When PFP-class NFTs are debunked, is the narrative abandoned or does the true value emerge?

When PFP-class NFTs are exposed, is the narrative discarded or does the genuine value rise to the surface?

Author: Lorraine

Preface:

The motivation for starting this article was when I heard my friends around me frowning and scratching their heads, contemplating whether they should buy a monkey (Bored Ape Yacht Club – BAYC) or Azuki.

This piqued my curiosity and thirst for knowledge, thus embarking on a journey to understand the origin and development of NFTs amidst a sea of information, and eventually forming my own conclusion.

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As a crypto newbie, a literallyNewww Fresher, I forced myself to quickly learn and distill the key points in this process. I summarized and deduced, incorporating my own thoughts after filtering through my brain.

It may seem dull and uninteresting to read this content, but looking back at the entire path, you can clearly see where I started picking mushrooms after falling into the rabbit hole, and all the wildflowers and pinecones I collected along the way, finally returning home with a basket full of things.

You might ask if they are useful. They are not assignments imposed by others, but a way for me to test my learning achievements in stages. The Feynman learning technique is timeless.

Maybe there’s nothing edible when everything is poured out of the basket, but many things may not be assessed solely based on their usefulness. At the very least, it satisfies my initial desire for knowledge and feeds my curiosity bit by bit. It also teaches me not to start with such grandiose themes in the future, but to find smaller points to write smoothly. That makes it worthwhile.

The Web3 world is a dense forest nurtured by the blockchain infrastructure, and NFTs are like LianGuaisscards that everyone has as an entry-level tool. If you’re interested, come along with this article and take a tour of the first rabbit hole in the forest called PFP NFTs.

Main text begins:

Looking back at the past year, although there is still an abundance of NFT projects, the splashes they make are not as significant as before, and more and more people are skeptical of them.

Indeed, in a bear market, people not only look for new opportunities in new projects and scroll through Twitter but also frequently discuss the question, “Should I buy NFTs at this time?”

NFTs have many different subcategories, but the most widely discussed and controversial one in the market is PFP (Profile Picture) NFTs. PFP NFTs refer to NFTs used as personal avatars, which are also the most recognizable and understandable form of NFTs for those outside the Web3 community.

But ever since the US Federal Reserve started raising interest rates in 2022, the bear market in the crypto market has not only accelerated the decline in token prices but also hastened the emergence of the NFT bubble.

NFT market trading volume hits new lows in Q3 2023.

As those previously popular blue-chip PFP NFTs, such as Bored Ape Yacht Club (BAYC), Azuki, CryptoPunks, and Doodles, see their floor prices gradually drop in the face of the current market where supply exceeds demand, the question of whether to enter the market in a timely manner or continue to wait and see has become a dilemma for everyone.

Should I buy NFTs at this time?

The underlying doubts can be summarized in the following aspects:

1. Is the current NFT price already at the floor price, or will it go even lower?

2. If I buy NFTs now at a low price, will it skyrocket to historical highs in the next bull market, allowing me to sell at a profit and achieve financial freedom?

3. Will the narrative about small images become outdated? Can NFTs still ride the growth wave of the next market cycle?

4. Besides the visual attributes of PFP NFTs, will they generate other forms of value, and is it worth spending several ETH to acquire them?

By further condensing the above questions into important keywords and clarifying the train of thought, we can find that everyone’s doubts about NFTs ultimately come down to these two points:

1. Practical/application value

2. Future market premium space

When the discussion around NFTs begins to strongly associate with “value,” it also means that current users are no longer easily buying into the narrative logic of the past bull market floating in a virtual void. If there is no more tangible utility and if there are no visible application scenarios, then it can all be seen as one bubble after another.

The allure of a bull market with returns in the hundreds is tempting. When buying NFTs during a hot market, it’s highly likely that there will be some gains. Any small image can be sold for a good price. As a result, people driven by FOMO mentality find it difficult to listen to too cautious and impartial arguments;

On the other hand, a bear market can be seen as an opportunity. It is only in a less noisy environment that we can calm down and reflect: What was our original intention for getting involved with NFTs? When looking back at the NFT projects that were once popular with our present vision, do they stand up to scrutiny? Are those holders truly patient and valuable diamonds, or are they clinging to mediocrity?

In this article, we will briefly review the important projects in the PFP NFT market and discuss future potential trends.

