The End and New Birth of NFT

1. The Decline of NFTs

The frenzy of the NFT market has ultimately come to a calm. Recently, the token issuance of Pudgy Penguins became the last highlight in the NFT field, while the token issuance of Doodles on Solana did not create much of a stir. Meanwhile, Yuga Labs continues to scale down, even involving its core IP Cryptopunks. The Bitcoin NFT projects that received much attention in the last wave of NFT revival are also nearly at zero, and the once-crazy narrative is now ignored.

The 10k PFP project once had a beautiful vision: a moderately-sized community helping a bottom-up IP project reach the world, which is completely different from the operation model of traditional IP projects. Traditional IPs like the Marvel Universe and Star Wars under Disney often require years of accumulation and huge investments to deeply resonate with people, ultimately becoming a gold mine.

In contrast, the entry barrier for NFTs is extremely low, and the speed of IP creation and assetization is astonishing. Creators only need to pay a small Gas fee to sell their works on Opensea, without the need for galleries, toy companies, or professional team support; an IP and a new artist are thus born.

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 clearer: it is more like an expensive luxury item with membership benefits, rather than equity or investment. The project parties hope that holders will continuously purchase sub-series to support their subsequent IP development plans. This contradiction lays hidden dangers: the project parties understand that content development is costly, but without content IP, survival is difficult. The frequent issuance of sub-series continuously drains the enthusiasm of OG series holders, tormenting every member of the community. Waiting for the returns brought by content may take years, or it may never come. The rift begins to widen, beautiful fantasies shatter as floor prices drop, leaving behind only various controversies.

2. The Ace MCN in the Trendy Toy Industry - PoP MART

Viewing NFTs as luxury trendy toys for Generation Z makes their rise and fall reasons even clearer. In an era dominated by fast food culture, a lack of content support is not entirely a bad thing. Just relying on appearance can quickly attract buyers; for instance, Azuki's artistic style aligns well with Asian aesthetics, and under this consensus, this grassroots-created NFT series has managed to become the third-largest blue-chip after BAYC. In the real world, well-known trendy toys like Block Bear, Little Yellow Duck, and Molly also lack content support, yet they once became popular due to their unique appearances.

However, trends are always fleeting, and IPs that lack content as a value core can become outdated at any time. Limited by the culture of the cryptocurrency sphere and the extremely low success rate of NFTs, project teams often continuously create derivatives around a single IP. But the reality is that before the core has taken shape, this wave of enthusiasm has already passed.

Of course, there are PFP projects supported by substantial content, such as Japanese NFTs. However, these projects face issues such as the incompatibility between fan communities and the crypto circle, saturation of traditional peripherals, and limited space for NFT empowerment.

So, does the small picture really have other alternatives? PoP MART may provide a different answer.

This small box store originated in Beijing and transformed by代理Sonny Angel. Although the copyright holder reclaimed the exclusive agency rights a year later, this instead prompted PoP MART to start building its own IP empire.

In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch the first自主潮玩 series Molly, and this pouting little girl image quickly became popular nationwide. Through the uncertainty of the blind box play, PoP MART began to experience rapid growth. By 2019, the annual sales of the single IP Molly had reached 456 million yuan, becoming the company's core source of revenue.

This model, which combines Japanese gacha with high-end trendy collaborations, has also become quite common during the subsequent NFT craze. Basic elements are designed by artists and then combined by the project team into a series of images for sale and operation. The initial phase of NFTs typically 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. Why is PoP MART experiencing a second spring now?

Forming and joining an IP community is relatively simple, but the challenge lies in how to sustain it. I believe the key is in the choice of model. After the first round of rapid growth, Molly did not allow PoP MART to become a household name, and the company's stock price, like NFTs, fell from 2021 all the way to 2024. However, PoP MART eventually turned a profit, relying on a whole wall of IPs. Now, PoP MART has 12 proprietary IPs, 25 exclusive IPs, and over 50 non-exclusive co-branded IPs.

People's preferences are always unpredictable, and the lifespan of a single IP is limited. But what if you have hundreds of options? Nowadays, Labubu has become popular in Europe, America, and Southeast Asia, and the value preservation ability of its surrounding dolls can be called "plastic Maotai." The ideals of Yuga Labs ultimately materialized in Web2, and this is not a coincidence.

We need to rethink what the IP business is, what the development path of NFTs is, and why PoP MART has achieved such high success in the absence of content support.

III. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in pragmatism. NFTs themselves are technically hard to differentiate, no matter how cleverly the Mint process is designed, it ultimately boils down to an image. The real challenge for NFTs is the implementation of the IP, which is hundreds of times more difficult compared to creating 10K PFPs. Yuga Labs wants to build a metaverse, Azuki wants to create anime, and these cool-sounding projects have initial costs reaching hundreds of millions, ultimately having to seek funding support from the community.

In this fast-paced world, everyone wants to achieve success quickly. Holders want to make big money, and project teams want to reach the top in one step. Very few blue-chip projects are willing to lower their status, and as a result, the more impatient they are, the worse they fall. The original team of Pudgy Penguins was also once so impetuous that after their reputation was damaged, they had to sell the project at a low price.

It wasn't until meeting the new owner Luca Netz that the little penguin found the right direction for development. This talent, with years of experience in physical marketing, brought the little penguin back to the height it deserved. Luca Netz is truly building a brand and operating a company for NFT holders. From marketing to plush toys to future games, every step of the little penguin is solid and steady, the company can profit, and the holders can benefit as well. All of this is quite ordinary; it’s just doing what should be done. It has been proven that bottom-up IP is feasible in Web3, but there are too few projects willing to humble themselves.

4. Future Development Path

The path to success seems simple, but in reality, it is difficult. The next step in the development of PFP requires breaking through the inherent thinking framework of cryptocurrency. To become the next Disney of Web3 requires a significant accumulation. Whether the scarcity of NFT has had a counterproductive effect in the process of going mainstream is a question worth pondering. If NFTs are positioned 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 ultimately still needs to be converted into tangible consumer goods to fulfill commitments to the community, rather than a bunch of odd sub-series.

Based on the unique culture of the cryptocurrency community and the attributes of NFTs themselves, the long-term focus on a single IP has its drawbacks. How can we innovate based on the existing PFP? How can we expand a single project into an IP factory? This may require us to embrace some new concepts and introduce more technologies and gameplay.

5. What is the significance of token issuance?

The significance of issuing tokens for NFT projects remains unclear to this day. This practice resembles an exploitation by those in higher positions towards those in lower positions, and it also dilutes the original value of NFTs. I can only interpret it as the project parties seeking a convenient way to exit with liquidity.

From APE to DOOD, these tokens are all variations of air coins without exception. Their empowerment usually includes staking to earn on-chain transaction dividends, purchasing rights for metaverse items, governance rights, etc. Ideally, it should be a perfect cycle for holders, stakers, and developers. But the reality is often that it falls into a vicious cycle of NFT price decline, mining revenue decrease, and token price drop.

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 used by Azuki's Anime is even a blatant plunder.

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

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, possessing many irreplaceable characteristics. Four years ago, I regarded it as the Moutai of the digital world, but the reality is that it has become the digital tulip. Few are willing to seek opportunities in the ruins, but I believe that beneath this rubble lies the next Labubu.