The Final Chapter and Rebirth of NFT: From Ruin to Rebirth

1. The End of the NFT Boom

The boom of the NFT market seems to have come to an end. The token issuance of Pudgy Penguins became the last highlight of NFTs, while the token issuance of Doodles on Solana only caused a faint response. Yuga Labs continues its reduction strategy, even involving its core IP Cryptopunks. Those Bitcoin NFT projects that rose during the last wave of NFT revival are also nearly at zero, and the once-crazy narratives are now ignored.

The 10,000 avatar NFT project once painted a beautiful blueprint: a moderately sized community promoting a bottom-up IP project to the world, which is completely different from the traditional IP model that requires huge upfront investment in content production. Traditional IPs, such as Disney's Marvel Universe and Star Wars, often require years of accumulation and massive investment to resonate deeply with people and ultimately monetize.

In contrast, the threshold for NFTs is extremely low, and the speed of IP creation and monetization is very fast. Creators only need to pay a small gas fee to sell their works on NFT trading platforms, and can create new IPs and achieve new artists without the need for galleries, toy companies, or professional teams.

Three to four years ago, we witnessed some bottom-up IPs becoming popular in the top entertainment circles of Europe, America, Japan, and South Korea. Ordinary artists can also achieve a comeback through NFTs. For the Generation Z that grew up in the anime culture, being able to participate in once hard-to-reach IP investments and incubation through cryptocurrency is nothing short of a dream.

However, with the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental from Azuki being released, the positioning of NFTs is gradually becoming clearer. They are not like equity or investment, but rather more like expensive luxury goods with membership benefits. The project parties hope that holders will continuously purchase sub-series to support their ongoing investment in the production of IP content. This contradiction lays hidden dangers: the project parties know that the cost of content production is high, but without content IP, they will lose vitality. Frequent issuance of sub-series continuously exhausts the enthusiasm of original series holders, tormenting the entire community. Waiting for content to bring returns may take many years, or may never come at all. The cracks begin to widen, beautiful fantasies shatter as floor prices drop, leaving behind only various disputes.

II. The IP Ace in the Real World: PoP MART

If we regard NFTs as luxury trend toys of Generation Z, the reasons for their rise and fall become clearer. In an era dominated by fast food culture, a lack of content support is not necessarily a bad thing; the appearance alone can quickly attract buyers. For example, Azuki's artistic style aligns with Asian aesthetics, allowing this grassroots NFT series to become the third-largest blue-chip project, following BAYC. In the real world, popular trend toys like Block Bear, Little Yellow Duck, and Molly also gained popularity solely based on their unique appearances, without the need for content support.

However, trends are always temporary. Without content as the core value, these IPs may become outdated at any time. Limited by the culture of the cryptocurrency circle and the low success rate of NFT projects, project teams often continuously launch derivatives around a single IP. But the reality is that before the core is fully formed, this wave has already passed.

Of course, there are also some PFP projects supported by ample content, such as Japanese-style NFTs. In the past few years, I have seen at least four or five projects with well-known Japanese anime IPs hoping to make a big splash in the NFT market. However, they seem to overlook several key issues: the IP fan base and the NFT community are almost completely unrelated; there are already a plethora of Japanese anime peripheral products, and fans have no reason to spend hundreds of times the price to purchase a small image; most importantly, these NFTs are merely images, and there is zero imagination for future empowerment. Even if you buy a Gundam NFT, you can only gain access to the "SIDE-G" of the Gundam metaverse, which has nothing to do with profiting from the Gundam IP in models, games, or animation, and may even be seen as an outsider within the entire Gundam fan base.

At this point, the PFP project has become a false proposition, and only the pragmatic project of the small penguin is still striving. So, does the small image have other avenues? I believe PoP MART may provide a different answer.

This small box store originating from Beijing transformed by代理Sonny Angel. This single series contributed nearly 30% of PoP MART's sales at the time. A year later, the copyright holder reclaimed the exclusive agency rights, which instead facilitated the birth of an IP empire.

The founder of PoP MART, Wang Ning, has a simple idea: to create proprietary IP that cannot be taken away by others. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch its first self-owned trendy toy series, Molly. This pouting little girl quickly became popular nationwide. With the uncertainty brought by the blind box gameplay and the dopamine-driven excitement, PoP MART began its first round of rapid growth. By 2019, the annual sales of the single IP Molly had reached 456 million yuan, becoming the core source of income for PoP MART.

This model that combines Japanese capsule toys with high-end trendy toys has also become quite common during the NFT boom in the following years. Artists design the basic elements, and the project team combines them into a series of images for sale and operation. NFT launches typically use the blind box format, where the project team showcases various rare combinations of images to stimulate purchasing desire.

The two only differ in terms of the release format, but tens of thousands of NFT projects have generally failed alongside various blue-chip projects. So why is PoP MART experiencing a second spring now?

