The Final Chapter and Reboot of NFT: From Bubble Burst to Potential Revival

1. The Decline of the NFT Craze

The last wave of the NFT market frenzy ended with the token issuance of Pudgy Penguins, and the token issuance of Doodles on Solana only generated a weak response. Yuga Labs continues to cut back on its business, even involving its core IP Cryptopunks. Bitcoin NFT projects that rose during the last wave of NFT revival have also almost gone to zero, and these once-crazy narratives have faded into the past and are no longer receiving attention.

10,000 PFP (profile picture) NFT projects once had a wonderful vision: a moderately sized community supporting a grassroots IP project to go global, which is entirely different from the traditional IP model that invests heavily in content upfront. Traditional IPs like Disney's Marvel Universe and Star Wars often require years of accumulation and substantial investment to truly resonate with people and ultimately become a gold mine.

In contrast, the entry barrier for NFTs is very low, and the speed of IP creation and assetization is extremely fast. Creators only need to pay a small amount of Gas fees to sell their works on Opensea, without the need for galleries, toy companies, or professional teams, giving birth to a new IP and a new artist.

However, with the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental from Azuki being released, the positioning of NFTs has gradually become clearer: they are more like expensive luxury goods with membership benefits, rather than equity or investment. The project teams hope that holders will continuously purchase sub-series to support their subsequent IP development, but this approach continually depletes the interests of original series holders, leading to increasing community conflicts. The beautiful fantasies have shattered as the floor price drops, leaving only various controversies.

2. IP Operation Models in the Real World

If we consider NFT as a luxury trendy toy for Generation Z, the reasons for its rise and fall become even clearer. In an era dominated by fast food culture, the lack of substantial content is not a fatal flaw; it can quickly attract buyers based solely on appearance. In the real world, well-known trendy toys like Bearbrick, B.Duck, and Molly also lack deep content support, yet they have become wildly popular due to their unique appearances.

However, IP without content as its value core may become outdated at any time. Limited by the culture of the cryptocurrency circle and the low success rate of NFT projects, project parties often continue to launch derivatives around a single IP. But the reality is that the craze has already passed before the core is formed.

In contrast, a well-known潮玩 company provided a different answer. The company originated from a small shop in Beijing and transformed by代理Sonny Angel. After the copyright holder reclaimed the exclusive agency rights, the company began to create its own IP. In 2016, the company collaborated with a Hong Kong designer to launch its first自主潮玩 series, Molly, which quickly became popular nationwide. By stimulating consumers' purchasing desire through blind box gameplay, the company began rapid growth.

This model combining Japanese gachapon and high-end trendy toys is also quite common in the NFT craze. Artists design the basic elements, and the project team combines them into a series of images for sale and operation. NFT launches usually adopt a blind box format, where the project team showcases various rare combinations to attract buyers.

However, why do tens of thousands of NFT projects generally fail while this company is experiencing a second spring? The key lies in the fact that the company does not rely on a single IP, but rather has built a whole wall of IPs. Currently, the company owns 12 proprietary IPs, 25 exclusive IPs, and over 50 non-exclusive co-branded IPs.

People's preferences are always unpredictable, and the lifecycle of a single IP is limited. However, if you have hundreds of options at hand, the situation is very different. Today, a certain IP from the company has become a hit in Europe, America, and Southeast Asia, and its related dolls have a preservation value comparable to "plastic Moutai." The ideals of Yuga Labs have ultimately been realized in Web2, which is no coincidence.

We need to rethink the essence of IP operation and the development path of NFT projects. Why has this company achieved such heights in the absence of content support?

3. The Pragmatic Path of Pudgy Penguins

The success of Pudgy Penguins lies in pragmatism. NFT technology itself is difficult to create significant differentiation; no matter how cleverly the minting process is designed, what ultimately presents itself is still a JPG image. The real challenge for NFTs lies in the implementation of the IP, which is hundreds of times more difficult compared to producing 10,000 PFPs. Some projects want to build a metaverse or create anime; these ideas are cool, but the costs often reach hundreds of millions, ultimately forcing them to seek funding support from the community.

In this highly compressed world, people are eager for quick success. Holders want to make profits quickly, and project teams hope to achieve great heights in one step. Very few blue-chip projects are willing to be down-to-earth, and in the end, those who are more impatient often suffer the most. The original team of Pudgy Penguins was also so impetuous that after their reputation was damaged, they sold the project at a low price.

It wasn't until they met their new owner, Luca Netz, that Pudgy Penguins found the right direction. This operator, with years of experience in physical marketing, has brought the project back to where it should be. Luca Netz is truly building a brand and running a company for NFT holders. From marketing to plush toys and future games, every step of Pudgy Penguins is solid and steady, allowing the company to profit and the holders to benefit. There is nothing particularly special about this; it’s just doing what should be done. It has been proven that a bottom-up IP model is viable in Web3, but there are too few project parties willing to lower their stance.

4. Future Path

The path to success is simple yet difficult. The next phase of development for PFP projects requires breaking through the inherent thinking framework of the cryptocurrency circle. To become the next Web3 version of Disney, a significant accumulation is needed. Whether the scarcity of NFTs is counterproductive in the process of going mainstream is a question worth discussing. If NFTs are defined as trendy consumer products, then a scale of 10,000 may be too limiting; if defined as unique assets and financing methods in Web3, then IP ultimately needs to be transformed into physical consumer goods to fulfill its commitment to the community, rather than launching a series of strange sub-series.

Based on the unique culture of the cryptocurrency space and the attributes of NFTs themselves, a long-term focus on a single IP may be difficult to sustain. How can we innovate on the existing PFP foundation? How can we expand a single project into an IP factory? This may require us to embrace some new ideas and incorporate more technology and gameplay.

5. The Significance of Token Issuance

The significance of issuing tokens for NFT projects is still unclear. This practice resembles the exploitation of the lower tier by the higher tier, and it dilutes the original value of the NFT. It may simply be a way for projects to seek a quick liquidity exit.

From APE to DOOD, these tokens are all variations of air coins without exception. They usually grant holders functions such as earning on-chain transaction dividends through staking, purchasing rights for metaverse items, and governance rights. Ideally, this should form a virtuous cycle among holders, stakers, and developers. However, the reality is that they resemble air more, trapped in a vicious cycle of falling NFT prices, declining mining rewards, and decreasing token prices.

For original NFT holders, although the tokens dilute some dividends and rights, they usually receive a large airdrop at the Token Generation Event (TGE), so few people complain. However, in the long run, this is indeed a form of dilution, and the distribution methods of certain projects are even blatant plunder.

Short-term hype is certainly important, but the long-term survival of the project is more crucial. Don't let the token issuance become the endpoint of the project.

Conclusion

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging Web2 IPs. Theoretically, NFTs should have good development in this era because they possess many irreplaceable characteristics. Four years ago, I regarded it as "cyber Moutai," but reality has evolved into "cyber tulip." Although there are few willing to rebuild the ruins, I believe that beneath the ruins lies the seed of the next blockbuster IP.