The Final Chapter and Reboot of NFT

Original author: YBB Capital Researcher Zeke

1. The Collapse of NFTs

The final cry of NFTs was marked by the issuance of tokens for Pudgy Penguins, while Doodles' recent token launch on Solana only made a few ripples. Yuga Labs' subtraction continues, this time even affecting the most iconic IPs, Cryptopunks. The BitCoin NFTs that were part of the last wave of NFT resurgence are also nearing zero, and those once-crazy narratives have indeed fallen into obscurity, with no one paying attention anymore.

10k PFP The once beautiful vision was for a community of just the right size to help a bottom-up IP project reach the world, which is completely different from traditional IP projects that used to rely on heavy investment in content support. For example, Disney's Marvel Universe, Star Wars, and various animated characters often require years of accumulation along with countless funds to make these IPs deeply resonate and ultimately become a gold mine.

NFTs are completely different; their entry barrier is extremely low, and the speed at which an IP can be created and assetized is quite fast. Creators only need to pay some Gas to list their artworks for sale on Opensea, without the need for galleries, toy companies, film companies, or any professional team, thus giving birth to an IP and a new artist.

We witnessed, three to four years ago, that some grassroots IPs became popular in the top entertainment circles of Europe, America, Japan, and South Korea. An underground artist can also achieve a turnaround through NFTs. For me, as a member of Generation Z who grew up watching Japanese anime, being able to participate in IP investment and incubation that ordinary people could not access before through Crypto is indeed a dreamlike experience.

But later, after the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental of Azuki were released, the status of NFTs gradually became clearer. They are not like a form of equity or investment; instead, they resemble expensive luxury goods with membership benefits. The project team also hopes that we will continue to purchase sub-series to support their ongoing investment in the IP value core Roadmap. The seeds of contradiction were sown here: the project team knows that creating content is expensive, but without content, the IP will die. The sub-series released every few months continue to drain the OG series holders, tormenting everyone in the community, while waiting for feedback from content, which may take many years, or perhaps this feedback will never come. The cracks began to widen, and those beautiful fantasies started to shatter as the floor price fell, leaving only various conflicts behind.

2. The Ace of IP - MCN-PoP MART

If we consider NFTs as the luxury trendy toys of Generation Z, their causes and failures become clearer. In the fast-food era, having no content isn't necessarily a bad thing, as the appearance alone can quickly attract buyers. For example, Azuki's art style aligns well with Asian aesthetics, and under this consensus, this grassroots-produced NFT series can also become the third largest blue chip after BAYC. In the real world, well-known trendy toys like Bearbrick, B.Duck, and Molly also lack content support but have gained immense popularity solely based on their unique appearances.

However, trends are always like a gust of wind; without content as a value core, these IPs may become outdated at any time. Restricted by the culture of the crypto space and the extremely low success rate of NFTs, project teams often revolve around a single IP, continuously creating derivatives. But the reality is that before the core has even taken shape, this gust of wind has already passed.

Of course, there is also a type of PFP project that is supported by sufficient content, Japanese-style NFTs. In the past, I have seen at least four or five projects with well-known Japanese comic IPs hoping to make a big splash in the NFT market, but they don't seem to have thought that the fan base of the IP is almost completely incompatible with this circle, and the second point is that there are too many Japanese anime peripherals to choose from, why should fans pay hundreds of times the price to buy a small picture? Of course, the most important thing is the third point, this small picture can only be a picture, and the imagination space for future empowerment is 0. Even if you purchase a Gundam NFT, you will only be able to gain access to the Gundam Metaverse "SIDE-G". Wanda's profits from models, games, and animations naturally have nothing to do with you, and the community will not be a member of the IP incubation, and the entire Gundam fan base will even be considered an outlier. At this point, GameFi's pain points are actually very similar.

Thus, the PFP project has become a false proposition, with only the pragmatic spark of the little penguin still striving. So does the little image really have another way out? I believe PoP MART may have provided a different answer.

This small box store originated from the Beijing Europe and America Shopping Center and achieved a turnaround by relying on the agent Sonny Angel. This single series contributed nearly 30% of PoP MART's sales at that time. The envious copyright holder reclaimed the exclusive agency rights a year later, but this move instead led to the birth of an IP empire.

Wang Ning (founder of PoP MART) had a simple idea at that time: to create proprietary IP that cannot be taken away by others. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch its first self-owned trendy toy series - Molly. This little girl with a pouting image quickly became popular nationwide, driven by the excitement of uncertainty in the blind box gameplay and the stimulation of dopamine. PoP MART began its first phase of rocket-like growth, and by 2019, the annual sales of the single IP Molly had reached 456 million yuan, becoming the core source of income for PoP MART at that time.

This approach, which combines Japanese capsule toys with high-end trendy toys for collaborations, became quite common during the NFT boom in the following years. Basic elements designed by artists are then handed over to the project team to be combined into a series of images for sale and operation. NFTs are generally released in blind box form during the launch phase, and the project team will release images of various rare combinations to enhance players' desire to purchase.

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 PoP MART experiencing a second spring today?

