The collapse of NFT

The final cry of NFT ends with the issuance of Pudgy Penguins coins, and the recent token issuance of Doodles on Solana only caused a few ripples. Yuga Labs’ subtraction is still ongoing, this time even with the most soulful IP, Cryptopunks. Those BitCoin NFTs in the last wave of NFT revival are also close to zero, and these once crazy narratives have indeed long fallen into desolation, no longer attracting any attention.

The original vision of 10k PFP was very beautiful, a community of just the right size helping an IP project from the bottom up to go global, which is completely different from traditional IP projects that rely on heavy investment in content. For example, under Disney, the Marvel Universe, Star Wars, and various animated characters often require years of accumulation and countless funds to truly penetrate people’s hearts and eventually become a gold mine.

And NFT is completely different, with a very low barrier to entry, shaping an IP and capitalizing on IP assets quite quickly. Creators only need to pay some Gas to list their artworks for sale on Opensea, without galleries, toy companies, movie companies, or any professional teams. An IP, a new artist is thus born. We also witnessed three or four years ago, some bottom-up IPs popular in the top entertainment circles of Europe, America, Japan, and South Korea. A grassroots artist can also achieve a reversal of fortune through NFT. For me, as a Z generation who grew up watching Japanese anime, being able to participate in IP investment and incubation through Crypto, which was once out of reach for ordinary people, is also a very dreamy thing.

But in the later ‘crazy nesting dolls’ of BAYC, Azuki’s catastrophic sub-series Elemental was released. The blurred status of NFT gradually becomes clear, it is not like equity or investment, but more like an expensive luxury item with membership benefits. The project team hopes that we can continue to purchase sub-series to support their continuous investment in the IP core value roadmap. The seeds of contradiction are sown here, the project team knows that creating content is expensive, but without content, the IP will die. The sub-series released every few months continues to drain the OG series holders, tormenting everyone in the community, waiting for feedback from the content may take many years, or perhaps this feedback will never come. The cracks continue to widen, the beautiful fantasies begin to shatter as the floor price falls, leaving only various conflicts.

The ace MCN-PoP MART in the IP field

If we regard NFT as the luxury plaything of Generation Z, its causes and failures become clearer. In the fast food era, having no content is not necessarily a bad thing, as it can quickly attract buyers based solely on appearance. For example, Azuki’s art style is quite in line with Asian aesthetics. Under consensus, this grassroots-produced NFT series can quickly follow BAYC to become the third largest blue chip. In the real world, well-known trendy toys such as Bearbrick, B.Duck, and Molly also lack content support but rely on their unique appearances to become popular for a while.

However, trends are always temporary. Without content as the core value, these IPs may become outdated at any time. Constrained by the culture of the coin circle and the very low success rate of NFTs, project parties often revolve around a single IP for continuous derivatives. But the reality is that without a prototype of the core, this trend will pass.

Of course, there is also a type of PFP project that is supported by sufficient content, Japanese-style NFTs. In the past, I have seen at least four or five projects with well-known Japanese comic IPs hoping to make a big splash in the NFT market, but they don’t seem to have thought that the fan base of the IP is almost completely incompatible with this circle, and the second point is that there are too many Japanese anime peripherals to choose from, why should fans pay hundreds of times the price to buy a small picture? Of course, the most important thing is the third point, this small picture can only be a picture, and the imagination space for future empowerment is 0. Even if you purchase a Gundam NFT, you will only be able to access the Gundam Metaverse “SIDE-G”. Wanda’s profits from models, games, and animations naturally have nothing to do with you, and the community will not be a member of the IP incubation, and the entire Gundam fan base will even be considered an outlier. At this point, GameFi’s pain points are actually very similar.

At this point, the PFP project has become a false proposition, only the practical fire of the little penguin is still working hard. So, is there another way out for the small images? I think PoP MART may have provided a different answer.

This originated from a small grid shop in Beijing’s Oumaihui Shopping Center, and relied on the agent Sonny Angel to achieve a turnaround. This single series contributed nearly 30% of PoP MART’s sales at the time. The jealous copyright holder took back the exclusive agency rights a year later, but this move instead led to the birth of an IP empire.

Wang Ning (Founder of PoP MART) had a simple idea at this time, to create proprietary IP, to create IP that others cannot take away. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch the first self-owned trendy toy series - Molly. This little girl with a pouting image instantly became popular nationwide, driven by the uncertainty and dopamine stimulation of blind box gameplay. PoP MART began its rapid ascent like a rocket. By 2019, the annual sales of the single IP Molly had reached 456 million yuan, becoming the core source of revenue for PoP MART at that time.

This kind of joint strategy combining Japanese capsule toys with high-end trendy play collaborations, is also very common in the NFT frenzy in recent years. The basic elements designed by artists are then combined by the project party to create a series of images for sale and operation. NFTs are generally released in blind box form in the initial stage, and the project party will release various rare combinations of images to enhance players’ desire to purchase. The two only differ in the form of release, but tens of thousands of NFT projects and various blue chips have generally failed. And why has PoP MART now come back to life?

