The Final Chapter and Restart of NFT: A Future Beyond Issuing Coins

1. The End of NFT

The last boom of the NFT market came to a halt with the token issuance of Pudgy Penguins. Recently, the token launched by Doodles on Solana has also failed to create much of a stir. Yuga Labs continues to downsize, even involving its core IP Cryptopunks. The Bitcoin NFT projects that were in the spotlight during the last wave of NFT revival are now almost worthless, and these once-crazy concepts have lost their appeal.

The vision of 10,000 PFP NFT projects was once beautiful - a moderately sized community could help a bottom-up IP project achieve success. This is completely different from the traditional model where substantial funds are invested in content development first, as seen with IPs like Disney's Marvel Universe and Star Wars, which require years of accumulation and huge investments to resonate with the public and eventually monetize.

NFT is completely different; its threshold 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 NFT trading platforms, without the need for galleries, toy companies, or professional teams, giving birth to a brand new IP and artist.

A few years ago, we also witnessed some bottom-up IPs becoming popular in the entertainment circles of Europe, America, Japan, and South Korea. Some ordinary artists were able to achieve a turnaround through NFT. For the Generation Z who grew up watching anime, being able to participate in IP investment and incubation that was previously inaccessible through cryptocurrency is a very dreamy thing.

However, after the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental by Azuki were released, the positioning of NFTs gradually became clear - it resembles an expensive luxury item with membership benefits, rather than equity or investment. The project parties also hope that holders will continue to buy sub-series to support their subsequent IP development. This contradiction has buried hidden dangers - the project parties know that content development costs are high, but without content IP, they will lose value. The frequent issuance of sub-series continuously depletes the interests of original series holders, tormenting the entire community. Waiting for content to bring returns may take years, or even never arrive. The cracks began to widen, beautiful fantasies shattered with the drop in floor prices, leaving only various disputes.

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

If NFTs are viewed as luxury trendy toys for Generation Z, the reasons for their rise and fall become clearer. In the age of fast food culture, a lack of content is not necessarily a bad thing, as the appearance alone can quickly attract buyers. For example, Azuki's art style aligns well with Asian aesthetics, and driven by consensus, this grassroots NFT series can follow closely behind BAYC to become the third largest blue-chip. Similarly, well-known trendy toys in the real world, such as Be@rbrick, Little Yellow Duck, and Molly, also lack content support but have once become popular due to their unique appearances.

However, trends are always fleeting, and IPs without content as a core value may become outdated at any time. Limited by cryptocurrency culture and the low success rate of NFT projects, project parties often continuously develop derivatives around a single IP. But the reality is that the core value is not yet formed, and this wave has already passed.

Of course, there are also some PFP projects with rich content support, such as Japanese-style NFTs. I have seen several projects with well-known Japanese anime IPs hoping to make a big splash in the NFT market. However, they seem to have not considered that the IP fan base is basically incompatible with the cryptocurrency circle. Secondly, there are already countless peripheral products from Japanese anime, why would fans spend hundreds of times the price to buy a small picture? The key point is that this small picture is limited to the image itself, and the future empowerment imagination space is almost zero. Even if you buy 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 gained by Bandai from models, games, and animations. Within the entire Gundam fan base, NFT holders may even be regarded as outliers. In this regard, the pain points of GameFi are actually quite similar.

At this point, the PFP project has become a false proposition, and only the pragmatic project Pudgy Penguins continues to strive. So, does the small image have any other way out? I think PoP MART may provide a different answer.

This small grid shop originating from Beijing turned around by代理Sonny Angel. This single series contributed nearly 30% of PoP MART's sales at that time. The envious copyright holder reclaimed the exclusive agency rights a year later, but this instead led to the birth of an IP empire.

The founder of PoP MART, Wang Ning, had a simple idea at the time: to create proprietary IP that cannot be taken away by others. In 2016, PoP MART collaborated with Hong Kong designer Wang Xinming to launch its first self-owned trendy toy series, Molly. This pouting little girl character quickly became a nationwide sensation, and with the uncertainty stimulation of the blind box gameplay and dopamine drive, 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 income for PoP MART.

This model, which combines Japanese gacha with high-end trendy toy collaborations, became quite common during the NFT craze in the following years. Basic elements are designed by artists and then combined by the project team into a series of images for sales and operations. The initial phase of NFT launches usually also adopts a blind box format, where the project team releases various rare combinations of images to stimulate purchasing desire.

The two only differ in terms of issuance, but tens of thousands of NFT projects and various blue chips have generally failed, while PoP MART is now迎来第二春. Why is that?

