Creating Coins Is Not the Objective: The Conclusion and Renewal of NFTs

Issuing coins is merely the beginning. The resurgence of NFTs may lie within the next platform that merges creativity, consumption, and emotional value.

Author: YBB Capital Researcher Zeke

1. The Fall of NFTs

The final whistle of NFTs was marked by the release of Pudgy Penguins’ tokens, and the recent launch of Doodles on Solana made just a few ripples. Yuga Labs continues to diminish, this time affecting even the most iconic IP, Cryptopunks. The Bitcoin NFTs from the last NFT revival are nearly nonexistent. The once vibrant narratives have faded into obscurity, leaving them largely ignored.

10k PFP had an ambitious vision in the past, suggesting a community of just the right size could propel a grassroots IP project to greatness, distinctly different from traditional IP initiatives that first invest heavily in content. Take Disney’s Marvel Universe or Star Wars; these franchises required years of development and massive funding to become beloved cultural staples and eventually turn into cash cows.

NFTs, however, operate on a different premise. They offer low entry barriers and allow for rapid creation of IP that can quickly transform into assets. Creators need only pay minor gas fees to list their art on Opensea—no galleries, toy companies, film studios, or professional teams required. Thus, a new IP and artist emerge.

We witnessed a few years ago how some grassroots IPs soared in popularity within top entertainment circles in Europe, America, Japan, and South Korea. A local artist could facilitate a comeback through NFTs. For me, as a Gen Z individual raised on Japanese cinema, participating in IP investment and incubation, once out of reach for common people, felt like a dream come true through Crypto.

However, after BAYC’s “Crazy Nesting Dolls” and Azuki’s disastrous sub-series Elemental, the ambiguous status of NFTs became clearer. They no longer resembled equities or investments but more like expensive luxury items with membership perks. Project teams appeared to expect ongoing purchases of sub-series to fuel their continued investment in the core value of the IP roadmap. This dynamic sowed the seeds of contradiction: creators understood the high costs of content production, yet without it, the IP would stagnate. The sub-series released every few months continually drained resources from OG series holders, frustrating everyone in the community. Waiting years for content-driven rewards, if they ever materialized at all, became burdensome. Thus, the cracks widened, and delightful illusions shattered as floor prices fell, leaving behind endless disputes.

2. PoP MART: The Ace MCN of IP

If we conceptualize NFTs as trendy luxury items for Generation Z, their trajectories become clearer. In an era of rapid consumption, the absence of content can be a boon. A striking design can quickly captivate buyers. For instance, Azuki’s art appeals to Asian aesthetics, allowing this grassroots NFT series to emerge as the third-largest blue-chip after BAYC. In the physical realm, popular collectibles like Bearbrick, B.Duck, and Molly thrive despite lacking content support by relying solely on their unique aesthetics.

Yet trends are transient. Without substantive content as their core value, IPs risk obsolescence at any moment. Given the prevailing culture in crypto and the dismal success rate of NFTs, project teams often continue to generate derivatives around an IP. However, the reality is that their foundations have yet to solidify, and the trend could swiftly evaporate.

There is, however, a category of PFP projects with robust content backing, namely Japanese NFTs. I’ve observed at least four or five projects tied to well-known Japanese comic IPs attempting to make waves in the NFT space, but they seem oblivious to the fact that their fanbase is largely incompatible with this sphere. Moreover, the abundance of merchandise related to Japanese animation begs the question: why would fans spend exorbitant amounts on a mere image? The most critical point is that this image often lacks future potential for expansion. Acquiring, say, a Gundam NFT might provide entry to the Gundam metaverse “SIDE-G,” but does nothing to integrate you within the larger Gundam fan community.

To date, PFP projects have morphed into a disingenuous proposition, while only the diligent little penguin continues to strive forward. Is there a different path for these collectible images? I believe PoP MART might offer an intriguing solution.

Originating in Beijing’s Oumeihui Shopping Center, this small shop gained traction by acting as the agent of Sonny Angel. This series alone accounted for nearly 30% of PoP MART’s sales at the time. Although the copyright owner withdrew exclusive agency rights a year later, this led to the creation of an IP empire.

Wang Ning, the founder of PoP MART, had a straightforward vision: to create his own IP—one no one could take away. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch its first independent trendy toy series: Molly. This little girl with a pout quickly gained nationwide popularity due to the uncertain allure and dopamine-driven excitement of blind box gameplay. This marked the beginning of PoP MART’s meteoric rise. By 2019, Molly’s single IP generated annual sales of 456 million yuan, establishing itself as the primary income source for PoP MART.

The combination of Japanese-style capsule toys and high-end trendy items became widespread amid the NFT frenzy in recent years. Basic designs are crafted by artists before handed over to project teams for assembly into collectible series for sale. NFTs typically launch as blind boxes, with projects releasing images of various rare combinations to elevate buyer eagerness.

While both methods differ in sales format, thousands of NFT projects and various blue-chip endeavors have ultimately faltered. So why is PoP MART now experiencing a revival?

In my view, this stems from challenges with implementation and high entry costs. The former isn’t an issue anymore; the latter, however, remains problematic. NFTs once enjoyed a “Free Mint” phase, during which Goblintown and MIMIC SHHANS were highly profitable. Creators profited significantly just from transaction fees. Many NFTs introduced during the Inscription Era became comparatively decentralized, but this opportunity didn’t halt the overall decline of NFTs. Forming and sustaining an IP community is easy, yet long-term continuity is the real struggle.

