Author: Lorraine
Preface:
The inspiration for writing came when I first heard a friend around me frowning and scratching their head in contemplation: "Should I buy a monkey (BAYC) at this time? The monkey is still too expensive, or should I buy Azuki?"
This also happened to pique my curiosity and thirst for knowledge, so I embarked on understanding the ins and outs of NFTs in a sea of information and came to a conclusion.
As a crypto novice, a literallyNewww Fresher, I forced myself to quickly learn and distill the key points in this process, to summarize and conclude, and after filtering through my brain, I came up with some thoughts based on my second understanding.
It can be said that this content may be very boring and not so interesting to read, but looking back at the whole path, you can clearly see where I started picking mushrooms after falling into the rabbit hole, what wildflowers I touched along the way, and what pine cones I picked, finally returning home with a basket full of things.
You may ask if they are useful, this is not an assignment that someone else has given me to submit, but it is the result of my desire to test my learning achievements in this stage of research, and the Feynman learning method never goes out of style.
Perhaps there is not a single thing in the basket that can be eaten, but many things may not be so utilitarian as to be conclusively judged by their usefulness. It at least satisfies my original desire for knowledge, my curiosity has been gradually satisfied by myself, and it also makes me realize that in the future, I should not raise such big themes and should find smaller points to write about, then it's worth it.
The Web3 world is like a dense black forest nurtured by the blockchain infrastructure, and NFTs are like a Passcard that everyone in the entry-level world holds. If you are interested, follow this article and take a stroll into the first rabbit hole in the forest called PFP NFT together~
The main text begins
Looking back over the past year, although NFT projects continue to emerge, the splashes they make are not as big as they used to be, and more and more people are disillusioned with them.
Indeed, in the bear market, in addition to looking at new opportunities for new projects and scrolling through Twitter, there is also a question that is most commonly mentioned and discussed: "Should I buy NFTs at this time?"
In fact, NFTs have many different subcategories, and the most widely discussed and controversial in the market is PFP. PFP (Profile Picture) NFTs refer to NFTs used as personal avatars, and they are also the most easily recognizable and understandable form of NFT for those outside the Web3 community.
However, since the Fed began raising interest rates in 2022, the bear market in the crypto market has not only accelerated the decline in coin prices, but has also accelerated the emergence of the NFT market bubble.
In Q3 of 2023, the NFT market trading volume hit a new low.
As the floor prices of previously high-flying blue-chip PFP NFTs, such as Bored Ape Yacht Club (BAYC), Azuki, CryptoPunks, and Doodles, gradually fell in the face of the current market where supply exceeds demand, the question of whether to enter the market in a timely manner or continue to wait has become a point of contradiction for everyone.
1. Should I buy NFTs at this time?
The doubts hidden behind it can be summarized as follows:
Is the current price of NFTs already at the floor, or will there be even lower prices?
If I buy NFTs at the current low, will it surge back to historical highs when the next bull market arrives, allowing me to sell and achieve financial freedom?
Will the narrative about small pictures become outdated? Can NFTs still catch the next cycle of market growth?
Besides the intuitive avatar properties of PFP NFTs, will they generate other values, and is it worth it for me to spend several ETH to get involved?
When the above questions are summarized into important keywords, it can be seen that everyone's doubts about NFTs ultimately boil down to these two points—
1. Practical/application value
2. Future market premium space
When discussions about NFTs begin to be strongly tied to "value," it also means that current users are no longer easily buying into the narrative logic that was floating in the bull market in the past. If there is no more practical utility, if there are no more visible application scenarios, then all of it can be seen as one bubble after another.
The allure of a hundredfold return in the bull market is tempting, and as long as you enter the NFT market during the hot market, you will most likely not return empty-handed. Anyone can sell a small picture for a good price, so people driven by FOMO are unlikely to listen to too conservative and fair arguments;
The bear market, on the other hand, is not without its opportunities. It is only in a less noisy environment that one can calm down and reflect: What was my original intention for getting involved in NFTs? Looking back at the NFT projects that were once popular with today's perspective, are they perfect enough to withstand scrutiny? Are those holders really diamond hands or just cherishing their own broom?
In this article, we will briefly review the important project situations in the PFP NFT market and the possible trends for the future.
2. The value of PFP NFTs
Looking back at the earliest NFTs, the first NFT in 2014, ⌈Quantum⌋, was chosen by the author as a way to digitize and auction his artwork, based on the immutability and public display of ownership in blockchain technology.