The value of PFP NFTs

Looking back at the earliest NFTs, the first NFT in 2014, ⌈Quantum⌋, was chosen by the author as a means to auction the digitalization of their art works, emphasizing the immutability and ownership transparency within blockchain technology.

Quantum

In order to understand the value of PFP NFTs, we can learn from history and see how the 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, inspired by early 70s punk art in London, the two founders of Larva Labs created a series of 10,000 unique 24×24 pixel avatars called CryptoPunks.

Later, with the surge of Ether, the founders boldly uploaded them to the Ethereum blockchain, pioneering the exploration of non-fungible tokens.

It can be said that at that time, they followed the bull market and sensed the speculation, and thanks to being the “first to eat the crab” on the Ethereum smart contract, this groundbreaking classic NFT gradually acquired the label of “OG in the crypto community” and a narrative.

Furthermore, CryptoPunk #5822 became the Guinness-certified most expensive NFT collectible, selling for a high price of $23.7 million (equivalent to 8000 ETH at the time), which set a new record for the price of PFP NFT transactions.

2.1.2 Bored Ape Yacht Club (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 a virtual world, but the holder also gains membership to the “Yacht Club” and enjoys the benefits of the BAYC Club. For example, holding a BAYC NFT grants complete commercial usage rights and allows for the sale of merchandise using its image or other commercial transactions.

From here, we can see that the BAYC team has taken another step in exploring the value of NFTs. By granting individuals IP commercialization rights, they have found an anchor that tightly binds them to community members.

2.1.3 Doodles

Six months later, on October 17, 2021, 10,000 colorful ⌈Doodles⌋ NFTs were created by three Canadian artists and launched.

Burnt Toast, responsible for animation design, has previously had many commercial collaborations with top companies such as Google, WhatsApp, and Snapchat, and their personal works have received widespread praise from fans.

Knowing the audience’s preferences, Burnt Toast continues to incorporate bold outlines, cotton candy-like colors, and whimsical doodle designs into the Doodles’ visual identity.

Unlike previous highly personalized and serious NFT images in the market, this highly colorful and friendly appearance quickly gained market recognition.

Just like BAYC has its own club, Doodles also focuses on community operations on Discord: publishing official development roadmaps to NFT holders, establishing a community treasury “Doodlebank” for brand promotion, and giving holders the right to vote on project proposals, and more.

At this stage, it can be observed that Doodles, thanks to the perfect collaboration of its three founders in design and marketing, as well as the dedicated community management by the team, has a high level of openness and inclusivity. They have also made many active and innovative explorations, with the ambition to build the brand into a global entertainment media group and lay a foundation for future cross-industry 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 cryptography, technology, and gaming) launched 10,000 ⌈Azuki⌋ NFTs inspired by Japanese animation.

Azuki comes from Japanese and means “red bean”.

The creative team’s approach is also very different from the directions of the NFTs mentioned above. Thanks to its exquisite art style design and fusion of Eastern and Western cultures, Azuki has attracted many collectors who love East Asian culture. Its aesthetic value at the artistic level is also fully recognized, with sales reaching 300 million dollars within a month after its release, and the total sales even surpassed CryptoPunks and BAYC at one point.

In addition to refreshing art style, AZUKI has taken community operations to the extreme by creating a virtual world called “The Garden,” where holders will enjoy priority access to physical airdrops and event tickets for future projects.

Not only that, AZUKI’s marketing strategy extends to enabling the use of ERC-721A contracts, establishing the virtual world of “The Ruins,” launching the concept of the virtual city “Hilumia,” collaborating with Web2 fashion brands, fragmenting the IP #Bobu to generate $Bobu tokens, and launching the Beanz series of NFTs, among other things.

Just like the post that Azuki wrote on its official Twitter account on the eve of the project’s launch:

“We rise together.

We build together.

We grow together.”

What sets AZUKI apart from the other projects is the team’s innovation and efficiency in pushing boundaries and continuously surprising holders during the hype cycle.

They truly cultivate their own backyard, using innovative marketing, community cohesion, and immersive metaverse storytelling to create a fertile land. They nurture every green field with care, placing the community at the forefront, aiming to build a highly decentralized brand.

Seeing the project team lively and systematically achieve each milestone on the roadmap, Azuki’s holders seem to have found their initial intentions to get involved.

