The Rise and Fall of NFTs: From Bubble to the Transformation of Physical IP

1. The End of the NFT Boom

The last boom of the NFT market ended with the token issuance of Pudgy Penguins, and the token issuance of Doodles on Solana also failed to create much of a ripple. Yuga Labs continues to scale back its operations, even involving its core IP Cryptopunks. The Bitcoin NFT projects that were once in the spotlight during the last wave of NFT revival are now nearly worthless, and these once-crazy concepts are now largely ignored.

The initial vision of 10,000 PFP projects is beautiful, hoping to help a bottom-up IP project reach the world through a moderately sized community. This is completely different from the traditional IP model that requires long-term investment of significant funds. The entry barrier for NFTs is very low; creators only need to pay some Gas fees to sell their works on Opensea, without the need for support from galleries, toy companies, or professional teams, thus giving birth to a new IP and a new artist.

However, with the "unlimited derivatives" of BAYC and the disastrous sub-series Elemental of Azuki being released, the positioning of NFTs is gradually becoming clear. They are not a form of equity or investment, but rather a luxury good with accompanying membership benefits. The project team hopes that users will continuously purchase sub-series to support their ongoing investment in the core value of developing IP. This contradiction has led to the community being tormented, as the wait for returns from content may take years, or may never come at all. As the floor price drops, the beautiful fantasy begins to shatter, leaving only various disputes.

2. Model for IP Operations in the Real World

If we regard NFTs as luxury trendy toys for Generation Z, the reasons for their rise and fall become clearer. In this fast-paced era, a lack of content support is not necessarily a bad thing, as mere appearance can quickly attract buyers. In the real world, many well-known trendy toy brands also lack content support, yet they became popular due to their unique designs.

However, trends are always short-lived, and without content as a value support, these IPs may become outdated at any time. Limited by the culture of the cryptocurrency sphere and the extremely low success rate of NFT projects, project teams often continuously develop derivatives around a single IP. But the reality is that the craze has already passed before the core value is formed.

The success of a well-known trendy toy brand may have pointed a way for NFTs. The brand started by代理 a single IP and later developed multiple proprietary IPs. Currently, the brand owns 12 proprietary IPs, 25 exclusive IPs, and over 50 non-exclusive co-branded IPs.

People's preferences are always changing, and the lifespan of a single IP is limited. But what if you have hundreds of choices? Today, a certain IP series from this brand is very popular in Europe, America, and Southeast Asia, and the value retention capability of its surrounding dolls can be called "plastic Moutai." The ideals of some Web3 projects are ultimately realized in Web2, and this is not a coincidence. We need to rethink what IP management is, what the development roadmap of NFTs is, and why this trendy toy brand can achieve such high success despite the lack of content support.

III. The Pragmatic Approach of Pudgy Penguins

The success of Pudgy Penguins lies in pragmatism. The technical differences between NFT projects are not significant; in the end, it's just an image. The real challenge for NFTs is the implementation of IP, which is hundreds of times more difficult than creating 10,000 PFPs. Some large projects want to develop metaverses or anime; these ideas are cool but require huge investments, and they often raise funds from community members.

In this fast-paced world, everyone wants to succeed quickly. Holders hope to make a lot of money, and project teams want to achieve great heights in one step. Few well-known projects are willing to be grounded, and the more eager they are for success, the harder they fall. The original team of Pudgy Penguins was also once so impatient, and after their reputation was damaged, they sold the project at a low price.

At this time, Pudgy Penguins encountered a true leader, Luca Netz. This practitioner, with years of experience in physical marketing, brought the project back on track. Luca Netz is genuinely building a brand, managing a company for NFT holders. From marketing to plush toys, and then to future game development, every step of Pudgy Penguins is solid, the company can be profitable, and holders can benefit as well. There is nothing particularly special about this; it is just doing what should be done. It has been proven that the bottom-up IP model is viable in Web3, but there are too few project parties willing to lower themselves.

4. The Future Development Directions of NFTs

The future development of NFTs needs to break through the inherent thinking framework of the cryptocurrency circle. To become the next Disney of Web3 requires long-term accumulation. The question of whether the scarcity of NFTs is counterproductive in the process of going mainstream is worth pondering. If NFTs are positioned as trendy consumer products, then a scale of 10,000 may be too limiting; if defined as unique assets and fundraising methods of Web3, then IP ultimately still needs to be transformed into physical consumer products to fulfill commitments to the community, rather than continuously launching various 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 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.

V. The Significance and Impact of Token Issuance

The true meaning of issuing tokens for NFT projects is still unclear. This practice seems more like the exploitation of the lower tiers by those in higher positions, and it also dilutes the original value of NFTs. It may only be understood as a way for projects to seek convenient exit liquidity.

From APE to DOOD, these tokens are similar to variants of air coins. They usually grant holders functions such as staking to receive on-chain transaction dividends, purchasing rights for metaverse items, and governance rights. Ideally, this should create a virtuous cycle of holders → stakers → developers. However, the reality often falls into a vicious cycle of declining NFT prices, decreasing mining yields, and falling token prices.

For original NFT holders, although the tokens take away some dividends and rights, they usually receive a large airdrop when the tokens are generated, so there are few complaints. However, in the long run, this is indeed a form of dilution, and the distribution methods of certain projects are even more obvious encroachments on interests.

Short-term popularity is certainly important, but the long-term survival of the project is even more crucial. Don't let the token issuance become the end station 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, as they possess many irreplaceable characteristics. Four years ago, some viewed them as "cyber Moutai", but reality has proven they are more like "cyber tulips". Although there are not many willing to rebuild from the ruins, I believe that beneath this rubble, the seeds of the next hit IP must be hidden.