Quantum
To understand the value of PFP NFTs, we can learn from history and see how those leading NFT projects positioned their value when they were first launched.
2.1 Background & value definition of four blue-chip PFP NFTs
2.1.1 CryptoPunks
In the summer of 2017, the two founders of Larva Labs were inspired by early 1970s punk art in London and created 10,000 different 24x24 pixel series avatars, ⌈CryptoPunks⌋.
Later, as the price of Ether surged, the founders boldly attempted to upload them to the Ethereum blockchain, pioneering the exploration of non-fungible tokens.
It can be said that at that time, they followed the bull market and sniffed out the speculation, and thanks to being the "first to eat crabs" in the Ethereum smart contract, this groundbreaking classic NFT gradually acquired the label and narrative of "OG in the crypto circle."
Subsequently, CryptoPunk #5822 was certified by Guinness as the most expensive NFT collectible, selling for a high price of $23.7 million (valued at 8000 ETH at the time), setting a new record for the unit price of PFP NFT transactions.
2.1.2 BAYC
On April 30, 2021, 10,000 Bored Ape Yacht Club (BAYC) NFTs were released.
Different from the narrative genes of CryptoPunks, each unique ape in BAYC is not only a symbol of identity in the virtual world, but the holder also gains the qualification to join the aptly named "Yacht Club" and enjoys the benefits of the BAYC club. For example, holding a BAYC NFT grants full commercial usage rights, allowing the sale of related products and commercial transactions using its image.
From this, it can be seen that the BAYC team has taken a step further in exploring the value of NFTs, by granting "individual IP commercialization rights" and finding an anchor point that can be closely tied to community members.
### 2.1.3 Doodles
Six months later, on October 17, 2021, 10,000 colorful Doodles NFTs created by three Canadian artists were launched.
Burnt Toast, responsible for animation design, had previously collaborated commercially with many leading companies such as Google, WhatsApp, and Snapchat, and his personal work had received widespread acclaim from fans.
Understanding the audience's preferences, he continued to incorporate bold outlines, colorful pastel colors, and childlike doodles into the Doodles' character design.
Unlike the highly personalized and serious NFT images in the past, this highly colorful and friendly appearance quickly gained market recognition.
Similar to BAYC having its own club, Doodles also focused on Discord community operations: publicly announcing the official development roadmap to NFT holders, establishing a community treasury "Doodlebank" for brand promotion, and granting holders the right to vote on project proposals, and more.
At this stage, it can be seen that Doodles, benefiting from the perfect coordination of design and marketing by the three founders, as well as the team's dedicated community operations, has great openness and inclusiveness. It has also made many active and innovative explorations, with the ambition to build the brand into a global entertainment media group, laying the foundation for the development of more cross-border entertainment projects in the future (such as comics, TV shows, music, etc.).
### 2.1.4 Azuki
On January 12, 2022, the Chiru Labs team (a group of artists and development engineers from Los Angeles with strong capabilities in crypto, technology, and gaming) released 10,000 Azuki NFTs inspired by Japanese anime.
Azuki, derived from Japanese, means "red bean."
The main creative team's approach is very different from the direction of the previous NFTs. Azuki, with its exquisite art style design and the fusion of Eastern and Western cultural attributes, has attracted many collectors who love East Asian culture. Its aesthetic value at the artistic level has been fully recognized, with sales reaching $300 million within a month of its release, and the total sales even surpassing CryptoPunks and BAYC at one point.
In addition to its refreshing art style, AZUKI has taken community operations to the extreme, creating a virtual world called "The Garden," where holders will have priority access to physical airdrops of future projects and event tickets.
Furthermore, AZUKI's marketing strategy extends to the use of the ERC-721A contract, the establishment of the virtual world "The Ruins," the concept of the virtual city "Hilumia," collaboration with Web2 fashion brands, the fragmentation of the IP #Bobu to generate $Bobu tokens, and the launch of the Beanz series NFT, and more.
Just before the project went live, Azuki wrote in an official post:
“We rise together.
We build together.
We grow together.”
Unlike the other projects, the Azuki team's innovations are bolder, and they are pushing forward with high efficiency, combining punches during the hot cycle, constantly surprising holders.
