The Final Chapter and Rebirth of NFT: Reflections from Prosperity to Decline

1. The End of the NFT Boom

The last wave of the NFT market frenzy came to an end with the token issuance of Pudgy Penguins. Recently, the token issuance of Doodles on Solana has also failed to make much of a splash. At the same time, Yuga Labs continues to downsize, even affecting its core IP Cryptopunks. The BitCoin NFT project, which received much attention during the last round of NFT revival, is also nearly at zero, and the once-crazy narrative is now ignored.

The vision of 10,000 PFP NFTs is a beautiful one. It attempts to push an IP project globally through a moderately-sized community in a bottom-up approach. This is in stark contrast to traditional IP projects that invest heavily first and then create content. Traditional IPs like Disney's Marvel Universe and Star Wars often require years of accumulation and enormous investment to make the IP resonate with the public and ultimately monetize.

In contrast, the threshold for NFT is extremely low, and the speed of creating IP and realizing IP assetization is very fast. Creators only need to pay a small Gas fee to sell their works on platforms like Opensea, without the need for galleries, toy companies, or professional teams to create a new IP.

Three to four years ago, we witnessed some grassroots IPs gaining popularity in the entertainment circles of Europe, America, Japan, and South Korea. Some grassroots artists also achieved a "comeback of ordinary people" through NFTs. For Gen Z like me, who grew up watching Japanese anime, being able to participate in IP investment and incubation that was previously difficult to access through cryptocurrency is a dream come true.

However, with the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental of Azuki being released, the positioning of NFT has gradually become clearer. It resembles an expensive luxury item with membership benefits, rather than equity or investment. The project parties hope users will continually purchase sub-series to support their subsequent IP development plans. This contradictory seed has since been planted: project parties know that creating content is expensive, but without content, the IP will die. Releasing sub-series every few months continuously drains the enthusiasm of holders, tormenting everyone in the community. Waiting for content to bring returns may take many years, or even never come. The rift begins to widen, beautiful fantasies shatter as the floor price drops, leaving only various disputes.

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

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

However, trends are always fleeting, and IP without content as value support may become outdated at any time. Restricted by the culture of the cryptocurrency circle and the extremely low success rate of NFTs, project parties often continuously derive around a single IP. But the reality is that the core has not yet taken shape, and the craze has already passed.

Of course, there are PFP projects supported by sufficient content, such as Japanese NFTs. In the past, I've seen several well-known Japanese anime IPs trying to make a splash in the NFT market, but they seem to have not considered that the IP fan base is almost completely incompatible with the NFT community. Furthermore, the merchandise for Japanese anime is already extensive; why would fans spend hundreds of times the price to buy a small image? Most importantly, the future empowerment space of this small image is zero. Even if one buys a Gundam NFT, they can only gain entry rights to the Gundam metaverse "SIDE-G", which has nothing to do with the profits of the Gundam IP itself.

It can be seen that PFP projects have become a false proposition, and only practical projects like Pudgy Penguins are still striving. So, does the small image have any other way out? PoP MART may provide an answer.

This small store originating from Beijing turned things around by代理Sonny Angel. This single series contributed nearly 30% of PoP MART's sales at that time. A year later, the copyright holder reclaimed exclusive agency rights, which instead facilitated the birth of an IP empire.

The founder of PoP MART, Wang Ning, has a simple idea: 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 a nationwide sensation. Through the uncertainty stimulated by the blind box gameplay, 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, which combines Japanese gachapon with high-end trendy toys, has also become very common in the subsequent years of the NFT craze. Artists design the basic elements, and the project team combines them into a series of images for sales operations. The NFT launch phase usually also adopts the blind box format, where the project team releases various rare combination images to stimulate purchasing desire.

The two simply differ in their form of release, but why do tens of thousands of NFT projects generally fail, while PoP MART is experiencing a resurgence?

I once attributed the reasons to the difficulties in landing and the high purchasing threshold. The former does exist, but the latter is not actually the case. NFTs also had a Free Mint period, and Goblintown and MIMIC SHHANS were successful examples from that time, where creators earned a considerable amount just from transaction fees. The decentralization of NFTs during the inscription era was even higher, but it still could not stop the decline of NFTs. Joining an IP community is easy, but the difficult part is sustaining operations.

