The Final Chapter and Reboot of NFT: From Fantasy to Reality

1. The Decline of the NFT Craze

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 also failed to generate much excitement. Yuga Labs continues to scale back its business, even involving its core IP Cryptopunks. Those Bitcoin NFT projects that attracted attention during the last resurgence of NFTs are now almost worthless, and the once-crazy narratives have lost their appeal.

The vision of 10,000 PFP( profile pictures) was once beautiful: a moderately sized community empowering a bottom-up IP project to go global, which is entirely different from the traditional IP model that first invests a large amount of capital to create content. Traditional IPs like Disney's Marvel Universe, Star Wars, etc., often require years of accumulation and massive investment to resonate deeply with people and ultimately monetize.

In contrast, the threshold for NFTs is extremely low, and the speed of IP creation and assetization is very fast. Creators only need to pay a small amount of Gas fees to sell their works on Opensea, without the need for galleries, toy companies, film companies, or professional teams; a new IP and a new artist are thus born.

A few years ago, we witnessed some bottom-up IPs becoming popular in the top entertainment circles of Europe, America, Japan, and South Korea. Ordinary artists can also achieve a comeback through NFT. For Generation Z individuals like me who grew up watching Japanese anime, being able to participate in IP investment and incubation that were previously difficult to access through cryptocurrency is very exciting.

However, after the "matryoshka" behavior of the subsequent series of BAYC( Bored Ape Yacht Club) and the disastrous release of Azuki's sub-series Elemental, the positioning of NFTs gradually became clearer. It is not a form of equity or investment, but rather resembles an expensive luxury item with accompanying membership benefits. The project team also hopes that users will continuously purchase sub-series to support their ongoing investment in the IP content roadmap. This creates a contradiction: the project team knows that creating content is costly, but without developing content IP, they will lose value. Releasing a sub-series every few months continuously exhausts the enthusiasm of the original series holders, tormenting every member of the community. Waiting for the returns from the content may take years, or it might never come at all. The rift begins to widen, the beautiful fantasy shatters as the floor price drops, leaving only various controversies.

2. IP Incubation in the Real World: Insights from PoP MART

If NFTs are regarded as luxury trendy toys for Generation Z, the reasons for their rise and fall become clearer. In an era dominated by fast food culture, a lack of content is not necessarily a bad thing; mere aesthetics can quickly attract buyers. For example, Azuki's art style aligns well with Asian aesthetic preferences, and under this consensus, this grassroots-created NFT series can follow closely behind BAYC to become the third largest blue-chip project. In the real world, Bearbrick(, the Bearbrick), B.Duck, Molly, and other well-known trendy toys similarly lack deep content support, yet they gained widespread popularity due to their unique appearances.

However, trends are always fleeting, and IPs without content as a foundation can become outdated at any time. Due to the cultural characteristics of the cryptocurrency space and the low success rate of NFT projects, project teams often continuously launch derivatives around an IP. But the reality is that the core content has not yet taken shape, and this trend has already passed.

Of course, there are also some PFP projects supported by ample content, such as some Japanese NFTs. In the past, I have seen at least four or five projects with well-known Japanese anime IPs hoping to make a splash in the NFT market, but they seem to overlook several key issues: the IP fanbase and the NFT community are almost entirely unrelated; there are already a plethora of Japanese anime peripheral products, why would fans spend hundreds of times the price to purchase a small image? Most importantly, this small image is just an image, and its potential for appreciation in the future is limited. Even if you purchase a Gundam NFT, you can only gain access to the Gundam metaverse "SIDE-G", which is unrelated to the profits earned by Bandai from models, games, and animations, and it may even be seen as an outlier within the entire Gundam fanbase. In this regard, GameFi projects face a similar dilemma.

At this point, PFP projects have become a false proposition, with only the pragmatic project Pudgy Penguins still striving. So, do these small images have any other way out? PoP MART may provide an answer.

This small store, which originated in Beijing, transformed by代理Sonny Angel. This one series alone contributed to nearly 30% of PoP MART's sales at the time. A year later, the copyright owner regained exclusive agency rights, which instead facilitated the birth of an IP empire.

The founder Wang Ning's idea is very simple: create your own IP and build a brand 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, and this pouting little girl image quickly became popular across the country. Through the uncertainty stimulation of the blind box gameplay, PoP MART started its first round of rapid growth. By 2019, the annual sales of the single IP Molly reached 456 million yuan, becoming the core source of income for PoP MART.

This model, which combines Japanese gashapon with high-end trendy toys, has also become very common during the NFT craze in the following years. The basic elements are designed by artists, and then the project team combines them into a series of images for sale and operation. The initial phase of NFT launches usually adopts a blind box format, where the project team showcases images of various rare combinations to stimulate purchasing desire.

