The Final Chapter and Reboot of NFT: Issuing Coin is Not the Goal

1. The Collapse of NFT

The last boom of the NFT market came to a halt with the issuance of tokens for Pudgy Penguins, while the recent token issuance for Doodles on Solana has only caused a slight ripple. Yuga Labs continues to downsize, this time even involving its most core IP - Cryptopunks. The Bitcoin NFT projects that were highly regarded during the last wave of NFT revival are also nearly at zero; these once-crazy concepts are now being ignored.

The original vision of the 10k PFP project was beautiful - a moderately sized community supporting a bottom-up IP project to go global, which is completely different from the traditional IP project model that invests a large amount of money in content first. Traditional IPs like Disney's Marvel Universe and Star Wars often require years of accumulation and huge investments to make the IP resonate with people and ultimately monetize.

NFTs are completely different; their entry threshold is very 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 online platforms, without the need for galleries, toy companies, movie companies, or any professional teams, giving birth to an IP and a new artist.

3-4 years ago, we witnessed some bottom-up IPs becoming popular in the top entertainment circles of Europe, America, Japan, and South Korea. Amateur artists can also achieve a comeback through NFTs. For someone like me, a member of Generation Z who grew up watching Japanese anime, being able to participate in IP investment and incubation that was previously hard to reach through cryptocurrency is also a dreamlike thing.

However, with the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental of Azuki being released, the positioning of NFTs has gradually become clear - it is not a form of equity or investment, but more like an expensive luxury item with accompanying membership rights. The project team also hopes that we will continue to purchase sub-series to support their ongoing investment in building IP value. This creates a contradiction, as the project team knows that creating content is costly, but without content IP, they will face extinction. Releasing a sub-series every few months continuously drains the enthusiasm of OG series holders, tormenting everyone in the community. Waiting for content to bring returns may take years, or even never arrive. The cracks are widening, and beautiful fantasies are shattered as the floor price falls, leaving only various disputes.

2. The Ace MCN in the IP World - PoP MART

If we regard NFTs as luxury trendy toys for Generation Z, the reasons for their rise and fall become clearer. In an era of fast food culture, a lack of content is not necessarily a bad thing; the appearance alone can quickly attract buyers. For example, the art style of Azuki aligns well with Asian aesthetics, and under this consensus, this grassroots NFT series can follow BAYC to become the third-largest blue-chip. In the real world, Bearbrick(, the Bearbrick), B.Duck, Molly, and other well-known trendy toys also lack content support, but they once became popular due to their unique appearances.

However, trends are always short-lived, and IPs without substantial content as their core value may become obsolete at any time. Limited by the culture of the cryptocurrency circle and the extremely low success rate of NFTs, project parties often create derivatives around a single IP. The reality is that the core has not yet taken shape, while the craze has already passed.

Of course, there are also PFP projects supported by sufficient content, such as Japanese-style NFTs. In the past, I have come across several projects with well-known Japanese anime IPs that hoped to make a splash in the NFT market. However, they seem to overlook a few issues: the IP fan base and the NFT community are almost completely unrelated; there are already countless Japanese anime peripherals available, so why would fans spend a high price to buy a small image; most importantly, this small image is merely an image, and the potential for future empowerment is zero. Even if you purchase a Gundam NFT, you can only gain access to the "SIDE-G" entrance of the Gundam metaverse. Profiting from models, games, and animations has nothing to do with you, and you might even be seen as an outsider among the entire Gundam fan base. In this regard, the pain points of GameFi are very similar.

At this point, the PFP project has become a false proposition, with only the pragmatic spark of the little penguin continuing to strive. So, does the little image really have another way out? I believe PoP MART may provide a different answer.

This small boutique originating from Beijing achieved a turnaround by代理Sonny Angel. This single series contributed nearly 30% of PoP MART's sales at the time. The envious copyright holder reclaimed exclusive agency rights a year later, but this actually facilitated the birth of an IP empire.

The founder Wang Ning's idea is very simple - to create proprietary IP that cannot be taken away by others. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch the first self-owned trendy toy series, Molly. This pouting little girl image quickly became popular across the country. Through the uncertainty stimulation of the blind box gameplay and the dopamine drive, 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 revenue for PoP MART.

This model that combines Japanese capsule toys with high-end trendy toys has also been very common during the NFT boom in the following years. Basic elements designed by artists are then assembled into a series of images for sale and operation by the project party. The initial phase of NFT launches generally also adopts a blind box format, where the project party releases various rare combinations of images to stimulate purchasing desire.