They are really nurturing their own backyard, using innovative marketing, community cohesion, and immersive metaverse narratives to create a fertile land, nurturing every blade of grass with care. Everything is community-driven, aiming to create a highly decentralized brand.
Seeing the project team steadily and methodically achieving each milestone on the roadmap, Azuki's holders seem to have found their original intention to get involved here.
Under the premise of a community interest community, every small action of community members is closely linked to the value of NFTs in their wallets with luxury attributes. The consciousness of each holder is infinitely nurtured, proud of this unique community identity, and actively promoting the project from all sides. The thriving atmosphere in this positive cycle is exactly the decentralized wonderland that Azuki wants to create.
### 2.2 Summary:
Summarizing the above relatively typical PFP blue-chip NFT projects from the past, it can be seen that the project teams are increasingly stuffing their projects with rich content and making increasingly complex and grand visions.
They have not only worked hard on the image design for personal display to the outside world but have also made bold breakthroughs in technical innovation and innovative marketing.
They hope to create a closed-loop narrative that can transcend cycles and stably occupy the market in the long term, and they also hope that the IP can continue to thrive and endure.
Returning to the discussion of the "application value" of PFP NFTs, it can be seen that the project teams are gradually defaulting to the consensus that "by holding our NFTs, you can get more than just an avatar."
2.3 In addition to avatar value, what other value can PFP NFTs have?
2.3.1 Commercial value linked to the physical world
In BAYC, holding an NFT allows you to enter the club and also gives you the right to apply the IP in offline commercial scenarios.
As Yuga Labs has evaluated, "many Bored Ape holders have an entrepreneurial spirit and use PFP to create independent entity businesses." The general public can use PFP images as iconic symbols to attract business for offline stores, and major brands such as Li Ning and Adidas have also released collaborative clothing with BAYC.
By leveraging the global visibility of BAYC, it promotes its physical business, allowing NFT holders to gain a sense of achievement both online and offline. This may be a tangible way to maximize the satisfaction of holders.
2.3.2 Derivative Token Airdrop Benefits
Many project teams will release second-generation NFTs shortly after the sale of the first generation, and use them as early bird rewards to airdrop to first-generation holders.
For example, six months after Doodles went live, the project team launched the Dooplicator airdrop program for Doodles OG holders.
The Dooplicator NFT is defined as a functional graffiti machine that can be used to hatch various wearable items, allowing Doodles OG holders to customize their NFT avatars. This initiative aims to attract a wider audience and provide a better interactive experience, laying the groundwork for the official launch of Doodles 2.
After its release, the Dooplicator had a floor price of 0.66 ETH in the secondary market, and at its peak, the average price reached 3.89 ETH.
Similarly, after two months of Azuki's release, Chiru Labs launched 20,000 Beanz series NFTs. Half of these were airdropped for free to Azuki holders, and the remaining half was publicly available for sale. Beanz was briefly traded on Opensea at an average price of 6.4 ETH.
In a sense, the airdrop of derivative tokens can also be seen as an investment value chip for additional benefits when buying NFTs.
Initiatives like Beanz, which offer a "buy one, get one free" approach, not only do not dilute the value of old users' NFTs but also lower the entry barrier for new participants, increase liquidity, and attract more exposure and attention to the project, which can also be reflected in the rise in NFT prices, creating a win-win situation for all parties involved.
2.3.3 Access Pass to Future Project Potential
As many project teams plan many future major actions in their grand Roadmap, each milestone to be achieved is a prominent signpost.
For example, Doodles aims to build the company into a global entertainment media group, so subsequent initiatives are closely related to this theme. They appointed former Billboard president Julian Holguin as CEO, acquired the Emmy-nominated animation studio "Golden Wolf" to expand Doodles' licensing rights, and even collaborated with Columbia Records to release doodles records.
When world-renowned and highly professional individuals from the audiovisual field are invited to take the helm, it shows that they are serious about building the company.
Three months after the release of Doodles NFT, the official announcement was made to launch Doodles 2 on the Flow blockchain.
Compared to a single NFT, Doodles 2 is more like a new game map, where each graffiti avatar is customizable and dynamic. The vision is to move beyond the Ethereum ecosystem and lower the barrier for everyone to have their own digital identity.
Subsequently, the official launched a new project called Space Doodles, calling it "non-dilutive expansion content" for Doodles.
Unlike the typical issuance of new avatar images, Space Doodles are new images based on the original Doodles NFTs. In other words, only Doodles holders can obtain them.