I used to attribute the reasons to the difficulty of landing and the high threshold for purchase. The former seems to have no problems at present, while the latter is not the case. NFT also had a free mint period, Goblintown, MIMIC SHHANS were the golden dogs of that period, and creators made a lot of money solely by trading commissions. Many NFTs in the era of inscriptions are even more decentralized, but this does not stop the decline of NFTs. It is very simple to form and join an IP community, but what is difficult is continuity.

So, I think maybe we got the model wrong. After the first rocket-like rise, Molly did not make PoP MART a sensation. The company’s stock price dropped from 21 to 24, just like NFT. However, PoP MART turned red, relying on a whole wall of IP. Now PoP MART has 12 self-owned IPs including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, and 25 exclusive IPs including THE MONSTERS (including Labubu), PUCKY, and SATYR RORY, as well as over 50 non-exclusive joint IPs such as Harry Potter, Disney, and League of Legends.

People’s preferences are always changing, the life of an IP is limited, but what if I have hundreds of options in my hands? Nowadays, Labubu is hot in Europe, America, and Southeast Asia, and the value retention of its peripheral dolls can be compared to plastic Maotai. Yuga Labs’ ideal state is ultimately realized in Web2, but all of this is not surprising. We need to rethink what IP business is, what the roadmap of NFT is, and why PoP MART can achieve such a high level without content support.

Three, Pudgy Penguins

I also participated in the Little Penguin Hong Kong event last year, and this NFT project always treats the community with such enthusiasm. The success of Pudgy Penguins lies in being practical, practical, and practical. NFT itself does not make much of a technological difference, no matter how clever the Mint process design is, it’s ultimately just a JPG. The difficulty of NFT lies in the landing of IP, which is hundreds of times different from the difficulty of creating 10K PFP. Yuga Labs wants to do Metaverse, Azuki wants to do anime. Okay, all of this is cool, but these projects that cost billions to start will only ask the community members for money.

This extremely compressed world is too impetuous, everyone wants to succeed in a hurry. Holders want to make big money, and project parties want to skyrocket. There are not many blue-chip projects willing to bow their heads, and the more impatient they are, the more miserable they end up. The original team of Pudgy Penguins was also such an impetuous grassroots team, and after being assassinated by public opinion, they sold the little penguins at a low price.

At this point, the little penguin only met their true owner, Luca Netz, a worker with many years of physical marketing experience, who brought the little penguin back to its rightful height. Luca Netz is really building a brand, operating a company for NFT holders. From marketing to plush toys to future games, every step of the little penguin is solid, the company can make a profit, and the holders can also profit. There’s nothing special about all this, it’s just doing what it should do. So, the fact proves that bottom-up IP can exist in Web3, it’s just that there are too many project parties who can’t let go of their ego.

So, I really dislike the term ‘falsifiability’, as if certain things should never have existed. Electric cars used to be stupid, and Siri on my phone used to be stupid too. However, that doesn’t prevent the whole city from being filled with green-plated cars now, not to mention AI. Many so-called falsified tracks will still be explored by Web3 in the future, it’s just lacking a compatible project party.

Four, Path

The path to success is simple, but it is also difficult. The next stop for PFP will eventually have to break free from some of the inherent logical frameworks of Crypto and require a lot of accumulation to become the next Web3 Disney. Has scarcity of NFTs had a counterproductive effect as it moves towards the masses? This has been discussed in my previous articles. If it is defined as trendy consumer goods, then the limitation of 10K may be too great. If it is defined as a unique asset and fundraising method specific to Web3, then IP will eventually need to be converted into tangible consumer goods to fulfill the community’s commitments, rather than a bunch of strange sub-series.

Based on the unique culture of the coin circle and the attributes of NFT itself, it is indeed helpless to hold onto an IP for a long time. How to further elaborate on these PFPs? How to expand a project into an IP factory? Perhaps we need to embrace some new concepts, and introduce more technology and gameplay.

Is issuing coins the last stop?

What is the significance of issuing NFT coins? I still don’t understand it. This situation seems more like exploitation of the lower class by the upper class, and also a dilution of the value of OG NFT. I can only interpret it as the project seeking a convenient liquidity exit. From APE to DOOD, without exception, they all seem like variations of meme coins. Their empowerment often involves staking to receive some on-chain transaction dividends, purchasing props in the Metaverse, governance rights, and so on. Ideally, it is a perfect cycle of holder-staker-developer. However, in reality, it seems more like a bubble, caught in a vicious cycle of NFT price decline, mining revenue decline, and token price decline.

And for OG NFT holders, although the Token takes away some dividends and rights. However, most of them will also receive a large number of airdrops at TGE, so no one complains. But in the long run, as mentioned in the fourth paragraph, this is a kind of dilution, and the distribution like Azuki’s Anime is even a blatant robbery. Short-term popularity is important, but the long-term survival of the project is more important. Don’t let issuing coins be the last stop.

Conclusion

In this fast-paced, dopamine era, we have witnessed the rise of many emerging IP in Web2, NFT should thrive in this era, it has many irreplaceable characteristics. Four years ago, I regarded it as the cyber Moutai, but reality is the cyber tulip. There are few people willing to manage ruins, but I believe that beneath the ruins must be the next Labubu.

This article is contributed and does not represent the views of BlockBeats.

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