The Final Chapter and New Birth of NFT

The prosperous era of NFTs seems to have come to an end. The token issuance of Pudgy Penguins marks the conclusion of this era, and the token issuance of Doodles on Solana has also failed to generate much excitement. Even giants like Yuga Labs are continuously downsizing, and even their most iconic Cryptopunks project has not been spared. The BitCoin NFT projects that rose during the last wave of NFT revival are now almost worthless, and the once-crazy narratives have long since faded.

The vision of 10,000 PFP( Profile Picture) NFTs was once so beautiful. It represents a brand new way of IP creation: promoting an IP project globally from the bottom up through a moderately sized community. This is in stark contrast to the traditional model of IP projects where huge investments are made upfront to create content. Traditional IPs like Disney's Marvel Universe and Star Wars often require years of accumulation and enormous 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 assetization is very 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; an IP and a new artist are thus born. A few years ago, we witnessed some bottom-up IPs gain popularity in the top entertainment circles of Europe, America, Japan, and South Korea. Amateur artists can also achieve a turnaround through NFTs. For the Gen Z growing up in Japanese anime culture, being able to participate in what was once an unattainable IP investment and incubation is undoubtedly a dream come true.

However, with the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental of Azuki being released, the positioning of NFTs is gradually becoming clear. It is not a form of equity or investment, but rather more like an expensive luxury good that comes with membership benefits. The project teams hope that holders will continuously purchase sub-series to support their ongoing plans for IP content development. This creates a contradiction: the project teams understand that content production is costly, but without creating content IP, they cannot survive. Releasing a sub-series every few months constantly drains the enthusiasm of OG series holders, tormenting everyone in the community. Waiting for the returns from content may take years, or it may never come at all. The rift begins to widen, and beautiful fantasies collapse as floor prices drop, leaving only various disputes.

If NFTs are regarded as luxury trendy toys for Generation Z, the reasons for their rise and fall become even more apparent. In an era dominated by fast food culture, a lack of content is not necessarily a bad thing; it can quickly attract buyers based solely on appearance. For example, Azuki's artistic style aligns well with Asian aesthetics, and under this consensus, this grassroots NFT series can closely follow BAYC to become the third largest blue chip. In the real world, Bearbrick(, the Bearbrick), B.Duck, and Molly, among other well-known trendy toys, also lack content support, yet they have all gained popularity due to their unique appearances.

However, trends are always fleeting, and IP without content as value support may become outdated at any time. Limited by the culture of the cryptocurrency space and the extremely low success rate of NFTs, project teams often continuously launch derivatives around a single IP. But the reality is that before the core content has taken shape, this trend has already passed.

Of course, there are also some PFP projects with rich content support, such as Japanese NFTs. In the past, I have seen at least four or five projects holding well-known Japanese anime IPs hoping to make a big splash in the NFT market. However, they seem to overlook several key issues: first, the IP fan base is almost completely incompatible with the NFT circle; second, the peripheral products of Japanese anime are already numerous, and fans have no reason to spend hundreds of times the price to buy a small image; most importantly, these NFTs are just images, and there is zero space for future empowerment. Even if one purchases a Gundam NFT, they can only gain access rights to the Gundam metaverse "SIDE-G". The profits from Gundam in models, games, and animations have nothing to do with NFT holders, and the NFT community may even be seen as outsiders among the entire Gundam fan base. The dilemmas faced by GameFi projects are similar.

It seems that PFP projects have become a false proposition, and only pragmatic projects like Little Penguin are still making continuous efforts. So, do these small images have other avenues? I think a certain trendy toy brand may have provided a different answer.

This small shop originating from Beijing turned around thanks to its agency of Sonny Angel. This single series contributed nearly 30% of the brand's sales. The envious copyright owner reclaimed the exclusive agency rights a year later, but this move instead facilitated the birth of an IP empire.

The founder's idea is very simple: to create proprietary IP that cannot be taken away by others. In 2016, the brand collaborated with a Hong Kong designer to launch its first independent toy series, Molly. This pouting little girl character instantly became popular across the country. Through the uncertainty stimulation of blind box gameplay, the brand 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 revenue for the brand.

This model, which combines Japanese gachapon with high-end trendy toys, became quite common during the NFT craze in the following years. Basic elements are designed by artists and then assembled into a series of images for sale and operation by the project team. The initial phase of the NFT launch usually adopts a blind box format, where the project team releases various rare combinations of images to stimulate purchasing desire.

The two only differ in the form of release, but tens of thousands of NFT projects and various blue chips have generally failed. So why is this trendy toy brand experiencing a resurgence?