Under the premise of the community interest commonwealth, every small action of the community members is closely linked to the value of NFTs with luxury properties in their wallets. Each holder’s sense of ownership is nurtured infinitely, and they take pride in this unique sense of community belonging. They actively promote the project from various angles, creating a thriving atmosphere under positive feedback loops. This is exactly the decentralized wonderland that Azuki aims to create. Conclusion:

In summary, looking at the above several past typical PFP class blue-chip NFT projects, we can see that the project teams have been increasingly enriching the content that their respective projects can carry when issuing NFTs, and their visions have become more diverse and grand.

Not only have they put in efforts in personal image design for display to the outside world, but they 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 for the long term, and they also hope that the IP can be perpetual and continuous.

Returning to the discussion of the “application value” issue of PFP class NFTs, we can see that the project teams have gradually taken for granted that “by holding our NFT, you can get more than just an avatar.”

2.3 In addition to avatar value, what other values can PFP NFTs have?

2.3.1 Commercial value through linkage with the physical world

In BAYC, by holding an NFT, you enter the club and also have the right to apply the IP to offline commercial scenarios.

As Yuga Labs commented, “Many boring Ape holders have an entrepreneurial spirit and use PFP to create independent entity businesses.” Ordinary people can use PFP avatars as iconic signs to attract business for their physical stores, and major brands such as Li Ning and Adidas have also released BAYC co-branded apparel.

With the global popularity radiating from BAYC, it can enhance publicity for their own physical businesses, allowing holders to feel a sense of achievement both online and offline. This may be the most concrete way to maximize holder satisfaction.

2.3.2 Airdrops of derivative tokens as rewards

Many project teams will release second-generation NFTs shortly after the sale of the first generation, and distribute them as early bird rewards through airdrops to the holders of the first generation.

For example, half a year after the launch of Doodles, the project team started the Dooplicator airdrop program for Doodles OG holders.

Dooplicator NFTs are defined as functional doodle machines that can be used to hatch various types of wearable devices, allowing Doodles OG holders to customize their NFT avatars in various ways. This enables users to freely create their preferred digital alter ego, breaking boundaries and attracting a wider audience for better interactive experiences, setting the stage for the subsequent official launch of Doodles 2.

After the launch, Dooplicator’s minimum price in the secondary market was 0.66ETH, and at its peak, it even reached an average of 3.89ETH.

The mentioned AZUKI is also similar. Two months after the release, Chiru Labs introduced 20,000 Beanz series NFTs. Beanz is defined as AZUKI’s sidekick, with 10,000 being airdropped for free to AZUKI holders, and the remaining half being sold to the public. Beanz once reached a peak average price of 6.4ETH on Opensea.

Airdropping derivative tokens can be seen as an investment value chip that provides additional benefits when buying NFTs to some extent.

Initiatives like Beanz, which offer a “buy one, get one free” concept, not only don’t dilute the value of existing users’ NFTs but also lower the entry barriers for newcomers and increase liquidity. This attracts more exposure and popularity to the project, which can be reflected in the rise of NFT prices. It’s a win-win situation for multiple parties and a welcome sight.

2.3.3 Passports for obtaining future potential features of projects

Just as many project teams have grand plans in their Roadmaps for future major actions, each milestone to be achieved serves as a prominent signpost.

For example, Doodles aims to build the company into a global entertainment media group. Therefore, subsequent actions revolve closely around this theme, such as appointing former Billboard CEO Julian Holguin as CEO, acquiring the Emmy-nominated animation studio “Golden Wolf” to expand Doodles’ licensing rights, and even partnering with Columbia Records to release Doodles records.

When world-renowned and highly professional individuals in the field of visual and audio are invited to join as leaders, you can feel that they are seriously building a ship.

Three months after the release of Doodles NFTs, the official announced the launch of Doodles 2 on the Flow blockchain.

Compared to a single NFT, Doodles 2 is more like a brand new game map, characterized by customizable and dynamic doodle avatars. The vision is to step out of the Ethereum ecosystem and lower the barriers for everyone to have their own digital identity.

Therefore, the official subsequently launched a new project called SLianGuaice Doodles, calling it “Doodles’ non-dilutive expansion content.”

It is different from the typical increased issuance of small avatar images. It is a new image based on the existing Doodles NFTs, which means only Doodles holders can obtain it.

Holders can package their Doodle NFTs through the Doodle Bot smart contract, and the randomly generated spaceship will be synthesized with the original Doodle to create the SlianGuaice Doodle NFT.

It can be understood as transforming the original Doodle character into an astronaut animated version of Doodle. The animation and cosmic scenery make the visual presentation more rich. This is also an important upgrade closely related to the narrative of Doodles2. Holders can experience the basic gameplay and worldview of Doodles2 through this method.

