The Curtain Call and Rebirth of NFT

1. The Decline of the NFT Craze

The last boom of the NFT market ended with the token issuance of Pudgy Penguins, while the token issuance of Doodles on Solana only garnered limited attention. Yuga Labs continues to downsize, even involving its core IP Cryptopunks. The once high-profile Bitcoin NFT projects that were the focus of the last resurgence of NFTs are also nearing zero, and the once-crazy narratives have quietly faded from people's sight.

The vision of the 10k PFP project was once beautiful: a moderately sized community supporting a bottom-up IP project to reach the world, which is in stark contrast to the traditional IP project model that requires significant upfront investment. For example, IPs like the Marvel Universe and Star Wars under Disney often require years of accumulation and huge financial investments to resonate with people and ultimately become profitable projects.

The uniqueness of NFTs lies in their extremely low barriers to entry and the rapid assetization of IP. Creators only need to pay a small amount of Gas fees to showcase and sell their works on digital platforms, without the support of galleries, toy companies, or film studios, and without the involvement of a professional team, giving birth to a new IP and a new artist.

Three to four years ago, we witnessed some bottom-up IPs becoming popular in the top entertainment circles of Europe, America, Japan, and South Korea. Ordinary artists were able to achieve a comeback through NFTs. For the Generation Z growing up in Japanese anime culture, being able to participate in IP investment and incubation, which was once difficult to access, through crypto technology is undoubtedly an exciting thing.

However, with BAYC's "infinite derivation" strategy and Azuki's disastrous sub-series Elemental launch, the positioning of NFTs has gradually become clear: they resemble a high-end luxury product with membership benefits rather than a form of equity or investment. The project teams hope that holders will continuously purchase sub-series to support their ongoing investments in developing the core value of the IP. The root of this contradiction lies in the fact that project teams realize that content development is costly, yet failing to develop content IP will lead to a loss of vitality. The frequent issuance of sub-series continually depletes the enthusiasm of original series holders, causing the entire community to fall into fatigue. Waiting for the returns brought by content may take years, or they may never come. As the divergences continue to widen, those beautiful illusions shatter along with the decline in floor prices, leaving only various controversies and disappointments.

2. Real-World IP Giants: Pop Mart

If we regard NFTs as luxury trendy items for Generation Z, the reasons for their rise and fall become clearer. In an era dominated by fast food culture, a lack of content support is not a fatal weakness, as the appearance alone can quickly attract buyers. For example, Azuki's art style is very much in line with Asian aesthetic standards, and driven by consensus, this grassroots NFT series managed to become the third largest blue-chip project after BAYC. In the real world, well-known trendy toys like Bearbrick, B.Duck, and Molly also do not have deep content support, but they became popular due to their unique appearances.

However, trends are always fleeting, and IP without content as a value support may become outdated at any time. Restricted by cryptocurrency culture and the reality of very low success rates for NFT projects, project parties often continue to launch derivative products around an IP. But the reality is that before the core value of the IP has taken shape, this wave of enthusiasm has already passed.

Of course, there are also some PFP projects with ample content support, such as Japanese NFTs. In the past, I have encountered at least four or five projects holding well-known Japanese manga IPs, all hoping to achieve great success in the NFT market. However, they seem to overlook several key issues: first, the fan base of the IP is almost completely unrelated to the NFT circle; second, the peripheral products of Japanese anime are already numerous, and fans have no reason to spend hundreds of times the price to buy a small image; most importantly, the future empowerment space of these NFT images is almost zero. Even if you purchase a high-end NFT, you can only gain access rights to the "SIDE-G" of the Gundam metaverse, which has nothing to do with the profits of Gundam in models, games, or animations, and may even be considered an outlier among the entire Gundam fan base. In this regard, the dilemmas faced by GameFi projects are also very similar.

At this point, PFP projects have become a false proposition, and only the pragmatic project of Little Penguin continues to strive. So, does the small image really have another way out? Pop Mart may provide a different answer.

This small shop originating from Beijing has turned around by代理Sonny Angel. This one series alone contributed nearly 30% of the sales for Pop Mart. When the copyright holder retrieved the exclusive agency rights a year later, this move instead prompted Pop Mart to start building its own IP empire.

The founder of Pop Mart, Wang Ning, has a very simple idea: to create proprietary 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. This little girl with a pouting image quickly became popular across the country and stimulated consumers' purchasing desires through the blind box play method. Thus, 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 Pop Mart's core source of income.

This model combining Japanese gacha and high-end trendy toys has also been quite common during the NFT boom in the following years. Artists design the basic elements, which are then combined by the project team into a series of images for sale and operation. NFTs typically adopt a blind box format during the initial release stage, where the project team will release various rare combinations of images to stimulate players' purchasing desire.

The main difference between the two lies in their different forms of release, but why have tens of thousands of NFT projects and various blue-chip projects generally failed, while Pop Mart has迎来了第二春?