I once attributed the reasons to difficulties in landing and high purchasing thresholds. The former is indeed a problem, but the latter is not the case. NFTs also had a period of Free Mint, with Goblintown and MIMIC SHHANS being successful examples from that time. Creators can earn substantial profits just by relying on transaction commissions. Many NFTs from the inscription era have further advanced in terms of decentralization, but this still cannot prevent the decline of NFTs. It is easy to form or join an IP community, but the challenge lies in how to sustain its development.

Therefore, I think the problem may lie in the model. After the first round of rapid growth, Molly did not let the brand skyrocket either, as the company's stock price, like the NFT, dropped from 2021 all the way to 2024. But the brand eventually turned profitable, relying on a whole wall of IPs. Today, the brand has 12 proprietary IPs including Molly, DIMOO, BOBO&COCO, YUKI, Hirono, etc., and THE MONSTERS( contains 25 exclusive IPs including Labubu), PUCKY, SATYR RORY, and more than 50 non-exclusive co-branded IPs such as Harry Potter, Disney, League of Legends, etc.

People's preferences are always fickle, and the lifecycle of IP is limited, but what if you have hundreds of choices? Nowadays, Labubu is gaining popularity in Europe, America, and Southeast Asia, and the value retention capability of its surrounding dolls is known as "plastic Moutai." Yuga Labs' ideals have ultimately been realized in the Web2 domain, and this is no coincidence.

We need to rethink what an IP business is, what the development roadmap for NFTs is, and why this trendy toy brand has achieved such high success despite lacking content support.

The success of Pudgy Penguins lies in pragmatism. The NFT itself is difficult to create a technological gap, no matter how cleverly the Mint process is designed, it ultimately remains a JPG image. The real challenge of NFT lies in the landing of IP, which is hundreds of times more difficult than producing 10K PFPs. Yuga Labs wants to create a metaverse, Azuki wants to produce anime; these ideas are very cool, but these projects, starting at hundreds of millions in costs, ultimately still have to seek financial support from the community.

This highly compressed world is too restless, with everyone wanting to achieve fame overnight. Holders want to make a fortune, and project teams want to reach the top in one step. Very few blue-chip projects are willing to be down-to-earth, and the more impatient one is, the harder the fall. The original team of Pudgy Penguins was also an impatient grassroots team, and 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 its rightful height. Luca Netz is truly building a brand and operating a company for NFT holders. From marketing to plush toys and future games, every step of the little penguin is solid and steady. The company can be profitable, and holders can also benefit. This is all very ordinary, just doing what should be done. It has been proven that bottom-up IP is viable in Web3, but there are too few projects willing to lower their stance.

I do not agree with the term "falsification", as if certain things were never meant to exist. Electric vehicles were once very immature, and Siri on our phones was quite clumsy. But that doesn't prevent entire cities from being filled with new energy vehicles today, and AI technology is advancing rapidly.

Many of the so-called discredited tracks will continue to be explored in the Web3 future, but there is a lack of suitable project teams.

The path to success seems simple, but in reality, it is difficult. The future development of PFP must break through some inherent logical frameworks of cryptocurrency. To become the next Disney of Web3, significant accumulation is required. Has the scarcity of NFT had a counterproductive effect during the process of becoming mainstream? I discussed this issue in a previous article. If we define NFT as trendy consumer goods, then a scale of 10K may be too limited; if we define it as a unique asset and fundraising method in Web3, then IP ultimately needs to be converted into tangible consumer goods to fulfill its promises to the community, rather than a bunch of odd sub-series.

Based on the unique culture of the cryptocurrency circle and the attributes of NFTs themselves, it is inevitable to stick to an IP in the end. How can we further innovate on these PFPs? How can we expand a single project into an IP factory? This may require us to embrace some new ideas and introduce more technology and gameplay.

The significance of issuing tokens for NFTs remains unclear to this day. It feels more like an exploitation of the lower levels by those in power, as well as a dilution of the original value of the NFT. I can only understand it as a way for the project to seek a convenient exit for liquidity.

From APE to DOOD, without exception, they all seem like variations of air coins. Their empowerment typically includes staking for on-chain transaction dividends, purchasing rights for items in the metaverse, governance rights, and so on. Ideally, it represents a perfect cycle among holders → stakers → developers. However, the reality is that it resembles a void, trapped in a vicious cycle of NFT devaluation, declining mining returns, and token depreciation.

For original NFT holders, although the tokens have taken away some dividends and rights, most of them will also receive a large airdrop at the TGE, so no one complains. However, in the long run, this is indeed a dilution, and the allocation like Azuki's Anime is even more of a 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 become the final destination.

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging Web2 IPs. NFTs should have thrived in this age, as they possess 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 a cyber tulip. Few are willing to cultivate in the ruins, but I believe that beneath the ruins lies the next Labubu.