This is a small step for the doodle characters to explore space, and a big step for the entire Doodles universe spaceship to leap across the Web3 galaxy.

Although the future portrayed in the blueprint is not so clear, it has unlimited potential and imagination. Early adopters of holders can own these invisible “LianGuaissport” and enjoy the early access tickets to explore the metaverse world, and see what the so-called “future” will be like.

Premium space for the future market of 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, with the current decline in royalty income from NFTs, it is still too early and immature to discuss the future premium space of NFTs. However, we can deduce some possibilities for obtaining premium opportunities in the future from the current market conditions of blue-chip projects mentioned above.

3.1 Blue-chip NFT status quo

For the 4 classic blue-chip NFTs listed above, the average transaction volume on Opensea in the past year was selected for horizontal comparison. It can be found that in the bear market of the past year, the unit price of these projects has also experienced a significant decline:

The overall NFT market transaction volume has shrunk significantly, showing a state of “inventory consumption”.

As of now, according to the OpenSea rankings of NFT circulation transaction volume in the past 30 days, among the blue-chip projects mentioned above, BAYC, CryptoPunks, and AZUKI are still in the Top 10, while Doodles has dropped to 22nd place.

And the liquidity is the most obvious feedback from the market on the value of NFT investment.

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 rank at the top, indicating their dominant position in the NFT field.

In addition, the aforementioned projects AZUKI and CryptoPunks are also ranked at 3 and 4 respectively.

Despite being in a bear market, the dip in the floor prices of these iconic blue-chip projects still stimulates the purchasing desire of a small group of investors.

So, what new attempts have these projects made in this bearish year?

3.1.1 CryptoPunks

2023 Key Points:

-Securing the OG position in the NFT world and taking the digital art route

After Larva Labs sold CryptoPunks’ IP to the developers of Bored Ape Yacht Club (BAYC), Yuga Labs, the long-controversial rights in the NFT business are now provided to the holders, meaning that holders can finally utilize their small images for marketing, services, and other commercial activities.

In addition to this, Yuga Labs is gradually moving closer to the art field, which was once seen as the “Bitcoin” of NFTs.

For example, CryptoPunk #110 was exhibited at the Centre Pompidou, a modern art museum in France, and Avant Arte collaborated to launch the “10,000 On-Chain” series of physical print collections (the unframed version reportedly priced at $639, while the framed version is priced at $1,073).

Yuga Labs also announced plans to donate more Punks to leading art institutions worldwide in the future.

Btw, independent filmmaker Sherone Rabinovitz, who spent five years perfecting it, collaborated with Zak Group to release the documentary series “Punks As Told By CryptoPunks,” and the first episode finally aired on October 10th. Those interested can check it out on YouTube – 01_Punks As Told By CryptoPunks: Matt & John

Perhaps, from a temporal perspective, PFP NFTs can be simply and crudely divided into CryptoPunks and other NFTs.

CryptoPunks, which opened the NFT era and holds a foundational position, seems to have found a route that is both easy and low effort, yet maintains a high status.

Its role as an inspiring leader has already given it enough leverage, and the future premium space will likely focus on the historical value and artistic scarcity of CryptoPunks.

3.1.2 BAYC

2023Key Points:

-Derive a series of chain game projects based on the metaverse gaming platform Otherside

Since the market panic caused by the selling wave of giants Franklin and Huang Licheng in 23, the price of BAYC has been fluctuating violently all the way down. How can we stabilize the hearts of community members and deliver innovative answers?

When it comes to BAYC’s movements in 2023, we cannot ignore the overall content layout of the parent company Yuga Labs.

In May 2022, the metaverse project “Otherside” went live, which became the foundation for Yuga’s numerous projects and clarified the future direction towards gaming.

According to DappRadar data, the top 5 quarterly sales of NFTs belong to the gaming field.

The label of game players is often closely related to “faith charging,” and from this perspective, the intersection between games and NFTs is significant. NFTs can provide a good connection to the gaming world, tokenize the concepts of various functionalities in the metaverse, and can be said to be the most practically applied scenario this year. It is not surprising that Yuga is developing in this field.

On January 18, BAYC launched a new game called “Dookey Dash,” which is a web-based parkour game similar to Temple Run. Players must hold “BAYC Sewer LianGuaiss,” with a total supply of only 30,000. The acquisition method can be either free for BAYC/MAYC holders or purchased separately on the secondary market (the average highest price in the second month of the game was about 6.13 ETH).

