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

1. The Decline of the NFT Craze

The final cry of the NFT craze stopped with the token issuance of Pudgy Penguins, and the recent token issuance of Doodles on Solana has only garnered a small response. Even top projects like Yuga Labs are continuously scaling down, and even its most iconic IP, Cryptopunks, has not escaped unscathed. The Bitcoin NFT projects that were once the center of attention during the last wave of NFT revival are now nearly at zero, and the once-crazed narratives have faded away, leaving them unnoticed.

The vision of 10,000 PFPs was originally beautiful: a moderately sized community helping a bottom-up IP project to go global, which is entirely different from the traditional IP model of investing huge sums to create content. Traditional IPs like Disney's Marvel Universe and Star Wars often require years of accumulation and massive investment to resonate deeply with people, ultimately becoming a gold mine.

NFTs are completely different; their entry threshold is extremely low, and the speed of IP creation and assetization is very fast. Creators only need to pay a small Gas fee to sell their works on platforms like Opensea, without the need for galleries, toy companies, or professional teams. A new IP and a new artist are thus born.

However, after the "Crazy Matryoshka" of BAYC and the disastrous sub-series Elemental of Azuki were released, the positioning of NFTs gradually became clearer: they are more like expensive luxury goods with membership benefits, rather than equity or investment. The project parties hope that holders will continuously purchase sub-series to support their roadmap for building the core value of the IP, but this approach is constantly consuming the enthusiasm of original series holders. A contradiction arises: the project parties understand that the cost of content creation is high, but without creating content IP, it is difficult to survive. Frequent issuance of sub-series continuously depletes community resources, while waiting for content to yield returns may take years, or even may never come. As the floor price drops, beautiful illusions are shattered, leaving only various controversies.

II. Real-World IP Ace - PoP MART

Viewing NFTs as luxury trendy toys for Generation Z makes the reasons for their rise and fall even clearer. In an era dominated by fast food culture, a lack of content support is not entirely disadvantageous. Some can quickly attract buyers solely based on their appearance, such as Azuki's art style, which aligns well with Asian aesthetics. Under this consensus, this grassroots NFT series has become the third-largest blue chip after BAYC. In the real world, well-known trendy toys like Block Bear, B.Duck, and Molly also lack content support but have gained popularity due to their unique appearances.

However, trends are always fleeting. Without content as the core value, these IPs can become outdated at any time. Due to the cultural characteristics of the cryptocurrency space and the extremely low success rate of NFT projects, project teams often keep launching derivatives around a single IP. But the reality is that before the core has taken shape, this wave has already passed.

Of course, there are some PFP projects with sufficient content support, such as Japanese-style NFTs. However, these projects often overlook a key issue: the IP fanbase is almost completely incompatible with the NFT circle. In addition, Japanese anime peripheral products are already rich and diverse; why should fans spend hundreds of times the price to buy a small image? More importantly, these NFTs often lack the imaginative space for future empowerment. Even if you purchase a Gundam NFT, you can only gain access rights to the Gundam metaverse "SIDE-G", which has nothing to do with the profits obtained by Bandai from models, games, or animations, and may even be regarded as an outlier among the entire Gundam fanbase.

In this context, PFP projects seem to have become a false proposition, with only pragmatic projects like Pudgy Penguins continuing to make efforts. So, do small images have other avenues? PoP MART might provide an alternative answer.

This small kiosk originating from Beijing turned around by代理Sonny Angel. This single series contributed nearly 30% of PoP MART's sales. When the copyright holder reclaimed exclusive agency rights, PoP MART founder Wang Ning's idea was simple: create proprietary IP that others cannot take away. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch its first self-owned trendy toy series Molly, and this pouting little girl image instantly became popular across the country. Through the uncertainty stimulation of blind box gameplay, 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 gachapon with high-end trendy toys has also become quite common during the NFT boom in the following years. Artists design the basic elements, while the project team is responsible for combining them into a series of images for sales and operations. The initial phase of NFT launches usually adopts a blind box format, where the project team releases various rare combinations of images to stimulate purchasing desire.

Despite the different forms of issuance, tens of thousands of NFT projects and various blue-chip projects have generally failed. However, PoP MART is experiencing a resurgence; what is the reason for this?

In the past, I attributed the reasons to difficulties in landing and high purchase thresholds. The former is indeed a problem, but the latter is not. NFTs also had a period of Free Mint, during which projects like Goblintown and MIMIC SHHANS achieved great success, with creators making a fortune just from trading commissions. The NFT era of inscriptions took decentralization a step further, but none of this could prevent the decline of NFTs. It is easy to form or join an IP community, but the challenge lies in how to sustain it.

