The Rise and Fall of NFTs: From Virtual Fad to Return to the Real Economy

1. The End of the NFT Craze

The last boom of the NFT market came to a halt with the token issuance of a certain penguin project. Recently, a well-known NFT project launched its token on a certain public chain, but the response has been lukewarm. Another leading NFT project is continuously scaling down, and even its most iconic IP has not been spared. The Bitcoin NFT project, which was once the center of attention during the last wave of NFT revival, is now almost at zero. These narratives that once drove people crazy have now fallen into obscurity, with no one paying attention.

Ten thousand PFP( personal avatars ) NFT projects once had a beautiful vision: a moderately sized community to support a bottom-up IP project to reach the world. This is radically different from the traditional IP projects that first invest huge sums to create content. Traditional IPs, such as the superhero universe, sci-fi series, and animated characters under a famous entertainment company, often require years of accumulation and significant financial investment to resonate deeply with people and ultimately become a gold mine.

NFTs, on the other hand, are completely different; the entry barrier is very low, and the speed of IP creation and assetization is quite fast. Creators only need to pay a small gas fee to list their works for sale on NFT trading platforms, without the need for galleries, toy companies, film companies, or any professional teams; an IP and a new artist are thus born.

Three or four years ago, we witnessed some grassroots IPs becoming popular in the top entertainment circles of Europe, America, Japan, and South Korea. Through NFTs, amateur artists can also achieve a comeback. For Z generation individuals like me who grew up watching Japanese anime, being able to participate in IP investment and incubation that was once difficult to access through cryptocurrency is truly a dream come true.

However, with the "crazy nesting dolls" of a certain well-known NFT project and the disastrous sub-series launch of another project, the positioning of NFTs has gradually become clearer. They are not investments or equity; instead, they resemble expensive luxury goods with membership benefits attached. The project teams hope we will continuously purchase sub-series to support their ongoing efforts to build the core value of the IP. A contradiction arises: the project teams know that content production costs are high, but without creating content IP, they will decline. The sub-series released every few months continue to deplete the enthusiasm of the original series holders, tormenting every member of the community. Waiting for the returns from content may take years, or may never materialize at all. The cracks begin to widen, and the beautiful fantasies are shattered as the floor price drops, leaving only various disputes.

2. IP Incubation in the Real World

If we consider NFTs 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, as the appearance alone can quickly attract buyers. For example, the art style of a certain NFT project aligns well with Asian aesthetic preferences, and under this consensus, this grassroots-produced NFT series can follow closely behind top projects to become the third-largest blue chip. Some well-known trendy toys in the real world also lack content support, yet they once became a sensation due to their unique appearances.

However, trends are always fleeting. Without content as the core value, these IPs can become outdated at any time. Limited by the culture of the cryptocurrency sphere and the extremely low success rate of NFT projects, project teams often keep creating derivatives around a single IP. But the reality is, the core has not yet taken shape, and this wave has already passed.

Of course, there are also some PFP projects that are well-supported by content, such as Japanese-style NFTs. In the past, I have seen at least four or five projects with well-known Japanese anime IPs hoping to make a big splash in the NFT market. However, they seem to have overlooked several issues: the IP fanbase is almost completely incompatible with the NFT community; there are already so many Japanese anime peripherals that fans can hardly choose; why would fans spend hundreds of times the price to buy a small image; most importantly, this small image is merely a picture, and the potential for future empowerment is zero. Even if you purchase a well-known robot animation NFT, you can only gain access to its metaverse. The profits made by the IP side from models, games, and animations are naturally unrelated to you, and the NFT community may even be seen as outsiders among the entire IP fanbase.

At this point, PFP projects have become a false proposition, with only that penguin project still persistently striving as a pragmatic spark. So, does the small image have another way out? Perhaps a certain trendy toy brand provides a different answer.

This small box store, which originated in Beijing, turned around by代理某天使系列. This single series contributed nearly 30% of the brand's sales at the time. The envious copyright owner reclaimed the exclusive agency rights a year later, but this move instead led to the birth of an IP empire.

The founder's idea for the brand is very simple: to create its own IP that cannot be taken away by others. In 2016, the brand collaborated with a designer from Hong Kong to launch its first self-owned trendy toy series, and the little girl with the pouting image instantly became popular across the country. Through the uncertainty stimulation of the blind box method and dopamine drive, the brand began its first round of rapid growth. By 2019, the annual sales of this IP had reached 456 million yuan, becoming the core source of income for the brand.

This model combining Japanese gacha with high-end trendy toys for collaborations has also been very common during the NFT boom in the following years. The basic elements are designed by artists and then handed over to the project team to combine into a series of images for sale and operation. NFTs typically adopt a blind box format during the initial launch phase, where the project team releases various rare combinations of images to stimulate players' purchasing desire.

The two only differ in their release forms, but tens of thousands of NFT projects and various blue chips have generally failed. So why is this trendy toy brand experiencing a resurgence?