To attract traditional esports players from Web2, the game also offers high prizes, which have increased the value of BAYC and related tokens along with its popularity.

As for Yuga Labs itself, whether it is the development of virtual land Otherdeed NFTs, the launch of the 2D strategy game Legends of the Mara (LotM), or the collaboration with MAYC and the well-known Web2 game IP “Dungeons & Dragons”… Yuga is fully depicting its blueprint in the gaming field.

It is not difficult to speculate that Yuga Labs will also strongly focus on its own metaverse gaming platform, Otherside, in the future. They will heavily invest in the gaming industry, where there is a high market premium for future IPs. They will also actively seek collaboration with third-party partners to integrate popular IP projects such as BAYC, MAYC, Meebits, CryptoPunks, etc. They will create a large-scale original metaverse gaming matrix centered around the combination of NFTs and blockchain games, offering immersive entertainment experiences.

3.1.3 Doodles

Key points for 2023:

– Doodles 2 will migrate to the Flow blockchain – Co-founder remains true to himself and acts as the spokesperson for the community

On the Doodles side, after completing a $70.4 million financing round with a valuation of $540 million in September of last year, they announced in January of this year that Doodles 2 will be released on the Flow blockchain.

They claimed that they wanted to lower the entry barrier and attract a broader audience, aiming to build Doodles into a global entertainment media company. However, besides issuing press releases, hiring a group of top management personnel, and collaborating with Crocs to produce holey shoes, there seems to be no other new actions.

The decision to migrate the new project to a new blockchain has caused dissatisfaction among community members and has triggered a lot of FUD (fear, uncertainty, and doubt) sentiment. Co-founder @poopie even made his own highly personalized response to the community’s thirteen questions on Twitter, ending with the statement, “Don’t expect us to go with the flow,” showing a confident (negative) attitude that is not understood but also independent.

The community’s opinion on the project’s operation is crucial for PFP NFT projects. When you straightforwardly respond to your supporters but fail to deliver tangible results that shut their mouths, it seems reasonable for the floor price to continue to plummet, with a drop of over -80%.

Based on this information, the market premium space for Doodles in the future seems quite elusive at the moment. Unless the founder’s team can appease the emotions of the community members and deliver some effective results, and if Doodles 2 can actually attract more attention and participation from new users after cross-chain migration, then it can revive the phrase that was often mentioned at the beginning, “Coloring the world with joy,” and allow each colorful doodle figure to roam in a sky full of happiness and imagination.

3.1.4 Azuki

2023 Key Points:

– The rough Elementals project diluted the value of the Azuki generation and lost public support

2023 can be said to be a historic year for the Azuki project.

The AzukiElementals NFT series launched in June suffered from a lack of innovative artwork, hindered Mint process, and poor user experience, greatly impacting the sticky and loyal community members. For more details, you can refer to this article from the Planet Daily: Azuki encounters trust crisis: New works questioned, prices plummeted

The management made such a major mistake, perhaps because the development team was elevated by the community and nurtured an arrogant attitude, or perhaps the team forgot the original intention of putting content first in the bear market, focusing on short-term gains. In any case, this move disappointed many holders and caused a significant drop in floor prices.

Azuki has always emphasized the TTP (Trust the process) to the community members, but it seems to have shattered its own reputation due to inconsistent actions.

However, there will always be followers for a certain thing. While the departing members are undoubtedly a great loss for the team, it is crucial to quickly adjust the pace, appease the remaining members, support and trust the community to the maximum extent, and engage in “post-disaster reconstruction”.

It is reported that from November to March next year, Azuki will support five offline events in different Asian regions and launch AzukiLianGuaissport (passport).

When we have seen each other at our worst and the remaining loyal holders admit their mistakes and are sincere, and when we prioritize the importance of community, together we can build a better future blueprint. Perhaps, this is the best beginning.

Azuki used to be a good student who gave many high-quality answers. Its unique fusion of cultural diversity, exquisite art style, and vibrant community have always been its strengths. If it can continue to combine accumulated essence with continuous innovation, step by step, I believe the future market premium value will recognize this craftsmanship spirit.

3.2 Summary

In the overall bearish environment of the cryptocurrency market this year, blue-chip NFT projects have experienced worse liquidity, and their decline rates have also surpassed half, reaching low points.