Holders can use the Doodle Bot smart contract to package their Doodle NFTs, and the randomly generated spaceship will be combined with the original Doodle to create a Space Doodle NFT.
This can be understood as replacing the original Doodles avatar with an astronaut animated version of Doodles, making the visual presentation richer. This is an important upgrade closely related to the narrative of Doodles 2, allowing holders to experience the basic gameplay and worldview of Doodles 2 in a shallow way.
This is a small step for the graffiti characters to explore space and a big step for the entire Doodles spaceship to leap into the Web3 galaxy.
Although the future path outlined in the blueprint is not yet clear, the potential is unlimited and full of imagination. Early adopters of NFTs can have these invisible "passports," enjoying early access to explore the metaverse world and catch a glimpse of what the so-called "future" might look like.
3. Future Market Premium Space for PFP NFTs
The development of most projects in the Web3 ecosystem relies on the economic environment of the cryptocurrency market, and NFTs are no exception.
In addition, the current environment has seen a sharp decline in NFT royalty income. Therefore, it is still too early and immature to discuss the future market premium space for NFTs. However, we can infer some potential opportunities for gaining a premium advantage in the future from the current status of blue-chip projects in the market, as mentioned above.
3.1 Status of Blue-Chip NFTs
Comparing the average transaction volume on Opensea over the past year for the four classic blue-chip NFTs listed above, it can be seen that during the bear market of the past year, the unit prices for these projects have also experienced a significant decline:
The overall NFT market transaction volume has significantly decreased, showing a "stock consumption" state.
As of now, according to the OpenSea 30-day NFT circulation transaction volume rankings, BAYC, CryptoPunks, and AZUKI are still in the top 10, while Doodles has dropped to 22nd place.
The liquidity of these NFTs is the most obvious feedback from the market on the high or low investment value of these NFTs.
Expanding the timeline to the entire Q3 of this year, we can see that Yuga Labs' Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) still hold the top positions in the Top 5 NFT series, highlighting their dominant position in the NFT field.
Additionally, as mentioned earlier, AZUKI and CryptoPunks are also ranked 3rd and 4th, respectively.
Even in the midst of a bear market, the decline in the floor prices of these iconic blue-chip projects still stimulates the purchasing willingness of a small portion of investors.
So, what new attempts have these project teams made in the deep bear market of this year?
3.1.1 CryptoPunks
2023 Key Points:
- Firmly holding the OG throne in the NFT world, following the path of digital art
Since Larva Labs sold the IP of CryptoPunks to Yuga Labs, the developer of BAYC, Yuga has provided the long-controversial NFT commercial rights to its holders, allowing holders to use their small images for marketing, services, and other commercial activities.
In addition, Yuga is gradually moving the once "Bitcoin" of NFTs, CryptoPunks, closer to the art field.
For example, CryptoPunk #110 was exhibited at the Centre Pompidou in France, and a collaboration with Avant Arte resulted in the "10,000 On-Chain" series of RWA physical print collectibles (the frameless version priced at $639, and the framed version at $1,073).
Yuga Labs also announced plans to donate more Punks to leading art institutions worldwide in the future.
Independent filmmaker Sherone Rabinovitz, in collaboration with Zak Group, released the documentary series "Punks As Told By CryptoPunks," the first episode of which was aired on October 10th. Interested individuals can watch it on YouTube.
Perhaps from a temporal perspective, PFP NFTs can be bluntly divided into CryptoPunks and other NFTs in the NFT world.
Having established itself as the pioneer of NFTs and holding a leadership role, CryptoPunks seems to have found a low-effort and high-impact path to maintain its high status.
Its leadership role has given it enough leverage, and the future premium space will likely focus on the historical value and scarcity of CryptoPunks as an art form.
3.1.2 BAYC
2023 Key Points:
- Deriving a series of blockchain game projects from the Otherside metaverse gaming platform
Since the massive sell-off of BAYC by whales Franklin and Huang Licheng in 2023, the price of BAYC has experienced significant volatility and a downward trend. How can the community's confidence be stabilized, and innovative solutions be delivered?
To discuss BAYC's movements in 2023, we cannot overlook the overall content layout of its parent company, Yuga Labs.
In May 2022, the metaverse project "Otherside" was launched, laying the foundation for Yuga's numerous projects and increasingly pointing towards the gaming field.
