After PFP-type NFTs are disenchanted, is the narrative abandoned, or is the true value gradually revealed?

Foreword:

The reason for writing this article is because I heard a friend next to me frowning and scratching his head, thinking: Should I buy a monkey (BAYC) now? The monkey is still too expensive, or should I buy Azuki?

And this also happens to arouse my curiosity and thirst for knowledge, so I embarked on a journey to understand the ins and outs of NFT in the vast amount of information and came to a conclusion.

As a newcomer to the encryption industry, a literally Newww Fresher, I have been pushing myself to learn quickly and extract key points, summarize and conclude through brain thinking and filtering, and come up with some ideas based on my own secondary understanding.

It can be said that this content may be boring and not very interesting to read, but looking back at the entire journey, it is clear to see where I started picking mushrooms after falling into the rabbit hole, which wildflowers I touched along the way, and which pine cones I picked, and finally returned home with a basket full of things.

Do you think they are useful? This is not an assignment given by someone else that I need to submit, but rather a way for me to test my learning achievements during this stage of research. The Feynman learning method is timeless.

Maybe there isn't a single edible thing in a basketful, but many things may not be so utilitarianly judged by their usefulness. It at least satisfies my original intention of seeking knowledge, and my curiosity has been gradually fed by myself, and it also makes me realize that I shouldn't start such a big theme in the future and should find smaller points to write smoothly, which is worth it.

Web 3 world is a dense forest nurtured on the soil of blockchain infrastructure, and NFT is like a pass card that everyone has in their hands. If you are interested, follow this article and take a stroll in the forest with the first PFP-type NFT rabbit hole.

正文开始

translates to

Start of the main text

in English.

Looking back at the past year, although NFT projects continue to emerge, the splashes they create are not as impressive as before, and more and more people are becoming disillusioned with them.

Undoubtedly, during the bear market, besides looking for new opportunities in new projects and browsing Twitter, there is also a question that is most frequently mentioned and discussed: "Should I buy NFTs at this time?"

NFT actually has many different subcategories, and the most widely discussed and controversial one in the market is PFP. PFP (Profile Picture) NFT refers to NFTs used as personal avatars, and is also the most recognizable and understandable form of NFT for those outside the Web3 community.

However, since the Fed's interest rate hike in 2022, the bear market in the cryptocurrency market has not only accelerated the decline in coin prices, but also hastened the emergence of the NFT market bubble.

2023 Q3 NFT market transaction volume hits a new low

When the previously popular blue-chip PFP NFTs, such as Bored Ape Yacht Club (BAYC), Azuki, CryptoPunks, and Doodles, are gradually falling in price in the current market where supply exceeds demand, whether to enter the market in a timely manner or continue to wait and see has become a point of contradiction for everyone.

1. Should I buy NFTs now?

The hidden doubts behind it can be summarized as follows:

·1. Is the current price of NFT already at the floor price, or will there be a lower price point?

·2、I am now buying NFT at a low price, will it rise to its historical high point in the next bull market, allowing me to sell it and achieve financial freedom?

·3. Will the narrative of small images become outdated? Can NFT still ride the growth wave of the next market cycle?

·4. Will PFP-type NFTs generate additional value beyond their visual avatar properties? Is it still worth spending several E to acquire them?

再把以上疑问摘重要关键词，把思路捋清晰后可以发现，大家归根结底对 NFT 的质疑在于这两点——

After summarizing the important keywords from the above questions and clarifying the ideas, it can be found that people's fundamental doubts about NFT are these two points -

1、Practical/Application Value

2、Future Market Premium Space

When the discussion around NFTs begins to be strongly associated with "value", it also means that current users are no longer easily buying into the narrative logic of the suspended void in past bull markets. If there is no more tangible utility, if there are no more practical application scenarios, then it can all be seen as one bubble after another.

Bull markets often offer mesmerizing returns, with NFTs being no exception. It's highly likely that any purchase made during a hot market will yield profits, even for seemingly insignificant images. As a result, those driven by FOMO may find it difficult to heed conservative and fair advice.