Therefore, I believe the problem may lie in the model. After the first round of rapid growth, Molly did not make PoP MART a household name, and the company's stock price has been declining continuously since 2021, similar to NFTs. However, PoP MART ultimately achieved a rebound, relying on a whole wall of IPs. Today, PoP MART has 12 proprietary IPs including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, 25 exclusive IPs including THE MONSTERS (including Labubu), PUCKY, and SATYR RORY, as well as over 50 non-exclusive co-branded IPs, such as Harry Potter, Disney, League of Legends, and more.

Human preferences are always fickle, and the lifecycle of IP is limited, but what if you have hundreds of options? Nowadays, Labubu has become a sensation in the European, American, and Southeast Asian markets, and the value retention ability of its peripheral dolls is known as "plastic Moutai." Yuga Labs' ideals were ultimately realized in the Web2 realm, and all of this is no coincidence.

We need to rethink what the IP business is, what the development roadmap for NFTs is, and why PoP MART can achieve such a height without content support.

3. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in practicality, practicality, and practicality. The NFT itself is difficult to differentiate technically; no matter how cleverly designed the Mint process is, it ultimately remains a JPG image. The real challenge of NFTs lies in the implementation of the IP, which is hundreds of times more difficult than creating 10K PFPs. Yuga Labs wants to build a metaverse, Azuki wants to create anime, and while these are all cool, these projects, which can easily cost hundreds of millions, ultimately still need to raise funds from community members.

In this highly compressed world, impatience prevails. Holders are eager to make big money, while project teams want to achieve success overnight. Very few blue-chip projects are willing to be down-to-earth, resulting in more severe falls the more impatient they are. The original team of Pudgy Penguins was also once an impatient grassroots team. After their reputation was damaged, they sold the project at a low price.

At this time, the little penguin met its true owner, Luca Netz. This professional, with years of experience in physical marketing, has brought the little penguin back to the height it deserves. Luca Netz is truly building a brand, running a company for NFT holders. From marketing to plush toys, and future game development, every step of the little penguin is solid and steady. The company can be profitable, and the holders can also benefit. This is all quite normal; it is just doing what should be done. It has been proven that the bottom-up IP model is feasible in Web3, but there are too few projects willing to lower their stance.

4. Future Path

The path to success seems simple, but it is actually difficult. The next stage of development for PFP must break through some inherent logical frameworks of cryptocurrency. To become the next Disney of Web3 requires a significant accumulation. Whether the scarcity of NFTs has played a counterproductive role in the process of becoming mainstream is a question worth discussing. If defined as trendy consumer goods, then a scale of 10K may be too limited; if defined as assets and fundraising methods unique to Web3, then IP still needs to be transformed into physical consumer goods to fulfill its commitment to the community, rather than a bunch of odd sub-series.

Based on the unique culture of the cryptocurrency space and the properties of NFTs, the approach of focusing long-term on a single IP is also a reluctant choice. How can we innovate based on these PFPs? How can a single project be expanded into an IP factory? This might require us to embrace some new ideas and introduce more technologies and gameplay.

5. The Significance of Token Issuance

The significance of issuing tokens for NFT projects is still unclear to this day. This practice resembles an exploitation of the lower-tier by the upper-tier and is also a dilution of the original value of NFTs. I can only understand it as the project parties seeking a convenient way to exit with liquidity.

From APE to DOOD, these tokens are all variants of air coins without exception. Their functions often include earning on-chain transaction dividends through staking, purchasing rights for items in virtual worlds, governance rights, and more. Ideally, it should be a perfect cycle for holders, stakers, and developers. However, the reality is that it resembles a kind of air, trapped in a vicious cycle of falling NFT prices, declining mining yields, and decreasing token prices.

For original NFT holders, although the tokens take away 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 the distribution method like Azuki's Anime is even more blatant plunder.

Short-term hype is certainly important, but the long-term survival of the project is even more critical. Don't let the token issuance be the final stop.

Conclusion

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging Web2 IPs. NFTs should have thrived in this era, as they possess many irreplaceable characteristics. Four years ago, I regarded them as the Maotai of the digital world, but reality has proven they are more like digital tulips. Although there are few willing to tidy up this wreckage, I firmly believe that beneath the ruins lies the next Labubu.