According to DappRadar data, the top 5 NFTs in terms of quarterly sales volume all belong to the gaming sector.
The label of "faith recharge" for gamers is closely linked to this, and from this perspective, the intersection of gaming and NFTs is quite extensive. NFTs can provide a good connection to the gaming world, tokenizing the concepts of the metaverse, making it the most practically applied scenario this year. It is not surprising that Yuga is developing in this area.
On January 18th, BAYC launched the new game "Dookey Dash," a web-based parkour game similar to Temple Run. Players must hold a "BAYC Sewer Pass," with a total supply of only 30,000. The pass can be obtained for free by BAYC/MAYC holders or purchased separately on the secondary market (the highest average price in the second month of the game's launch was around 6.13 ETH).
To attract traditional esports players from the Web2 world, the game also offers high prize money, which has increased the value of BAYC and related tokens.
Returning to Yuga Labs itself, whether it's pioneering virtual land with Otherdeed NFTs, launching the 2D strategy game Legends of the Mara (LotM), or collaborating with the traditional Web2 famous game IP "Dungeons & Dragons" with MAYC, Yuga is fully outlining its blueprint in the gaming field.
It is not difficult to speculate that Yuga Labs will also focus on its Otherside metaverse gaming platform in the future, concentrating the future IP's premium space heavily on the gaming sector, actively seeking partnerships with third-party partners, integrating popular IP projects such as BAYC, MAYC, Meebits, and CryptoPunks, and developing more immersive entertainment experiences around the combination of NFTs and blockchain games, forming a vast metaverse gaming matrix.
3.1.3 Doodles
2023 Key Points:
Doodles 2 will migrate to the Flow blockchain
Co-founders remain true to themselves and play the good cop with the community
After completing a $540 million financing round with a valuation of $7.04 billion in September last year, Doodles announced in January of this year that it will release Doodles 2 on the Flow blockchain.
While claiming to lower the entry barrier to reach a broader audience and to build Doodles into a global entertainment media company, apart from hiring a group of high-profile management and collaborating with Crocs to produce holey shoes, there seems to be no new actions.
Moving the new project to a new blockchain has caused a lot of dissatisfaction among community members, leading to a lot of FUD sentiment. Co-founder @poopie even provided his own personalized responses to the community's questions on Twitter, ending with the statement "Don't expect us to go with the flow," showing a confident (negative) attitude.
The community's perception of project operations is crucial for PFP NFT projects. When you respond so bluntly to your supporters and fail to deliver tangible results, it seems reasonable for the floor price to plummet by more than -80%.
Based on this information, the future premium space for Doodles seems quite elusive at the moment. Unless the founding team soothes the emotions of the community members and delivers some effective results, and if Doodles2 truly attracts more new users and attention after the cross-chain migration, only then can it revive the "Coloring the world with joy" spirit that was once so prominent, allowing the colorful doodle characters to roam freely in a sky full of happiness and imagination once again.
3.1.4 Azuki
2023 Key Points:
- The rough Elementals project diluted the value of a generation of Azuki and lost the support of the community.
For the Azuki project team, 2023 can be considered a historic year. The launch of the AzukiElementals NFT series in June, due to the lack of innovative images, repeated minting processes, and poor user experience, greatly undermined the loyalty of the community. For more details, refer to this article from The Block Beats: Azuki Encounters Trust Crisis: New Work Questioned, Price Plummets
The management's significant mistakes may have been due to the development team being elevated by the community, nurturing arrogance, or perhaps the team forgetting the community-first content focus in the bear market, focusing on short-term gains. In any case, this move disappointed many holders, leading to a significant drop in the floor price.
Azuki has always emphasized TTP (Trust the process) to the community, as if its actions have tarnished its reputation.
However, there will always be followers for something. While the departure of members is undoubtedly a significant loss for the team, how to quickly adjust the pace, appease the remaining members, and support and trust the community to the maximum extent, and engage in "post-disaster reconstruction," is crucial.
It is reported that from November to March next year, the Azuki team will support five offline events in different Asian regions and launch AzukiPassport.
When they have seen each other at their worst and sincerely admit their mistakes to the loyal holders, and prioritize the community-first principle, and work together to build a better future, perhaps this is the best start.