Therefore, I believe the problem may lie in the model. Molly's success did not make PoP MART an instant sensation; the company's stock price has been declining from 2021 to 2024, similar to the trend of NFTs. However, PoP MART ultimately achieved a rebound, relying on a whole wall of IPs. Today, PoP MART owns 12 proprietary IPs including Molly and DIMOO, 25 exclusive IPs such as THE MONSTERS, and over 50 non-exclusive co-branded IPs including Harry Potter, Disney, and League of Legends.

People's preferences are always changing, and the lifecycle of an IP is limited, but what if you have hundreds of choices? Nowadays, Labubu is extremely popular in Europe, America, and Southeast Asia, and its peripheral dolls have a value retention ability comparable to "plastic Maotai." The ideals of Yuga Labs were ultimately realized in Web2, which is not a coincidence.

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

3. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in pragmatism. NFTs themselves are unlikely to have technological breakthroughs; no matter how cleverly the Mint process is designed, it ultimately remains a JPG. The challenge of NFTs lies in the implementation of IP, which is hundreds of times more difficult compared to producing 10K PFPs. Yuga Labs wants to create a metaverse, Azuki wants to make anime, these all sound cool, but they are projects that start at a cost of over a hundred million, and ultimately will only raise funds from the community.

This highly compressed world is too restless, and everyone wants to achieve success in one step. Holders want to make big money, and project teams want to soar to great heights. Very few blue-chip projects are willing to be grounded, and the more impatient they are, the harder they fall. The original team of Pudgy Penguins was also once so restless that they sold the project at a low price after their reputation was damaged.

At this time, Pudgy Penguins encountered their true owner, Luca Netz. This practitioner, with years of experience in physical marketing, has brought the little penguins back to their rightful height. 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 penguins is solid; the company can profit, and the holders can also profit. All of this is quite ordinary, just doing what needs to be done. It turns out that bottom-up IP is viable in Web3, but there are too few project parties willing to humble themselves.

Therefore, I am quite averse to the term "falsification", as if certain things should never have existed. Electric cars once seemed foolish, and Siri in phones was also quite clumsy. But this does not prevent the entire city from being filled with green license plate cars today, and the development of AI is changing rapidly.

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

4. Future Development Path

The path to success seems simple, but in reality, it is difficult. The next step in the development of PFP must break through some inherent logical frameworks of cryptocurrency. To become the next Web3 Disney, a significant accumulation is required. Whether the scarcity of NFTs has counteracted the process of reaching the mass market is a question I discussed in a previous article. If NFTs are defined as trendy consumer products, then a scale of 10K may be too limiting; if they are defined as assets unique to Web3 and a means of fundraising, then IP ultimately needs to be converted into tangible consumer products to fulfill commitments to the community, rather than a bunch of odd sub-series.

Based on the unique culture of the cryptocurrency space and the attributes of NFTs themselves, the long-term operation around a single IP is also a helpless move. How can we further innovate based on 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. The Significance of Token Issuance

The significance of NFT issuance tokens remains unclear to this day. It feels more like an exploitation of the lower tiers by the upper tiers, and also a dilution of the original value of NFTs. I can only understand it as a convenient way for the project to seek liquidity exit.

From APE to DOOD, without exception, they all resemble variants of air coins. Their empowerment often includes staking to obtain on-chain trading dividends, metaverse item purchase rights, governance rights, and so on. Ideally, it is a perfect cycle among holders → stakers → developers. However, the reality is that it is more like a form of air, trapped in a vicious cycle of NFT price drops, declining mining rewards, and token devaluation.

For original NFT holders, although the tokens have taken away some dividends and rights, they mostly received a large airdrop during the TGE, so there are few complaints. However, in the long run, this is indeed a form of dilution, and the distribution like Azuki's Anime is even more of a blatant plunder.

While short-term popularity is certainly important, the long-term survival of the project is even more critical. Do not let the token issuance become the final destination.

Conclusion

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging Web2 IPs. NFTs were supposed to thrive in this era, as they possess many irreplaceable characteristics. Four years ago, I regarded them as "cyber Moutai," but reality has become "cyber tulip." Few are willing to sift through the ruins, but I believe that beneath the ruins lies the next Labubu.