I once attributed the reasons to difficulties in landing and high purchasing thresholds. The former indeed seems to be an issue at present, but the latter is not the case. There was also a period when NFTs could be minted for free, and projects like Goblintown and MIMIC SHHANS performed excellently during that time, allowing creators to earn substantial profits solely from trading commissions. Many NFTs from the inscription era further enhanced decentralization, but this still could not prevent the decline of NFTs. It is easy to form or join an IP community; the challenge lies in how to sustain it.

Therefore, I think the problem may lie in the model. After the initial rapid growth, Molly did not allow PoP MART to become famous in one fell swoop, and the company's stock price, like NFTs, fell from 2021 all the way down to 2024. However, PoP MART ultimately made a comeback, relying on a whole wall of IPs. Today, PoP MART owns 12 of its own IPs, including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, as well as 25 exclusive IPs including THE MONSTERS (including Labubu), PUCKY, and SATYR RORY, along with more than 50 non-exclusive collaborative IPs such as Harry Potter, Disney, and League of Legends.

People's preferences are always unpredictable, and the lifecycle of IP is limited, but what if we have hundreds of options at hand? Nowadays, Labubu is very popular in Europe, America, and Southeast Asia, and the value retention ability of its surrounding dolls can be called "plastic Moutai". The ideals of Yuga Labs have ultimately been realized in Web2, which is not a coincidence.

We need to rethink what the IP business is, what the development roadmap of NFTs is, and why PoP MART has achieved such heights despite the lack of content support?

III. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in pragmatism. The NFT itself is hard to differentiate technically; no matter how cleverly the minting process is designed, it ultimately remains a JPG image. The real challenge for NFTs is the implementation of IP, which is hundreds of times more difficult than creating 10,000 PFPs. Yuga Labs wants to build a metaverse, while Azuki aims to create anime. These ideas are cool, but these projects, which start with costs in the hundreds of millions, will ultimately seek financial support from the community.

In this highly compressed world, people are eager for quick success. Holders want to profit quickly, and project teams hope to achieve great heights in one go. Very few blue-chip projects are willing to be grounded, resulting in more severe falls with impatience. The original team of Pudgy Penguins was once such an impatient grassroots team, and after their reputation was damaged, they sold the project at a low price.

At this time, Pudgy Penguins encountered the true helmsman Luca Netz. This professional with years of experience in physical marketing has brought the little penguins back to their rightful heights. Luca Netz is truly building a brand, operating a company for NFT holders. From marketing to plush toys to future games, every step of Pudgy Penguins is solid and steady, allowing the company to be profitable and the holders to benefit. There is nothing particularly special about this; it is simply doing what should be done. It has been proven that the bottom-up IP model is viable in Web3, but there are too few projects willing to humble themselves.

Therefore, I do not agree with the term "falsification," as if certain things should never have existed. Electric vehicles once seemed foolish, and voice assistants on mobile phones were once unattainable. But this does not prevent entire cities today from being filled with new energy vehicles, and AI technology speaks for itself.

Many so-called discredited tracks will still be attempted in the future of Web3, but there is a lack of a suitable project party.

4. Future Development Path

The path to success is both simple and difficult. The next stage of development for PFP projects must break through the inherent thinking framework of cryptocurrency. Becoming the next Disney of Web3 requires a significant accumulation. Whether the scarcity of NFTs has been counterproductive in the process of becoming mainstream is a question I have discussed in previous articles. If NFTs are positioned as trendy consumer goods, then a limited edition of 10,000 might be too few; if they are defined as assets and financing methods unique to Web3, then IP ultimately needs to be converted into physical consumer goods to fulfill commitments to the community, rather than just a bunch of strange sub-series.

Given the unique culture of the cryptocurrency circle and the attributes of NFTs themselves, the long-term development around a single IP is also inevitable. How can we further innovate based on these PFPs? How can we expand a single project into an IP factory? This may require us to embrace some new concepts and introduce more technology and gameplay.

5. The Significance of Token Issuance

The significance of issuing tokens for NFT projects remains unclear to this day. This practice seems more like the exploitation of the lower tiers by those in higher positions and is also a dilution of the original value of NFTs. I can only understand it as the project team seeking a convenient way to exit with liquidity.

From APE to DOOD, these tokens are all variants of air coins without exception. Their functions usually include staking to obtain on-chain transaction dividends, purchasing metaverse items, governance rights, and so on. Ideally, it should form a virtuous circle among holders → stakers → developers. But the reality is that it resembles something illusory, caught 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 during the Token Generation Event (TGE), so few people complain. However, in the long run, this is indeed a form of dilution, and distributions like Azuki's Anime are even more blatant plunder.

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

Conclusion

In this fast-paced era that pursues instant gratification, we have witnessed the rise of many emerging Web2 IPs. NFT should have thrived in this era, as it possesses many irreplaceable characteristics. Four years ago, I regarded it as the Moutai of the digital age, but reality has proven it to be more like the digital tulip. Few are willing to sort through this ruin, but I believe that beneath the ruins lies the next Labubu.