Azuki has been a good student who has submitted many high-quality answers. Its unique blend of culture, exquisite art style, and vibrant community has always been its trump card. If it can continue to innovate and make steady progress, I believe the future market premium value will recognize this craftsmanship spirit.
4. Summary
In the overall economic downturn of the cryptocurrency market this year, the liquidity of blue-chip NFT projects has become even worse, with declines exceeding half, reaching low levels.
Perhaps after the bursting of the bubble during the prosperous period, these NFTs have finally returned to their rightful price levels.
Each project has faced significant changes and challenges, and they are exploring paths other than narrative JPEG avatars to support and fill their grand blueprints. Only by addressing these urgent issues can they discuss the future market premium space.
No matter how beautiful the vision and blueprint are, and how large and round the pie is, long-term delivery of constructive projects is essential to maintain the patience and enthusiasm of holders.
When the survival environment becomes harsh and funds flow out, how to stick to the original intention, fulfill promises step by step, and manage community operations in a market downturn is a challenge that every project must face.
PFP NFTs are symbols of value used to showcase scarcity and are excellent media for attracting and expanding users from outside the circle.
When the market is quiet, if the project team also remains silent and does not make any noise, it will only accelerate the abandonment by holders.
Continuously attracting fresh blood is an uplifting feat, rather than preying on old users as cash cows. Are there no good projects in the market this year that do this?
Actually, there are. Undoubtedly, the standout performer in the NFT market this year is Pudgy Penguins.
4. 2023 Outstanding NFT Case Study - Pudgy Penguins
4.1 What are Pudgy Penguins?
In late July 2021, Pudgy Penguins were officially launched and quickly caught the wave of NFTs, with an increase of over a hundred times.
However, the founding team gradually faced scandals, and Pudgy Penguins experienced a sharp drop in floor price and a change in ownership through acquisition. Subsequently, under the leadership of the new CEO Luca Netz, Pudgy Penguins began to transform and also showed unique insights and effectiveness in marketing.
Although the price has fluctuated, Pudgy Penguins experienced a surge in July this year, with the highest average price reaching 10.48 ETH. In Q3, the overall trend has been positive.
4.2 What did Pudgy Penguins do right?
1. Marketing
Thanks to Luca's previous aggressive and continuous entrepreneurial experience, he understands that NFTs need long-term marketing to succeed.
Different from other projects, Pudgy Penguins' youthful marketing efforts have been thorough. For example, within a year, the Instagram account's followers increased by 700,000, a series of popular Pudgy Penguin emoji gifs were uploaded to Giphy, and IP-related short videos and visual content were released.
By diligently creating high-quality innovative content on traditional Web2 social media platforms and attracting a large audience of real-world users, these efforts have also greatly helped subsequent sales of physical products.
2. Emotional Connection
Not sticking to NFT as expensive digital toys for adults, but using the mentioned meme marketing and IP derivative output to expand the audience to the general public, even children, overall making it more youthful.
3. Sustainable External Revenue Sources
Instead of earning income through blind issuance of new NFTs, which dilutes the value of existing NFTs, finding more sustainable sources of income and leading the project to scale up efficiently and steadily.
Founder Luca's marketing insights are very practical, and Web3Brand's Ruby and Star have carefully organized and analyzed the key points. I strongly recommend reading about Pudgy Penguins' marketing journey for those interested: NFT's Mass Adoption Will Come from User Love for IP: Pudgy Penguins CEO Shares Web3 IP Business Model Design
In addition to strategic policy changes, Pudgy Penguins has also been actively working offline.
In February this year, Pudgy Penguins partnered with Retail Monster to launch its IP product Pudgy Toyline in global offline retail stores.
Then in May, Pudgy Penguins completed a $9 million financing round led by 1kx and announced that the funds would be used to expand its intellectual property, team size, and "provide more services" to its community. Its physical toy line "Pudgy Toys" also went online on the Amazon marketplace.
This bold move received a good response, with 20,000 items sold within just 2 days of the product launch. It even won the Toy Insider's 2023 Best Summer Toy Award, surpassing Barbie, LEGO, and Pokémon in the new product sales rankings.
In September, Pudgy Penguins announced that its toy products would be available in 2,000 Walmart stores in the United States.
Pudgy Penguins' innovative collaboration with the physical industry has brought sustained popularity to its IP, and this recognition is also reflected in the rising trading prices in the secondary market.
Pudgy Penguins' out-of-the-box marketing has set a good example for many NFT projects facing innovation bottlenecks.