The two only differ in their release forms, but why have tens of thousands of NFT projects and various blue chips generally failed, while PoP MART is experiencing a second spring?

I used to attribute the reasons to difficulties in landing and high purchasing thresholds. The former does have problems, but the latter is not the case. NFTs also went through a grassroots period of Free Mint, where projects like Goblintown and MIMIC SHHANS achieved great success, with creators making a fortune just from trading commissions. Many NFTs from the inscription era have even gone further in terms of decentralization, but this cannot stop the decline of NFTs. It's easy to form or join an IP community, but the hard part is how to sustain it.

Therefore, I think the problem may lie in the model. After the first round of rapid growth, Molly also did not make PoP MART famous in one fell swoop, and the company's stock price continued to decline from 2021 to 2024, just like the NFT projects. However, PoP MART eventually turned the situation around, relying on a whole wall of IPs. Today, PoP MART has 12 proprietary IPs, including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, 25 exclusive IPs including THE MONSTERS( that contains Labubu), PUCKY, and SATYR RORY, as well as more than 50 non-exclusive collaborative IPs with Harry Potter, Disney, League of Legends, etc.

Human preferences are always fickle, and the lifecycle of IP is limited. But what if there are hundreds of options at hand? Today, Labubu has become popular in Europe, America, and Southeast Asia, and the value retention of its surrounding dolls can be called "plastic Maotai." Yuga Labs' ideals have ultimately been realized in the Web2 field, and this is no coincidence.

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

III. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in being pragmatic, pragmatic, and more pragmatic. The NFT itself is technically difficult to differentiate; no matter how cleverly the minting process is designed, it ultimately remains just a JPG image. The real challenge for NFTs is the implementation of IP, which is hundreds of times harder than producing 10,000 PFPs. Yuga Labs wants to create a metaverse, and Azuki wants to produce animations. These ideas are cool, but these projects, which start at over a hundred million in costs, will ultimately only raise funds from community members.

In this highly compressed world, everyone is eager to achieve quick success. 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 be grounded; the more impatient they are, the harder they fall. The original team of Pudgy Penguins was once a restless grassroots team, and after their reputation was damaged, they sold the project at a low price.

At this time, the little penguin met its true owner, Luca Netz. This professional, with years of experience in physical marketing, has brought the little penguin back to the height it deserves. Luca Netz is truly building a brand; he runs a company for NFT holders. From marketing to plush toys to future games, every step of the little penguin is steady and solid, the company can make a profit, and the holders can benefit as well. There is nothing particularly special about it; it's just doing what needs to be done. It has been proven that bottom-up IP is viable in Web3; there are just too few project parties willing to humble themselves.

Therefore, I don't like the term "falsifiability", as if certain things should never have existed. Electric vehicles were once very immature, and Siri on my phone was also quite clumsy. But this doesn't prevent entire cities from being filled with new energy vehicles today, and the development of AI goes without saying.

Many so-called discredited tracks will still be attempted by 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 cryptocurrencies; to become the next Web3 version of Disney requires significant accumulation. I have discussed whether the scarcity of NFTs has had a counterproductive effect in the process of becoming mainstream. If defined as trendy consumer goods, then a limited edition of 10,000 may be too few; if defined as a unique asset and fundraising method of Web3, then IP ultimately needs to be converted into tangible consumer goods to fulfill its commitment to the community, rather than a bunch of odd sub-series.

Given the unique culture of the cryptocurrency space and the attributes of NFTs themselves, it is inevitable to focus on a single IP for a long time. How can we further innovate 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. 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 of the lower tiers by those in higher positions and also dilutes the original value of the NFTs. I can only understand it as a convenient way for project teams to seek liquidity exit.

From APE to DOOD, without exception, they all resemble variations of air coins. Their endowment often includes earning on-chain transaction dividends through staking, purchasing rights for items in the metaverse, governance rights, and so on. Ideally, it should be a perfect cycle among holders → stakers → developers. But the reality is that it resembles more of an air, trapped in a vicious cycle of declining NFT prices, decreasing mining rewards, and falling token prices.

For original NFT holders, although the tokens have taken away some dividends and rights, most of them received a large airdrop during the token generation event (TGE), so no one complained. However, in the long run, this is indeed a form of dilution, and the distribution like Azuki's Anime is even more obviously predatory.

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

Conclusion

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging IPs in Web2. NFTs were supposed to thrive in this era, as they possess many irreplaceable characteristics. Four years ago, I regarded them as the Moutai of the digital age, but reality has proven they are more like digital tulips. Few are willing to rebuild in the ruins, but I believe that beneath the ruins lies the next Labubu.