I once attributed the reasons to difficulties in landing and high purchasing thresholds. The former indeed seems to be a problem at present, but the latter is not necessarily the case. NFTs also went through a grassroots period of free minting, and some projects performed excellently during that time, with creators earning a fortune solely from transaction fees. Many NFTs from the inscription era are even more decentralized on this basis, but that hasn't stopped the decline of NFTs. Forming or joining an IP community is easy; the difficult part is how to sustain it.

Therefore, I believe the problem may lie in the model. After the first round of rapid growth, the iconic IP of the toy brand did not make the company famous overnight, and the entire company's stock price fell from 2021 all the way to 2024, just like NFTs. However, the brand ultimately made a comeback, relying on a whole wall of IPs. Now the brand has more than ten self-owned IPs, over twenty exclusive IPs, and more than fifty non-exclusive collaborations with well-known IPs.

People's preferences are always unpredictable, and the lifespan of a single IP is limited. But what if you have hundreds of choices? Nowadays, a certain series of the brand has become a hit in Europe, America, and Southeast Asia, and the value retention ability of its surrounding dolls can be called "plastic Moutai." The ideals of a well-known NFT project were ultimately realized in the Web2 domain, and all of this is no coincidence.

We should rethink what an IP business is, what the development roadmap of NFTs looks like, and why this trendy brand can achieve such heights despite lacking content support.

3. The Secret to the Success of the Penguin Project

The penguin NFT project has always maintained enthusiasm towards the community.

The success of the project lies in practicality, practicality, or practicality. NFTs themselves are difficult to differentiate technically; no matter how cleverly the minting process is designed, it ultimately remains a JPG image. The challenge of NFTs lies in the realization of IP, which is hundreds of times more difficult than creating ten thousand PFPs. A well-known project wants to build a metaverse, while another project aims to produce animation. These ideas are all very cool, but these projects with initial costs in the hundreds of millions will ultimately seek financial support from community members.

This highly compressed world is too impetuous, and everyone wants to achieve success quickly. 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, and in the end, the more impatient they are, the harder they fall. The original team of this Penguin project was also a restless grassroots team, and after their reputation was damaged, they sold the project at a low price.

At this time, the Penguin project encountered a real helmsman, a practitioner with years of experience in physical marketing who brought the project back to where it should be. He is genuinely building a brand and operating a company for NFT holders. From marketing to plush toys to future games, every step of the Penguin project is solid; the company can profit, and the holders can profit as well. There is nothing particularly special about it; it is just doing what should be done. It has been proven that bottom-up IP can exist in Web3, but there are too many project teams that cannot lower their stance.

Therefore, I really dislike the term "falsification", as if certain things should never have existed. Electric vehicles were once very immature, and the voice assistants in mobile phones were quite clumsy. But this does not prevent entire cities from being filled with new energy vehicles today, and the development of AI technology goes without saying.

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

IV. Future Development Path

The path to success is both simple and difficult. The next stage of development for PFP will ultimately require breaking out of some of the inherent logical frameworks of cryptocurrency; to become the next well-known entertainment company in Web3 requires significant accumulation. Whether the scarcity of NFTs has always had a counterproductive effect during the process of becoming mainstream is a question I discussed in my past articles. If we define NFTs as trendy consumer goods, then a limit of ten thousand may be too small; if we define them as a unique asset and fundraising method in Web3, then IP must ultimately be transformed into tangible consumer goods to fulfill commitments to the community, rather than a bunch of strange sub-series.

Given the unique culture of the cryptocurrency space and the characteristics of NFTs, it is indeed a dilemma to focus long-term on a single IP. How can we further develop based on these PFPs? How can we expand a single project into an IP incubation 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 issuing tokens for NFT projects remains unclear to this day. This practice seems more like an exploitation of the lower tier by the higher tier, and also a dilution of the original NFT value. I can only understand it as the project team looking for a convenient way to exit with liquidity.

From a well-known project to the latest cases, without exception, they all resemble variants of air coins. Their empowerment often includes staking to earn on-chain trading dividends, purchasing rights for items in the virtual world, governance rights, and so on. Ideally, it should be a perfect cycle among holders, stakers, and developers. But in reality, it resembles a bubble, trapped in a vicious cycle of NFT depreciation, declining mining profits, and token devaluation.

For original NFT holders, although the tokens share some dividends and rights, most of them will also receive a large airdrop when the tokens are generated, so few people complain. However, in the long run, this is indeed a form of dilution, and the allocation methods of certain projects are even blatantly predatory.

Short-term hype is certainly important, but the long-term sustainability of the project is even more critical. Don't let the token issuance become the final stop.

Conclusion

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging Web2 IPs. Theoretically, NFTs should thrive in this era, as they possess many irreplaceable characteristics. Four years ago, I regarded them as the Maotai of the digital world, but reality has proven that they are more like digital tulips. There are few willing to manage them patiently, but I believe that beneath this ruin lies the next explosion.