I once attributed the reasons to difficulties in landing and high purchasing thresholds. From the current perspective, the former is indeed a problem, but the latter is not necessarily so. NFTs also experienced a period of Free Mint, with Goblintown and MIMIC SHHANS being successful cases from that time, where creators earned a fortune solely from transaction fees. Many NFTs from the inscription era have even furthered the degree of decentralization, but these advantages still couldn't prevent the decline of NFTs. It's easy to form or join an IP community, but the challenge lies in how to sustain its vitality.

Therefore, I think the problem may lie in the model. After the first round of rapid growth, Molly did not make Pop Mart famous overnight, and the company's stock price continued to decline from 2021 to 2024, similar to the trend of NFTs. However, Pop Mart eventually achieved a rebound, relying on a complete wall of IPs. Today, Pop Mart has 12 proprietary IPs including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, 25 exclusive IPs including THE MONSTERS (including Labubu), PUCKY, and SATYR RORY, as well as over 50 non-exclusive co-branded IPs with Harry Potter, Disney, League of Legends, and others.

Human preferences are always fickle, and the lifecycle of IP is limited. But what if you have hundreds of options at hand? Nowadays, Labubu is very popular in the European, American, and Southeast Asian markets, and the value retention of its peripheral dolls can be called "plastic Moutai". The ideals of Yuga Labs have ultimately been realized in the Web2 field, and this is not a coincidence.

We need to rethink what the IP business is, what the development roadmap for NFTs is, and why Pop Mart has achieved such great success without a strong content foundation.

3. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in being pragmatic, pragmatic, and pragmatic again. NFTs themselves are difficult to differentiate technically; no matter how cleverly the Mint process is designed, what ultimately presents is still a JPG image. The real challenge for NFTs lies in the realization of IP, which has hundreds of times the difficulty compared to creating a 10K PFP. Yuga Labs wants to build a metaverse, and Azuki plans to create anime. These ideas are cool, but these projects, with starting costs in the hundreds of millions, will ultimately only seek financial support from community members.

In this highly compressed world, people are eager for quick success. Holders want to profit quickly, and project teams hope to make a leap forward. Few blue-chip projects are willing to be grounded, resulting in more severe setbacks for those who are too impatient. The original team of Pudgy Penguins was once such an impatient grassroots team, and after their reputation was damaged, they sold the project at a low price.

Until encountering the true helmsman Luca Netz, the little penguin finally found the right direction for development. This operator, with years of experience in physical marketing, has brought the little penguin back to its rightful height. Luca Netz is truly building a brand, managing a company for NFT holders. From marketing to plush toys and future game development, every step of the little penguin is solid and steady, allowing the company to be profitable and holders to receive returns. There is nothing particularly special about it; it just does what it should be doing. It has been proven that the bottom-up IP model is feasible in the Web3 world, but there are too few project parties willing to lower their stance.

Therefore, I do not agree with the careless use of the term "falsification," as if certain things should not have existed from the beginning. Electric vehicles were once considered a stupid idea, and Siri in my phone was initially quite clumsy. But this does not prevent entire cities from being filled with new energy vehicles today, and the development of artificial intelligence is changing rapidly.

Many so-called discredited sectors will still be attempted by Web3 in the future, but it needs a suitable project party to promote it.

4. Future Development Path

The path to success seems simple, but in reality, it is fraught with difficulties. The next stage of development for PFP must break through some inherent logical frameworks of the cryptocurrency circle. To become the next Web3 version of Disney requires a substantial accumulation and sedimentation. Has the scarcity of NFTs played a counterproductive role in the process of becoming more mainstream? I discussed this issue in my previous article. If NFTs are defined as trendy consumer goods, then a scale of 10K may be too limited; if they are defined as assets and fundraising methods unique to Web3, then IP ultimately still needs to be converted into physical consumer goods to fulfill its promises to the community, rather than a series of bizarre sub-series.

Based on the unique culture of the cryptocurrency realm and the attributes of NFTs themselves, it is inevitable to focus long-term on a single IP. How can we further innovate based on these PFPs? How can a project be expanded into an IP factory? This may require us to embrace some new concepts and introduce more technologies and gameplay.

5. Token Issuance: Endpoint or New Starting Point?

The significance of issuing tokens for NFT projects remains confusing to this day. This practice seems more like an exploitation of holders by the project party and a dilution of the original NFT value. I can only understand it as the project seeking a quick way to exit and obtain liquidity.

From APE to DOOD, these tokens are all variants of air coins without exception. They usually grant holders certain rights, such as earning on-chain transaction dividends through staking, the right to purchase items in the metaverse, and participation in governance, among others. Ideally, it should form a virtuous cycle among holders → stakers → developers. However, the reality is that it resembles a hollow promise, trapped in a vicious cycle of falling NFT prices, reduced mining profits, and token devaluation.

For original NFT holders, although the token has diluted some rights and dividends, most of them received a large airdrop during the Token Generation Event (TGE), so few people complain. However, in the long run, this is indeed a form of value dilution, like Azuki.