Field Investigation: The Darkest Hour Has Not Come, But NFT Will Not Die

Field Investigation: NFT's Survival Despite Dark Times

First of all, let me state my point of view: PFP is a financial product that can condense cultural consensus. It may become a consumer product in the future, but in the current Web3 environment, PFP cannot be treated according to the logic of consumer products.

I used to be very cautious about discussing the financial attributes of NFT, but everything has two sides. If used properly, financial attributes may not be a bad thing. Bored Ape changed people’s views from “will be killed by Meebits” to “the No. 1 IP in Web3” by relying on a wave of price hikes, and Azuki survived the first crisis by relying on soaring prices. To give a very realistic example, it was difficult for Little Ghost to chat about brand collaborations when the floor price was 0.1+, but things became much easier when the price rose to around 0.3-0.5.

Consensus based on finance (floor price) is easy to form, but consensus based on culture often confuses people, because culture emphasizes foundation, and people often equate the cultural consensus generated based on finance (floor price) with rooted cultural consensus. In my personal opinion, cultural consensus generated based on finance (floor price) always lacks some vitality, just like many young people who are trapped by life calling Jack Ma “daddy” while “enjoying the benefits of 996.”

Since PFP is a financial product that can condense cultural consensus, the “accumulation” work before the project is launched becomes extremely important. Frankly speaking, Little Ghost did not consider this issue at all when it was launched, did not find a group of whales in advance or a market maker, which to some extent led to the price after the launch not skyrocketing like other projects in the same period. But we also regard this as a good thing. Without leveraging finance in an unstable foundation, it became the key to protect us in the bear market.

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You can also ponder an interesting question. If Az Project pulls up again later, will you still “be raised” by it, and will you still invest a lot of effort in “building the community”?

How did doing IP become the original sin of NFT?

Another view that is often seen recently is that NFT should not develop towards IP, and NFT should have new “narratives”.

Indeed, there is a lot of uncertainty in the IP route, and doing IP is a matter that requires a long time of precipitation, which means greater uncertainty and time cost for the Crypto circle, but compared to many unverified and quickly falsified “narratives”, the IP route is a proven path in the market, and this world always needs new IP.

However, Web3 IP is very different from traditional Web2 IP. Most Web2 IP captures a large number of fans through content output and monetizes through derivatives, but Web3 IP is at least currently lacking in content output capabilities. If you say “But isn’t it that Bandai sold Transformers toys before making the Transformers animation?” Okay, Bandai at least has the ability to make toys. However, this does not prove that there is a problem with the track, it only proves that the team’s ability is not good.

I understand why they are not optimistic about the development path of NFT IP. We have also gone through the entire process of product design, production and logistics, which is a very tiring thing. But we don’t have to completely deny the entire track, after all, Pudgy Penguins has given us a good demonstration. In addition to fat penguins, recently I have had some exchanges with the Karafuru team. Their Web2 in Southeast Asia also has a decent income, enough to cover the team’s operating costs.

It seems that NFT IP is not as difficult as many people expected, but the process doesn’t look as “spectacular” as many Crypto projects.

However, another challenge is how to feed back to these OG NFT Holders after earning money in Web2. Because it involves Web2 business, it must be subject to legal supervision, and how to “share the benefits” (or call it feedback) under legal supervision is also a difficult problem in itself.

In addition to the commercial closed loop, IP development means that more people must be brought in. If handled improperly, it will greatly dilute the value of OG Holders, which is also a major reason for this incident. But at present, there are only so few people in the Web3 circle, and if we want to expand the audience, we still rely on users within the circle, which is not very realistic. As mentioned above, project parties generally lack content creation and channel expansion capabilities. Without content creation and channel expansion, they cannot get out of the circle. Therefore, if they want to expand the audience, they can only issue more NFTs, but now no one regards NFTs as consumer goods. If they keep issuing bonds, it will inevitably cause the bubble to burst.

We Web3 People Overestimate Web3?

I admit that this subtitle is a bit clickbaity haha, but it’s something I’ve always wanted to discuss with everyone.

What do I believe in when it comes to Web3? I don’t think it’s about the technical aspects. I don’t understand code and programming, but the awe that AI brings me is stronger from an intuitive perspective. I believe that the most significant change that Web3 can bring to the world is the way of thinking that it brings to the world. Everyone can feel the iteration of productivity, and the shock is normal; but it is difficult to have a tangible feeling if you do not participate in the change of productive relations.

In 2022, Pop Mart had revenue of 4.62 billion yuan and a net profit of 570 million yuan. What can Web3 bring to them? Make money by issuing Molly NFT? It’s not necessary, and there are only a few people in the Web3 circle. From the perspective of productivity, it is difficult for Web3 to bring them significant growth again. But what if we change our perspective? Pop Mart’s current self-owned IP is mainly acquired, which often means larger upfront investment, including capital investment and betting on its future success. Web3 can help Pop Mart quickly build a new self-owned IP from scratch and quickly capture early seed users. As for why Pop Mart hasn’t done it yet, I guess it may be because they are worried about the proportion of financial attributes in it and fear that the risk outweighs the benefits.

A while ago, I chatted with a friend who works in the clothing industry. He wanted to help Web3 IP “empower” and help these Web3 teams create physical products that they cannot make, but after discussing with investors, he felt it was not feasible because the lifecycle of most Web3 IPs is too short, but designing and producing physical products takes time.

Actually, after staying in the Web3 circle for a long time, we need to look up and see the world. There was a time when I pointed to Mondrian’s geometric paintings and said, “They look a lot like the art on Art Blocks,” and I pointed to Keith Haring’s paintings and said, “They look a lot like that silly NFT.” Web3 is a comprehensive discipline that requires us to constantly draw nutrients and grow insights from a broader world. In the final analysis, Web3 is still a small circle, but every honest practitioner has a vision of changing the world, and the world is not changed by bowing our heads.

The darkest hour for NFT has not yet come, but it won’t die

Some people say “Our circle has Ponzi’s blood flowing from birth.”

Ponzi means danger and opportunity. To put it bluntly, the burst bubble is called Ponzi, and the unburst bubble is called finance. As Web3 IP creators, we need to navigate between culture and finance and find a balance between the two.

To be honest, I don’t think the darkest hour for NFT has arrived yet. In addition to the liquidity of the 20k ETH that was taken away, the increasingly malignant Brush Score Mining of Blur and the inadequate mechanism are causing negative impacts on the entire ecosystem. NFT may continue to decline for a period of time.

In addition to the price aspect, I see a lot of NFT players being hurt. Many of them may not participate in community building as actively as before, and many may only participate in transactions in the future. This loss of vitality is even more terrifying to me.

But as a practitioner, I will not judge the entire industry because of the behavior of one project. Because I see the changes it has brought to my life, I see the momentum that the Little Ghost IP has gathered in more than a year is even stronger than the IP that has been operating for several years in Web2. I see that the momentum of the Little Ghost is still getting stronger, and I will always be bullish.

I don’t think there will be a gap between Web3 and Web2 in the future, nor do I think that NFT will be an endless Ponzi bubble. Even if there are gamblers “flowing with Ponzi’s blood” around me, I am also looking forward to more Martin Luther King.

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