Thus, I propose that we may have been operating under the wrong paradigm. After Molly’s rocket rise, PoP MART did not ascend to divinity; instead, its stock price faltered, much like NFTs. Yet PoP MART’s revival hinges on a comprehensive array of IPs. Today, PoP MART boasts 12 proprietary IPs, including Molly, DIMOO, BOBO&COCO, YUKI, Hirono, and 25 exclusive IPs such as THE MONSTERS (including Labubu), PUCKY, and SATYR RORY, as well as over 50 non-exclusive collaborations with brands like Harry Potter, Disney, and League of Legends.

Consumer preferences are ever-shifting, and IPs have limited lifespans. But what if there are hundreds of options? Currently, Labubu enjoys immense popularity across Europe, America, and Southeast Asia, with its collectible dolls fetching prices rivaling premium goods. Yuga Labs’ vision materialized within Web2, and such success is no mere coincidence.

We need to reevaluate what constitutes an IP business, what constitutes the roadmap for NFTs, and why PoP MART can achieve such heights devoid of content support.

3. Pudgy Penguins

I also took part in the Pudgy Penguins event in Hong Kong last year. This NFT project consistently engages positively with its community.

The success of Pudgy Penguins lies in its pragmatism—pure pragmatism. NFTs themselves don’t offer substantial technical differences; no matter how clever the minting process is, in the end, it’s simply a JPG. The challenge rests in IP realization, which is exponentially more complex than creating 10K PFPs. Yuga Labs aims for a Metaverse, while Azuki aspires to produce animations. Those initiatives may sound impressive, but they leave community members on the hook for exorbitant costs.

In such a compressed ecosystem, impatience reigns, with everyone striving for rapid success. Holders seek financial gains while project teams aim for immediate glory. Few blue-chip projects are willing to temper their ambition, resulting in a downward spiral where the more haste, the greater the fall. Initially, the Pudgy Penguins team reflected this grassroot impatience, ultimately selling the project at a loss due to reputation damage.

Fate smiled upon Pudgy Penguins when they found their rightful owner, Luca Netz, a veteran in physical marketing. He steered the project back to its rightful place. Luca is genuinely crafting a brand, running a company dedicated to NFT holders. From marketing and plush toys to future games, every move the penguin team makes is grounded in reality, enabling profitability for both the company and the holders. It’s all quite straightforward—it’s simply doing the necessary work. Bottom-up IP can indeed thrive in Web3, but too many project leaders are reluctant to pivot.

Thus, I dislike the term “falsification,” suggesting that certain concepts shouldn’t exist. Electric vehicles were once considered impractical; Siri was deemed silly. Yet today, cities teem with green-plate vehicles and AI technologies.

Web3 will undoubtedly explore various so-called “falsified” avenues without a well-suited project operator.

Path Forward

The road to success is straightforward, yet arduous. Ultimately, PFP’s next phase must detach from some of Crypto’s ingrained logical frameworks. Considerable maturation will be required to evolve into the next Web3 Disney. In prior articles, I pondered whether NFT scarcity has inadvertently hindered broader acceptance. If viewed as trendy consumer goods, a cap of 10K seems overly restrictive. Conversely, if viewed as unique assets within Web3, IP should evolve into a tangible consumer product fulfilling its community promises, rather than merely a collection of obscure sub-series.

Given the distinct culture of cryptocurrency and the innate characteristics of NFTs, it’s fundamentally challenging to preserve an IP through the ages. How can we optimize these PFPs? How can we transform a project into an IP production powerhouse? This might necessitate embracing new concepts and integrating advanced technologies and gameplay.

5. Is Coin Issuance the Final Frontier?

I still don’t grasp the significance of NFT token issuance. This scenario resembles the upper class exploiting the lower and diluting the value of OG NFTs. It strikes me primarily as a convenient exit strategy for liquidity.

From APE to DOOD, they all resemble air-coin variants. Their supposed benefits often include staking for on-chain transaction profits, marketplace purchases in the Metaverse, governance rights, and more. Ideally, this should create a harmonious cycle of holders, pledgers, and developers. However, reality often resembles a toxic cycle of NFT price drops, declining gold farming incomes, and falling token values.

For OG NFT holders, even though tokens may dilute some benefits and rights, many will also receive numerous airdrops during TGE, sparing them from complaints. Yet long-term, as previously mentioned, this situation amounts to dilution, and Azuki’s Anime distribution feels more like theft.

While short-term hype is beneficial, the long-term viability of a project should take precedence. Let’s not allow token issuance to become the endpoint.

Conclusion

In this fast-paced, dopamine-driven society, we’ve watched various emerging Web2 IPs flourish. NFTs should thrive in this environment due to their unique qualities. Four years ago, I viewed them as a cyber Moutai; the reality now feels more akin to a cyber tulip. Few are willing to tend to the remnants, yet I firmly believe there’s a next Labubu nestled among the debris.

Author: YBB Capital

This article reflects the opinions of PANews’s columnist and does not represent the stance of PANews. PANews does not assume legal responsibility. The article and opinions do not constitute investment advice.

Image Source: YBB Capital
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