Or perhaps after the bubble of prosperity burst, these NFTs finally returned to their original price stability positions.

Each project has encountered significant changes and challenges, exploring paths other than narrative JPEG avatars to support and fill their ambitious blueprints. Only by addressing these urgent issues can we discuss the future market premium space.

No matter how many beautiful visions and blueprints are talked about, no matter how big and round the pie is drawn, if constructive projects are not delivered in the long term, it will inevitably wear down the holders’ patience and enthusiasm.

When the survival environment becomes harsh, when funds are flowing out, how to stick to the original intention, fulfill promises, and build while still managing the community well, is a challenge that every project must face.

PFP NFT is a symbol of value used to showcase scarcity, and an excellent medium to attract and expand users beyond the circle.

When the market is quiet, if the project also hides in the dust without making some noise, it will only accelerate holders’ abandonment of you.

Being able to continuously attract fresh blood is a thrilling feat, rather than just relying on old users as cash cows. So, are there no good projects doing this in the market this year?

Actually, there are. The standout NFT project in the market this year is undoubtedly Pudgy Penguins.

Analysis of Excellent NFT Case – Pudgy Penguins

4.1 What is Pudgy Penguins?

In late July 2021, Pudgy Penguins was officially released and soon caught the wave of the NFT boom, with its price increasing over a hundredfold.

However, the founding team was gradually exposed in scandals, and Pudgy Penguins experienced a drop in floor price and was acquired. Since then, under the leadership of the new CEO Luca Netz, Pudgy Penguins has gradually transformed and has had unique insights and effectiveness in marketing.

Although the price has also experienced fluctuations and oscillations, Pudgy Penguins had a surge in July this year, with the highest average price reaching 10.48 ETH. In terms of Q3, the overall trend has been positive and upward.

4.2 What did Pudgy Penguins do right?

1. Marketing

Thanks to Luca’s early years of brutal and savage entrepreneurial experience, he understands that NFTs need long-term marketing to be successful.

So, unlike other projects, Fat Penguin’s marketing is truly remarkable in its youthfulness. Within a year, they increased their Instagram followers by 700,000, uploaded a series of popular Fat Penguin emoticon GIFs on Giphy, and simultaneously released short videos and graphic content related to their IP creation, etc…

They completely forgot their Web3 NFT origin on traditional Web2 social media platforms and diligently created high-quality innovative content that attracted a large audience of real-life users. These achievements also played a significant role in the subsequent sales of physical products.

2. Emotional Connection

Not treating NFTs as expensive digital toys for adults, they use the aforementioned meme marketing and the production of IP-related derivatives to expand their target audience to the general public, even children, and create a youthful image for the project as a whole.

3. Sustainable External Revenue Sources

Instead of generating income through blind issuance of new NFTs, which dilutes the value of existing ones, they find more sustainable alternative sources of revenue to lead the project to scalable and steady growth.

Founder Luca’s marketing insights are full of valuable information, and Ruby and Star from Web3Brand have done a great job of organizing and analyzing them. I highly recommend reading their article if you are interested in Fat Penguin’s marketing journey: NFT’s massive adoption will come from the love of IP: Fat Penguin CEO shares insights on Web3 IP’s business model design.

In addition to the strategic changes, Fat Penguin has also made tangible efforts offline.

In February of this year, Fat Penguin partnered with Retail Monster to launch their IP merchandise, Pudgy Toyline, in global retail stores.

Then in May, Fat Penguin completed a $9 million financing led by 1kx and announced that the funds would be used to expand their intellectual property, team size, and “provide more services” to their community. Their physical dolls, “Pudgy Toys,” will also be available on Amazon.

This impressive feat received excellent feedback. Within just two days of the product launch, 20,000 pieces were sold, and the toy even won the Toy Insider’s Best Summer Toy for 2023, surpassing bestsellers such as Barbie, LEGO, and Pokémon in the new product sales ranking.

In September, Fat Penguin announced that its toy products will be available in 2,000 Walmart stores in the United States.

The innovative collaboration between Fat Penguin and various physical industries has brought continuous popularity to its IP, which is also reflected in the rising trading prices on the secondary market.

Fat Penguin’s standout marketing has set a good example for many NFT projects that have fallen into an innovation bottleneck. It clearly understands its advantages, values the maximization of intellectual property and cultural construction in the new era, and uses its own unique boxing techniques. Furthermore, it is actually taking every step outlined in the roadmap, without turning those plans into mere fantasies.

