self seems to be naturally compatible with the crypto and NFT markets. It molds an idealized perfect image of yourself, not something you must have and cannot live without, but it brings spiritual satisfaction and comfort, like the superstructure in contrast to the economic base.
In my opinion, the itch point in the NFT market is superficially represented by the virtual avatars in various virtual worlds, and on a deeper level, it is what the NFT project can bring to you in terms of long-term compounding (whether in terms of asset value or spiritual growth).
We do not need to beautify trading in the financial market; it is actually bloody and cruel. Many people enter with a competitive mindset, hoping to quickly enter and exit, and it is best to cash out after a few big waves. Therefore, compared to this, the path of long-term compounding is a secondary choice for them, "possible but not necessary." But for the majority of people who are not good at frequent trading, instant gratification seems to require the good fortune of creating momentum and gathering favorable conditions, and only adhering to long-termism is the ideal self that needs to be satisfied.
Unlike instant gratification, which can bring strong stimulation in a short period of time, long-term compounding is like a thick, good book that can give you a little bit of new inspiration every time you read it, but it is also enduring and provides a sense of security.
6.2
A good project/project team must be able to take care of all the points mentioned above—soothe your fears, dispel your anxieties, appropriately satisfy your greed, provide you with periodic waves of instant gratification, but fundamentally nurture your mind, make you identify with the project's long-term vision, follow the roadmap, slowly taste the fruits of progress, help you find something relatively certain in uncertainty, and find relative calm in turmoil.
Therefore, according to this logic, for a project to operate well, it must clearly understand and accept the current needs and emotions of community members and respond to them one by one. The direction indicated by the community members' opinions is based on the operation of the project itself, which ultimately returns to the essence of content being king. The project must work hard to polish its IP content, have a good plan, and implement every step forward in an orderly and positive manner.
6.3
This is a two-way positive cycle between the project team and community members.
The project team needs to adhere to the original intention of starting the project, shield the temptation of rug pulls, and continuously provide new things to the community members. Community members also need to stick to their original intentions for getting involved, prepare themselves psychologically for the long run, cooperate with the project team, organize community activities to build a cultural atmosphere, actively interact and respond, speak up for the project, and inject a continuous passion.
This process will indeed be very long and is enough to filter out many people. If nothing is given up, the result is likely to be that nothing is obtained.
Ultimately, those who can settle down will be the loyal fans who identify with each other and have a high degree of connection, and they will be able to serve this small group of people stably in the long term. Fine-tuning the operation of this niche content will definitely have a positive feedback.
Sometimes, the efficiency of operation by a "small but beautiful" team is higher, and the ability to shield external voices is also stronger when everyone works together.
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