It is very clear about its strengths, values maximizing intellectual property in the new era, and cultural development, as well as the differentiated strategies it can employ. More importantly, it is truly implementing every step of its roadmap, not letting those plans become mere fantasies.
5. Conclusion
Returning to the initial question of the article: "Should I buy NFTs at this time?"
5.1
If you purely love the IP and the images themselves, perhaps this question does not exist. With prices almost halved in the bear market, now might even be the best time to get involved.
But if it's with an investment mindset, and you're still looking at PFP narratives from the past with outdated eyes, then perhaps it must be acknowledged that the boom of buying and skyrocketing prices seen in 2021 to early 2022 is unlikely to be repeated.
@Christianeth's Q&A left a deep impression on me. He probably meant that the biggest problem facing NFTs is their immaturity.
Traditional Web 2 companies often take a long time to build IP, but in Web 3, everything is accelerated. BAYC and Azuki grew into benchmark IPs in this wild and fertile soil in less than a year, but people have not yet realized that these teams are not very professional. In other words, many shortcomings were overlooked or even covered up during the boom.
They are ultimately lacking in experience and talented individuals, and these need to be honed and refined over time.
5.2
But unlike some who are pessimistic about "NFT is dead," I believe that NFT will continue to exist in the future.
Originating from the art field, it represents an innovation that gives digital life to content IP, a tool based on infrastructure with wide applicability, used to solve problems that were previously difficult to handle.
Foundational technologies that inspire will not become obsolete. They can be optimized and iterated, always leading the way in an ever-growing field.
5.3
In the future, PFP NFTs will definitely need to minimize their most superficial "small image" characteristics in their strategic approach, and even consider it as the most basic and least noteworthy node in the entire narrative.
What should attract users is its content creation prospects, IP intellectual property, more practicality, and the potential for multi-scenario applications, and more…
Only in this way can it force the development team to create more interesting and promising new concepts, and open up more paths for the long term.
A good PFP NFT should be a super entrance, not limited to a niche product for self-adoration, but boldly throwing out anchors and reaching out to the real world to attract more attention, breaking the circle as a super icon.
It can serve as a low-threshold bridge, enriching the Web 3 ecosystem and spawning a lot of content and gameplay.
As the NFT market bubble gradually dissipates, and as the number of people looking for quick speculative profits decreases, every entrant's choices will be more cautious and honest.
For them, NFTs have evolved from high-priced auction items to something closer to their true and pure preferences. I believe this will lead to a better and more long-term development direction for the entire NFT market.
5.4
There's a quote from Zhang Yiming that I remember very deeply: "Empathy is the foundation, imagination is the sky, and in between are logic and tools."
This is the underlying logic of product development, and it is even more so in the Web3 world.
Empathy is like the community's emotional card, the better the operation, the more stable the foundation;
Unlimited and unbounded innovation is the vast sky of Web 3 projects, and content cultivation also requires a lot of imagination.
And right now, the sky of imagination is visibly crowded with various narratives, some excellent, some perfunctory, some valuable, and some not. So let the bullets fly a little longer;
The path in between is logic and tools, that is, the project's complete roadmap and the technical support behind it, and even the solid resources it relies on.
These three complement each other, and each one is indispensable.
So if you want to know which NFT projects to focus on in the future, I believe you can look at whether the project has these qualities:
Good community management + continuous innovation in content + complete roadmap & solid technology & rich resources
In the ever-changing market, there is certainly no completely secure thing, but at least it is a better compass for your reference.
5.5
Finally, from a long-term perspective, it can be said that the entire NFT industry is still not mature enough and is still in its early stages of development.
The various fluctuations in the early stages can be seen as small steps in trial and error. We still have to believe that there are many builders with strong vitality in this soil full of opportunities.
Adversity may be more inspiring, and we can look forward with patience, giving projects and project teams time to grow.
As mentioned in the pinned tweet by @Christianeth:
"We need to stand up and face the difficult we have, give more tolerance and confidence to what we loved."
The dawn will arrive."
Divergent Thinking: No Community, No NFT?
From the development history of several NFT projects mentioned in the article, it can be observed that
every "dream big" project aiming to create differentiated "after-sales service" will focus on the community.
Relying on the community ultimately emphasizes the "people" inside, the living members of the community.
And human nature is complex and fickle, especially in the attention economy of the Web3 world.