In the past, I attributed the reasons to the difficulty of landing and the high purchasing threshold. The former seems to have no issues at present, while the latter is not the case. NFTs also had their Free Mint phase, and Goblintown and MIMIC SHHANS were the golden dogs of that period. Creators made a fortune just from transaction commissions. Many NFTs from the inscription era have an even more thorough degree of decentralization based on this, but this cannot stop the decline of NFTs. It is very easy to form or join an IP community, but the challenge lies in sustaining it.

So, I think we might be making a mistake in our model. After the first段 rocket-like rise, Molly did not make PoP MART a sensation; the entire company's stock price has dropped from 2021 to 2024, just like NFTs. But PoP MART has turned around; it relies on a whole wall of IPs. Now, PoP MART has 12 self-owned IPs including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, as well as 25 exclusive IPs including THE MONSTERS (including Labubu), PUCKY, and SATYR RORY, and there are more than 50 non-exclusive co-branded IPs with Harry Potter, Disney, League of Legends, and others.

People's preferences are always fickle, and the lifespan of an IP is limited. But what if I have hundreds of choices in my hands? Nowadays, Labubu is booming in Europe, America, and Southeast Asia, and the value retention of its surrounding dolls is comparable to plastic Maotai. Yuga Labs' ideal state has finally been realized in Web2, but all of this is not a coincidence.

We should rethink what an IP business is, what the roadmap for NFTs is, and why PoP MART can achieve such heights without content support.

3. Pudgy Penguins

I also participated in the Little Penguin Hong Kong event last year, and this NFT project has always been so enthusiastic towards the community.

The success of Pudgy Penguins lies in pragmatism, pragmatism, and again pragmatism. NFTs themselves do not have any technical distinctions; no matter how cleverly designed the Mint process is, in the end, it's still a JPG. The difficulty with NFTs lies in the realization of the IP, which is hundreds of times more challenging than producing 10K PFPs. Yuga Labs wants to create a Metaverse, and Azuki aims to produce anime. OK, that's all very cool, but these projects with initial costs in the hundreds of millions will only ask the community family members to shell out money.

This extremely compressed world is too restless, with everyone eager for quick success. Holders want to make big money, and project teams want to achieve greatness in one step. Few blue-chip projects are willing to back down, and in the end, the more impatient they are, the worse they fall. The original team of Pudgy Penguins was also such an impatient grassroots team that, after suffering from a bad reputation, they sold the little penguins at a low price.

That's when the little penguins meet their real owner, Luca Netz, a worker with years of experience in brick-and-mortar marketing, who pulls the little penguin back to where it should be. Luca Netz is really doing a brand, and he runs a company for NFT holders. From marketing to plush toys to future games, Little Penguin is solid every step of the way, the company is profitable, and so can the holders. There's nothing special about all this, it's just doing what it's supposed to do. Therefore, it turns out that bottom-up IP can exist in Web3, but there are too many project parties that can't put down their bodies.

So, I really hate the term "falsification", as if certain things should never exist. Electric cars used to be silly, and Siri on my phone was also silly. But that doesn’t prevent green license plate cars from filling the entire city today, and AI is even more needless to say.

Many so-called discredited tracks will still be explored by Web3 in the future, but it lacks a suitable project partner.

4. Path

The path to success is simple, yet very difficult. The next stop for PFP will ultimately have to break away from certain inherent logical frameworks of Crypto; to become the next Web3 Disney requires substantial accumulation. Whether the scarcity of NFTs has played a counterproductive role in the process of reaching the masses is something I have discussed in my past articles. If it is defined as trendy consumer goods, then the limitation of 10K may be too great; if it is defined as a type of asset and fundraising method unique to Web3, then the IP must ultimately be transformed into physical consumer goods to fulfill its promise to the community, rather than a bunch of strange sub-series.

Given the unique culture of the cryptocurrency world and the inherent properties of NFTs, it is indeed frustrating to cling to a single IP for too long. How can we make further developments with these PFPs? How can we expand a project into an IP factory? This may require us to embrace some new concepts and introduce more technologies and gameplay.

5. Is Token Issuance the Final Stop?

What is the significance of NFT token issuance? I still don't understand it. This situation seems more like an exploitation of the lower tier by the upper tier, and a dilution of the value of OG NFTs. I can only understand it as this project looking for an easy liquidity exit.

From APE to DOOD, without exception, they all seem to be variants of air coins. Their empowerment often involves staking to earn some on-chain transaction dividends, purchasing items in the Metaverse, or governance rights. Ideally, it should be a perfect cycle among holders → stakers → developers. However, in reality, it resembles a kind of air, caught in a death loop involving the depreciation of NFTs, declines in gold mining profits, and token price drops.

For OG NFT holders, while the Token has taken away some dividends and rights, most of them will receive a large airdrop during the TGE, so no one complains. However, in the long run, as mentioned in the fourth paragraph, this is a form of dilution, and the distribution like Azuki's Anime is even more of a blatant grab.

Short-term popularity is important, but the longevity of the project is more important; don't let issuing tokens be the final stop.

Conclusion

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging Web2 IPs, and NFTs should thrive in this context due to their many irreplaceable characteristics. Four years ago, I regarded it as Cyber Moutai, but the reality is Cyber Tulip. Few are willing to manage the ruins, yet I believe that beneath the ruins lies the next Labubu.