Conclusion

Let’s go back to the initial question of the article: “Should I buy NFTs now?”

5.1

If you genuinely like the IP and the small images themselves, then perhaps this question doesn’t exist for you. In the bear market, prices have plummeted, and now is even considered the best time to get started;

But if you are thinking of investing, yet still holding onto outdated perspectives, focusing on the past narratives of PFPs, then perhaps you must admit that the peak of buying and watching them take off, as it was in 2021 to early 2022, is unlikely to be repeated.

@Christianeth’s Q&A left a deep impression on me. His point was that the biggest problem faced by NFTs is immaturity.

Creating IP for traditional Web 2.0 companies often takes a long time. But in Web 3.0, everything is accelerated. BAYC and Azuki only took less than a year to grow and become benchmark IPs in such a wild and fertile environment. However, people haven’t realized that those teams are still not very professional. In other words, many flaws were overlooked or even covered up during the rise of the trend. They lack experience and outstanding talents, which require time and accumulation.

5.2

But contrary to some pessimistic views that claim “NFTs are dead,” I believe that NFTs will continue to exist in the future.

Originating from the art field, NFT represents an innovation that gives digital life to content IPs. It is a tool based on infrastructure that has broad applicability and is used to solve problems that couldn’t be fully addressed in the past. Inspirational underlying technologies never go out of style. They can be optimized and iterated, always staying on the path of growth.

5.3

And when it comes to PFP NFTs, in the future, they will definitely need to strategically minimize the superficial “small image” feature and even treat it as the most basic and least noteworthy node in the entire narrative. What should attract users is its potential for content creation, intellectual property rights of the IP, greater utility, and potential for application in various scenarios, etc…

Only by doing so can we push the development team to create more interesting and promising new concepts and pave more roads, both wider and far-reaching.

A good PFP NFT should be a super entrance. It should not be limited to a niche product popular within a small community. Instead, it should boldly throw out anchors, catch the olive branch of the real world, and strive to break free from the circle to attract more attention. It can serve as a low-threshold bridge, enrich the Web 3 ecosystem, and give rise to a lot of content and gameplay. When the PFP NFT market bubble gradually dissipates and there are fewer people looking for quick speculative profits, every participant’s choice becomes more cautious and honest. For them, NFTs transform from high-priced auction goods to something closer to their own true and pure preferences. This, I believe, would be a better and more long-term-oriented direction of development for the entire NFT market.

5.4

There is a quote from Zhang Yiming that I remember quite well: “Empathy is the foundation, imagination is the sky, and logic and tools fill the gap in between.”

This is the fundamental logic behind product development, and it holds even truer in the Web3 world.

Empathy is like a card of emotional connection within a community, and the better the community is managed, the more stable the foundation becomes;

The unlimited and bottleneck-less capacity for innovation represents the vast sky of Web 3 projects, and cultivating content heavily relies on imagination.

But right now, it’s evident that the sky of imagination is crowded with all sorts of narratives, both refined and crappy. So, why not let the bullets fly a bit longer?

The middle path consists of logic and tools, namely the project’s well-developed roadmap, the technical support behind it, and even the solid resources it relies on.

These three elements are interdependent, and each of them is indispensable.

So, if you’re wondering which NFT projects you should focus on in the future, I think you can consider whether the project exhibits these traits:

Effective community management + continuous capacity for content innovation + comprehensive roadmap & solid technology & abundant resources

In a rapidly changing market, there is certainly no completely foolproof thing, but at least it can serve as a good compass for you to rely on.

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 its early stages of development.

All the fluctuations and changes in the early stages can be seen as small steps in trial and error. We still have to believe that there are many thriving builders on this fertile soil full of opportunities. Adversity may even stimulate one’s willpower. We can approach projects and their teams with anticipation and patience, giving them time to grow.

As @Christianeth mentioned in the pinned tweet:

“We need to stand up and face the difficult we have, give more tolerance and confidence to what we loved.

The dawn will arrive.”

Digressive Thinking: No Community, No NFT?

From the development journey of several NFT projects mentioned in the article, it can be observed that interestingly,

every ambitious project aims to create differentiated “after-sales service” and pays attention to the community.

In the end, relying on the community means valuing the “people” inside, the living members of the community. And human nature is complex and fickle, especially in the attention economy of the Web3 world.

6.1

Looking back at the present bearish state, it is clear that if a project relies on storytelling to create beautiful bubbles, it can attract attention. But no matter how frequently and enticingly the story is told, if it does not translate into actual action, it will be questioned and discarded by people.

