The Final Chapter and Reboot of NFT: New Explorations in the IP Field

1. The Decline of NFTs

The last gasp of the NFT market came with the token launch of Pudgy Penguins, while the token launch of Doodles on Solana only generated a slight response. Yuga Labs continues its downsizing strategy, even involving its most core IP, Cryptopunks. Those Bitcoin NFT projects that rose during the last wave of NFT revival are also nearly at zero, and the once-crazy narratives have now faded into obscurity, no longer attracting attention.

The 10k PFP project once had a beautiful vision. It hoped to help a grassroots IP project reach the world through a moderately sized community. This is completely different from the traditional IP project model, which involves investing a large amount of money to support content from the outset. Traditional IPs, such as Disney's Marvel Universe, Star Wars, and various animated characters, typically require years of accumulation and significant financial investment to deeply resonate with people and ultimately become profitable gold mines.

In contrast, the threshold for NFTs is extremely low, and the creation and assetization of IP is very fast. Creators only need to pay a small Gas fee to sell their works on Opensea, and without the support of galleries, toy companies, film companies, or any professional teams, they can create an IP and become emerging artists.

Three or 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 can also achieve a comeback through NFTs. For Generation Z like me, who grew up watching Japanese animation, being able to participate in IP investment and incubation that was once difficult to access through cryptocurrency is an incredibly dreamy experience.

However, with the "crazy nesting dolls" of BAYC and the disastrous sub-series Elemental of Azuki being released, the positioning of NFTs is gradually becoming clear. It is not like a form of equity or investment; rather, it resembles an expensive luxury item with accompanying membership benefits. The project teams hope that holders will continuously purchase sub-series to support their subsequent high-cost IP value building. This contradictory seed is thus sown: the project teams know that content production is costly, but without creating content IP, they will lose their vitality. Releasing a sub-series every few months continuously drains the enthusiasm of OG series holders, tormenting every member of the community. Waiting for returns from content may take years, or they might never come at all. The cracks begin to widen, and the beautiful illusions are shattered as the floor price drops, leaving only various disputes.

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

If we regard 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 support is not entirely a bad thing, as the appearance alone can quickly attract buyers. For example, the art style of Azuki aligns well with the aesthetics of Asians; based on this consensus, this grassroots NFT series was able to become the third-largest blue chip after BAYC. In the real world, well-known trendy toys like Bearbrick, B.Duck, and Molly also lack deep content support, but they all became popular due to their unique appearances.

However, trends are always fleeting, and an IP without content as its core value may become outdated at any time. Limited by the cultural characteristics of the cryptocurrency space and the extremely low success rate of NFTs, project teams often continue to launch derivatives around a single IP. But the reality is that by the time the core has yet to take shape, this trend has already passed.

Of course, there are also some PFP projects with ample content support, such as Japanese-style NFTs. In the past, I have seen at least four or five projects with well-known Japanese manga IPs that hope to make a big splash in the NFT market. However, they seem to overlook several key issues: First, the fan base of the IP is almost completely incompatible with the NFT circle; second, there are already a plethora of peripheral products from Japanese anime, why would fans spend hundreds of times the price to buy a small image? Most importantly, this small image is merely an image, and the future potential for empowerment is zero. Even if you purchase a 高达 NFT, you can only gain entry rights to the 高达 metaverse "SIDE-G". The profits that Bandai earns from models, games, and animations have nothing to do with you, and among the entire 高达 fan base, NFT holders may even be regarded as outcasts. In this regard, the pain points of GameFi are actually very similar.

At this point, PFP projects have become a false proposition, with only the pragmatic little penguin still striving continuously. So, does the small image have another way out? I believe PoP MART may provide a different answer.

This small box store originating from the Beijing Euro-American Shopping Center made a comeback by代理Sonny Angel. This one series alone contributed nearly 30% of PoP MART's sales at the time. The envious copyright holder reclaimed exclusive agency rights a year later, but this move instead facilitated the birth of an IP empire.

The founder of PoP MART, Wang Ning, has a very simple idea: 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 quickly became popular across the country, and through the uncertainty of the blind box gameplay and dopamine-driven stimuli, 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 at that time.

This model of combining Japanese gacha with high-end trendy toys for collaboration has become quite common during the NFT craze 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 usually adopt a blind box format during the initial release phase, where the project team will release various rare combinations of images to stimulate players' purchasing desire.