6.1
Looking back at the current deep bear market, it is clear that a project can attract attention by creating beautiful bubbles through narratives. However, no matter how frequent and appealing the storytelling is, if it does not translate into practical actions, it will eventually be questioned and abandoned.
Ultimately, any business project deals with human nature, so it is important to understand human pain points, capture weaknesses, follow the pleasure points, and ultimately satisfy the itch.
Although not pleasant to hear, in simple terms, the fundamental aspect of people in trading is greed.
According to Liang Ning's "Thirty Lectures on Product Thinking," human pain points are fear, pleasure points are instant gratification, and itch points are the ability to satisfy the virtual self.
Greed will endlessly nourish unlimited demands, driving people to take various actions. In the NFT trading market, these points can be further detailed as follows:
6.1.1
Fear is like a heavy stone that was originally pressing on your heart being removed, allowing negative emotions from all directions to take advantage and repeatedly strike your heart. In trading, this can lead to FOMO (fear of missing out) and may even form a FUD matrix (fear + uncertainty + doubt). Its existence shatters your beliefs and confuses your thoughts with a flood of information. If you cannot overcome fear, the result may be that you passively lose your direction, your mind becomes empty, and you can no longer hold onto your own opinions, simply following someone else's words and setting off in a car parked on the roadside.
6.1.2
Instant gratification can be reflected in the increase in asset value and positive interactions among community members. For example, holding NFTs that skyrocket and the level of enthusiastic discussions in the market indicate that you have done the right thing and give you a sense of achievement. Similarly, finding many like-minded friends in the community, even though they are strangers from different places, coming together with people who share the same hobbies and visions to voice and contribute to a project they all love creates a wonderful resonance, indescribable and addictive.
6.1.3
Satisfying the virtual self seems to be naturally compatible with the crypto and NFT markets. It shapes an idealized version of yourself, not something essential for survival, but it brings spiritual satisfaction and comfort, like the superstructure compared to the economic base.
In my opinion, the itch point in the NFT market is superficially represented by the avatars of virtual worlds, and on a deeper level, it is what the NFT project can bring to you in terms of long-term compounding (whether in terms of asset value or spiritual growth).
We don't need to beautify trading in the financial market; it is actually bloody and cruel. Many people enter with a competitive spirit, hoping to make quick profits and ideally exit after a few big moves. Therefore, choosing the path of long-term compounding is a secondary option for them. But for the majority who are not good at frequent trading, instant gratification seems to require the luck of creating a trend, gathering favorable conditions, and the blessing of good fortune. Only adhering to long-termism is the ideal self that needs to be satisfied.
Unlike instant gratification, which can bring strong stimulation in a short period, long-term compounding is like a thick, good book that can give you even a little new inspiration every time you read it, but it is also enduring and provides a sense of security.
6.2
A good project/project team must be able to take care of all the points mentioned above—
It will soothe your fears, dispel your anxieties, appropriately satisfy your greed, provide you with periodic waves of instant gratification, but fundamentally nurture your mind, make you identify with the project's long-term vision, follow the roadmap, slowly taste the fruits of progress, help you find something relatively certain in uncertainty, and find relative calm in the midst of turmoil.
Therefore, according to this logic, for a project to operate well, it must clearly understand and address the current needs and emotions reflected by community members, and accept, dispel, and be honest with each one. The direction indicated by the community members' feedback is based on the operation of the project itself, which ultimately returns to the essence of content being king. The project must work hard on the IP content, have good planning, and implement every step forward in an orderly and positive manner.
6.3
This is a two-way positive cycle between the project team and community members.
The project team needs to adhere to the original intention of starting the project, shield the temptation of rug pulls, and continuously provide new things to the community members. Community members also need to stick to their original intentions for getting involved, prepare themselves mentally for the long run, cooperate with the project team, organize community activities, build a cultural atmosphere among members, actively interact and respond, voice support for the project, and inject continuous enthusiasm.
This process can indeed be very long and is enough to filter out many people.
If nothing is given up, the result is likely to be that nothing is gained.
Ultimately, those who remain will be loyal fans who identify with each other and have a high degree of connection, able to serve this small group of people in the long term and operate this niche content in a refined manner, which will definitely lead to positive feedback.
Sometimes, the efficiency of "small and beautiful" team operations is higher, and the ability to shield external voices through collective efforts is also stronger.
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