Ultimately, any business project involves dealing with human nature, which requires understanding pain points, seizing weaknesses, following pleasure points, and ultimately satisfying itchy points.

Although it may not sound pleasing, but to put it bluntly, the fundamental aspect of people in transactions is greed.

According to Liang Ning’s “Thirty Lectures on Product Thinking,” the pain point of humans is fear, the pleasure point is instant gratification, and the itchy point is the ability to satisfy virtual selves.

Greed can endlessly nourish unlimited needs, driving people to perform various operations. So in the NFT market, these points can be concretely refined as follows:

6.1.1

Fear, like a heavy stone that was originally pressing on your heart, when it is lifted, negative emotions from all directions will seize the opportunity to enter and repeatedly pound your heart.

In trading, it manifests as FOMO (Fear of Missing Out), and it may also form a FUD matrix (Fear, Uncertainty, Doubt).

Its existence is to shatter what you originally believed in, and then fill your mind with a bunch of confusing information. If you cannot overcome fear, the result may be that you passively lose your steering wheel, your mind becomes empty and can no longer hold any of your own insights, and you just go along with what someone else said and hop into a car on the side of the road and start moving.

6.1.2

Instant gratification can be reflected in the increase in asset value and positive interaction feedback between community members.

For example, when the NFTs you hold skyrocket and the market discussions are more actively optimistic, it means you have done something right and you feel more accomplished;

Or when you find many like-minded friends in the community, even though you are strangers and in different places, when people with the same hobbies and visions come together to voice and contribute to projects they love, the resonance generated is a wonderful chemical reaction that is indescribable and addictive.

6.1.3

Fulfilling your virtual self, this idea seems to naturally align with the Crypto and NFT markets.

It portrays an ideal version of yourself, something that is not essential for survival but provides you with spiritual fulfillment and solace, serving as the superstructure compared to the economic base.

In my opinion, the focal point of the NFT market, to put it simply, is the intuitive virtual avatars of different virtual worlds. Going deeper, it is the long-term compounding effects that the NFT project can bring you, whether in terms of asset value or personal growth.

We don’t need to beautify the transactions in the financial market because they are, in reality, bloody and brutal. Many people dive into the market with a mentality of fierce competition, aiming to make quick profits and then enjoy a peaceful life after going all in on a few big moves.

Therefore, compared to that, taking the path of long-term compounding returns is a secondary option for them, something they can do but is not necessary. However, for the majority of people who are not good at frequent trading, instant gratification feels more like something that requires riding on the wave, having favorable circumstances, and a stroke of luck, whereas adhering to long-termism is what satisfies their itch, their ideal self.

Unlike the short-term stimulation that instant gratification can bring you, long-term compounding is like a thick book that can offer you even a little enlightenment with every read, while also providing lasting and grounded peace of mind.

6.2

A good project/ team must address all of the above points:

It should pacify your fears, dispel your anxieties, satisfy your greed appropriately, bring you temporary waves of instant gratification, but fundamentally nurture your mindset, make you identify with the project’s long-term vision, follow the roadmap, taste the fruits of progress little by little, and help you find something relatively certain in uncertainty, and find relative calm amidst turmoil.

So according to this logic, for a project to operate well, it must clearly understand the current needs and emotions expressed by community members, and accept, address, and be honest with each one of them. The direction indicated by the community members’ opinions is based on the project’s own operating situation, which goes back to the essence of content being king. The project team must work hard on the IP content, have good planning, and implement it in every step of progress, presenting a systematic and positive momentum.

6.3

This is a process of mutual positive feedback between the project team and community members.

The project team needs to adhere to the initial intention of starting the project, block the temptation of Rug Pull, and continuously provide new things to the community members. Community members also need to hold onto their initial aspiration to participate, be mentally prepared for the long run, cooperate well with the project team, organize community activities among members to build a cultural atmosphere, actively interact and respond, and speak out for the project and inject a continuous passion.

This process can indeed be very long, enough to filter out many people. If you can’t give up on anything, the result is very likely that you won’t get anything either.

What can be achieved in the end is definitely those loyal fans who recognize and have a high degree of connection with each other, and can serve this small group of people well in a stable and long-term manner. Operating this niche content in a refined manner will surely yield positive feedback.

Sometimes, a “small and beautiful” team has higher operational efficiency and a stronger ability to shield external voices when working together.

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