The two only differ in their issuance formats, but tens of thousands of NFT projects and various blue chips have generally failed, while PoP MART is迎来第二春 again. What is the reason?

I used to attribute the reasons to difficulties in landing and high purchase thresholds. The former indeed seems to have problems at present, but the latter is not the case. NFTs also had a grassroots period with Free Mint, where Goblintown and MIMIC SHHANS were the outstanding representatives of that time, with creators making a fortune solely from transaction fees. Many NFTs in the inscription era have further decentralized, but this cannot stop the decline of NFTs. It's easy to form or join an IP community, but the challenge is how to sustain it.

Therefore, I believe the problem may lie in the model. Molly's success did not propel PoP MART to great heights; the company's stock price has fallen from 2021 all the way to 2024, just like NFT. However, PoP MART eventually turned a profit, relying on a whole wall of IP. Now PoP MART owns 12 proprietary IPs including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, 25 exclusive IPs including THE MONSTERS( with Labubu), PUCKY, and SATYR RORY, as well as more than 50 non-exclusive collaborative IPs such as Harry Potter, Disney, and League of Legends.

People's preferences are always unpredictable, and the lifespan of an IP is limited, but what if there are hundreds of options at hand? Nowadays, Labubu is gaining popularity in Europe, America, and Southeast Asia, and the value retention ability of its surrounding dolls is known as "plastic Moutai." Yuga Labs' ideals have finally been realized in Web2, and none of this is accidental.

We should rethink what the IP business is, what the development path of NFTs is, and why PoP MART has achieved such success despite the lack of content support.

III. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in its pragmatism. There are hardly any technical breakthroughs with NFTs themselves; no matter how cleverly the minting process is designed, it's ultimately just a JPG image. The real challenge of NFTs lies in the IP implementation, which is hundreds of times more difficult than creating 10K PFPs. Yuga Labs wants to build a metaverse, and Azuki wants to create anime. These ideas are really cool, but these projects, which start at costs of over a hundred million, will ultimately only seek funding support from the community.

In this compressed world, everyone wants to achieve success in one step. Holders want to make big money, and project teams want to become famous overnight. Very few blue-chip projects are willing to be grounded, resulting in more severe falls when they are impatient. The original team of Pudgy Penguins was also so impetuous that they sold the project at a low price after their reputation was damaged.

At this time, the little penguin encountered the true helmsman, Luca Netz. This professional, who has years of experience in physical marketing, brought the little penguin back to the height it deserves. Luca Netz is truly 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 and steady, allowing the company to profit and the holders to gain benefits. There is nothing particularly special about it, 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 project parties willing to humble themselves.

I am very uncomfortable with the term "falsification", as if certain things should never have existed. Electric vehicles once seemed foolish, and Siri in phones used to be quite clumsy. But this does not prevent entire cities from being filled with new energy vehicles today, and the development of AI is changing rapidly.

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

4. The Future Path of NFTs

The path to success seems simple but is actually difficult. The next stage of development for PFP must break through the inherent thinking framework of cryptocurrency. To become the next Web3 version of Disney requires a substantial accumulation. Whether the scarcity of NFTs has been counterproductive in the process of becoming more mainstream is a topic I discussed in a previous article. If NFTs are defined as trendy consumer goods, then a scale of 10K may be too limited; if defined as a unique asset and financing method in Web3, then IP ultimately has to fulfill its commitments to the community through physical consumer goods, rather than a bunch of bizarre sub-series.

Based on the unique culture of the cryptocurrency circle and the attributes of NFTs themselves, focusing on a single IP for a long time is also a helpless move. How can we innovate based on these PFPs? How can we expand a single project into an IP factory? This may require us to accept some new concepts and introduce more technologies and play styles.

V. Token Issuance: Endpoint or New Starting Point?

The significance of issuing coins for NFT projects remains unclear to this day. It feels more like an exploitation of the lower tier by the upper tier, as well as a dilution of the original value of the NFT. I can only understand it as a liquidity solution sought by the project party for a quick exit.

From APE to DOOD, without exception, they all seem to be variants of air coins. Their empowerment often includes staking to earn on-chain trading dividends, purchasing rights for metaverse items, governance rights, and so on. Ideally, this creates a perfect cycle for holders, stakers, and developers. However, in reality, it resembles a kind of air, trapped in a vicious cycle of NFT depreciation, declining mining profits, and token devaluation.

For original NFT holders, although the tokens take away some dividends and rights, they usually receive a large airdrop at the TGE, so few people complain. However, in the long term, this is indeed a form of dilution, and distributions like Azuki's Anime are even more blatant plundering.

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