I used to attribute the reasons to difficulties in landing and high purchase thresholds. The former indeed seems to have issues at present, but the latter is not the case. NFTs have also gone through a period of free minting, with Goblintown, MIMIC SHHANS, and others being successful examples from that time. Creators could earn a hefty sum just from transaction commissions. Many NFTs from the inscription era are even more decentralized on this basis, but this has not stopped the decline of NFTs. It is easy to form or join an IP community, but the challenge lies in how to sustain it.

Therefore, I think the problem may lie in the model. Molly's success did not make PoP MART famous overnight; 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 has 12 proprietary IPs including Molly, DIMOO, BOBO&COCO, YUKI, and Hirono, 25 exclusive IPs including THE MONSTERS( containing Labubu), PUCKY, and SATYR RORY, as well as over 50 non-exclusive co-branded IPs such as Harry Potter, Disney, and League of Legends.

People's preferences are always unpredictable, and the lifecycle of an IP is limited. But what if we have hundreds of choices? Nowadays, Labubu is very popular in Europe, America, and Southeast Asia, and the value retention of its surrounding dolls is known as "plastic Moutai." Yuga Labs' ideals have finally been realized in the Web2 field, and this is not a coincidence.

We need to rethink what the IP business is, what the roadmap for NFT development is, and why PoP MART has been able to achieve such success despite the lack of content support.

III. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in pragmatism. NFTs themselves are difficult to differentiate technically, no matter how cleverly the minting process is designed, what ultimately presents is still a JPG image. The real challenge of NFTs lies in the implementation of IP, which is hundreds of times more difficult than producing 10,000 PFPs. Yuga Labs wants to build a metaverse, and Azuki wants to create anime. These ideas are cool, but these projects, which often cost hundreds of millions, tend to only seek funding support from the community.

In this highly compressed world, everyone is eager for quick success. Holders want to profit quickly, while project teams want to reach the top in one step. Very few blue-chip projects are willing to be grounded, and in the end, the more impatient they are, the worse they fall. The original team of Pudgy Penguins was also a restless grassroots team, and after their reputation was damaged, they sold the project at a low price.

At this time, Pudgy Penguins encountered its true helmsman, Luca Netz. This professional, with years of experience in physical marketing, has brought the project back on track. Luca Netz is genuinely building a brand and operating a company for NFT holders. From marketing to plush toys to future games, every step of Pudgy Penguins is solid, allowing the company to be profitable and the holders to benefit. None of this is special; it's just doing what should be done. It has been proven that a bottom-up IP model is feasible in Web3; it's just that there are too few project parties willing to humble themselves.

I don't like the term "falsification"; it seems like certain things shouldn't have existed from the start. Electric vehicles once seemed very stupid, and Siri on my phone also used to be quite dumb. But that doesn't prevent the whole city from being filled with new energy vehicles today, and the development of AI is self-evident.

Many so-called discredited tracks, Web3 will still try in the future, but it lacks a suitable project party.

4. Future Path

The path to success seems simple, but in reality, it is difficult. The next phase of PFP development will eventually require breaking through some inherent logical frameworks of cryptocurrencies. To become the next Disney of Web3 requires a significant accumulation. Whether the scarcity of NFTs has played a counterproductive role in the process of becoming mainstream is a question I discussed in my previous article. If NFTs are defined as trendy consumer goods, then a limited edition of 10,000 might be too little; if defined as unique assets and financing methods specific to Web3, then IP ultimately needs to be converted into physical consumer goods to fulfill commitments to the community, rather than just a bunch of odd sub-series.

Based on the unique culture of the cryptocurrency space and the attributes of NFTs themselves, the long-term focus on a single IP is also a helpless move. How can we innovate based on these PFPs? How can we expand a project into an IP factory? Perhaps this requires us to accept some new ideas and introduce more technologies and gameplay.

5. Issue Coin: Endpoint or New Starting Point?

The significance of issuing coins for NFT projects remains unclear to this day. This practice seems more like an exploitation of the lower tiers by those in higher positions, and it also dilutes the original value of the NFT. I can only interpret it as the project party seeking a convenient way to exit with liquidity.

From APE to DOOD, these tokens are all variations of air coins without exception. Their functions often include earning on-chain transaction dividends through staking, purchasing rights for items in the metaverse, governance rights, and more. Ideally, it should form a virtuous cycle among holders → stakers → developers. But the reality is that it resembles air more, caught in a vicious cycle of declining NFT prices, decreasing mining yields, and falling token prices.

For original NFT holders, although the tokens have taken some dividends and rights, they usually receive a large airdrop during the token generation event (TGE), so very few people complain. However, in the long run, this is indeed a form of dilution, and the distribution method like Azuki's Anime is an even more obvious encroachment of interests.

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