The two are just different forms of issuance, but why have tens of thousands of NFT projects and various blue chips generally failed, while PoP MART has welcomed a second spring?

I used to attribute the reasons to the difficulties of landing and the high purchase threshold. The former indeed has issues at present, but the latter is not the case. NFTs also had a Free Mint period with low-cost projects, with Goblintown and MIMIC SHHANS being the golden projects of that time, where creators earned a fortune solely from trading commissions. Many NFTs in the inscription era have even higher levels of decentralization based on this, yet this cannot prevent 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 we might be making a model error. After the first round of rapid growth, Molly also did not make PoP MART famous in one go; the stock price of the entire company fell from 2021 all the way down to 2024, just like NFTs. But PoP MART eventually turned 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 (including Labubu), PUCKY, and SATYR RORY, as well as over 50 non-exclusive collaborative 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? Nowadays, Labubu has become a sensation in Europe, America, and Southeast Asia, with the value retention of its surrounding dolls comparable to plastic Moutai. Yuga Labs' ideals were ultimately realized in Web2, and it is no coincidence.

We need to rethink what the IP business is, what the development roadmap for NFTs is, and why PoP MART has achieved such high success without content support.

3. The Success Path of Pudgy Penguins

The success of Pudgy Penguins lies in pragmatism, pragmatism, and more pragmatism. NFTs themselves are technically difficult to differentiate; no matter how cleverly the minting process is designed, it ultimately boils down to a JPG image. The challenge of NFTs lies in the implementation of IP, which is hundreds of times more difficult than producing 10K PFPs. Yuga Labs wants to build a metaverse, while Azuki hopes to create anime. These ideas are cool, but for projects that start at costs of over a hundred million, they will only seek financial support from community members.

In this highly compressed world, everyone is eager for quick success. Holders want to make big money, and project teams want to achieve greatness in one step. Very few blue-chip projects are willing to lower their stance, and the more impatient they are, the harder they fall. The original team of Pudgy Penguins was also a very impulsive grassroots team, and after their reputation was damaged, they sold the little penguin project at a low price.

At this time, the little penguin met its true owner, Luca Netz. This worker, with years of experience in physical marketing, brought the little penguin back to its rightful height. Luca Netz is indeed 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 solid, and the company can profit while the holders can also benefit. There is nothing particularly special about all this; 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 projects that cannot let go of their pride.

I really dislike the term "debunking"; it seems as if certain things should never have existed. Electric cars used to be foolish, and the Siri on my phone was also quite foolish. But that doesn't prevent the entire city from being filled with green license plate cars today, and there's no need to mention AI.

Many so-called discredited tracks will still be explored by Web3 in the future; it's just that it lacks a suitable project party.

4. Future Path

The path to success is both simple and difficult. The next step in the development of PFP must break through some inherent logical frameworks of cryptocurrency, and a significant accumulation is required to become the next Disney of Web3. I have previously discussed whether the scarcity of NFTs has been counterproductive in the process of becoming mainstream. If NFTs are defined as trendy consumer products, then a scale limit of 10K may be too small; if they are defined as a unique asset and fundraising method in Web3, then IP ultimately needs to be converted into physical consumer products to fulfill commitments to the community, rather than a bunch of strange sub-series.

Based on the unique culture of the cryptocurrency space and the attributes of NFTs themselves, the situation of long-term development around an IP is indeed quite challenging. How can we further elaborate on these PFPs? How can we expand a project into an IP factory? This may require us to embrace some new ideas and introduce more technologies and gameplay.

5. The Significance of Issuing Tokens

The significance of NFT token issuance remains unclear to this day. This practice resembles an exploitation of the lower tiers by those in power and is also a dilution of the original value of NFTs. I can only interpret it as the project seeking a convenient way to exit liquidity.

From APE to DOOD, without exception, they all resemble variants of air coins. Their empowerment usually includes staking to earn some on-chain transaction dividends, rights to purchase items in the metaverse, governance rights, and so on. Ideally, it is a perfect cycle among holders → stakers → developers. However, in reality, it resembles a type of air, caught in a vicious cycle of declining NFT prices, decreasing mining rewards, and dropping 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. But in the long run, this is a kind of dilution, and the distribution like Azuki's Anime is even more obvious plunder.

Short-term popularity is important, but the long-term sustainability of the project is more crucial; do not let issuing tokens be the final destination.

Conclusion

In this fast-paced, dopamine-driven era, we have witnessed the rise of many emerging Web2 IPs. NFT is at this