Quantum

2.1.1 CryptoPunks

2.1.2 BAYC

2.1.3 Doodles

2.1.4 Azuki

“We rise together.

We build together.

We grow together.”

2.3.1 The Commercial Value of Linked Entities

By holding NFTs in BAYC, you have entered the club and gained the right to apply IP in offline commercial scenarios.

As Yuga Labs put it, "Many boring monkey holders have an entrepreneurial spirit and use PFP to create independent entity businesses." Ordinary people can use PFP images as iconic symbols for offline stores to attract business, while big brands like Li Ning and Adidas have also released BAYC joint clothing.

With the popularity of BAYC radiating globally, it has been used to promote and publicize physical business operations, allowing holders of NFTs to feel a sense of achievement both online and offline. This may be the most tangible way for holders to maximize their sense of satisfaction.

2.3.2 Derivative Token Airdrop Benefits

Many project parties will release second-generation NFTs shortly after the first-generation NFTs are sold, and use them as early bird rewards to airdrop to first-generation holders.

For example, six months after Doodles was launched, the project team opened the Dooplicator airdrop plan for Doodles OG holders.

Dooplicator NFT is defined as a functional graffiti machine that can be used to hatch a variety of wearable devices, allowing Doodles OG holders to creatively customize their NFT avatars. This enables users to freely construct their preferred digital identities, breaking boundaries and attracting a wider audience for a better interactive experience, which also lays the groundwork for the upcoming Doodles 2 project.

After Dooplicator was launched, its lowest price on the secondary market was 0.66 ETH. At its peak, the average price even reached 3.89 ETH.

As mentioned earlier, AZUKI is no exception. Two months after the release of Red Bean, Chiru Labs launched 20,000 Beanz series NFTs. Beanz are defined as AZUKI's sidekick, with 10,000 of them being airdropped for free to AZUKI holders, and the remaining half being sold publicly. Beanz was once traded at a highest average price of 6.4 ETH on Opensea.

· The airdrop benefits of derivative tokens can also be seen as an investment value chip for buying NFTs.

· Initiatives like Beanz, which offer a new "buy one, get one free" approach, not only do not dilute the value of existing NFTs for old users, but also lower the entry barrier for new users and increase liquidity. This attracts more exposure and attention to the project, which in turn reflects in the rise of NFT prices. It is a win-win situation for all parties involved and a welcome development.

2.3.3 Obtain the pass for the future potential function of the project

Just as many project parties will plan many future big moves in their grand Roadmap, each milestone to be achieved is a prominent signpost.

Just like Doodles aims to build itself into a global entertainment media group, a series of subsequent measures have been closely focused on this theme, making various integrations and attempts. For example, the appointment of former Billboard president Julian Holguin as CEO; the acquisition of the Emmy-nominated animation studio "Golden Wolf", which can expand Doodles' franchise rights; and even a collaboration with Columbia Records to release Doodles records.

When you invite world-renowned and highly professional people in the audiovisual field to join the helm, you will feel that it is building ships seriously.

After three months of the release of Doodles NFT, the official team announced that they will be launching Doodles 2 on the Flow blockchain.

Compared to a single NFT, Doodles2 is more like a new game map, characterized by custom and dynamic doodle avatars. The vision is to move beyond the Ethereum ecosystem and lower the barrier of entry so that everyone can have their own digital identity.

Therefore, the official immediately launched a new project called Space Doodles, referring to it as "non-dilutive expansion content for Doodles".

It is different from the typical increase issuance of small profile pictures, but rather a new image based on the existing NFT of Doodles. In other words, only Doodles holders can obtain it.

Holders can package their Doodle NFTs through the Doodle Bot smart contract, and the randomly generated spaceship will be combined with the original Doodle to create a Space Doodle NFT.

can be understood as replacing the original Doodles image with an astronaut animated version of Doodles. The animation and space scenes make the visual presentation more rich, which is also an important upgrade closely related to the narrative of Doodles2. Holders can experience the basic gameplay and worldview of Doodles2 through this way.

This is a small step for a doodle person exploring space, but a giant leap for the entire Doodles spacecraft as it travels through the Web3 galaxy.

Although the future depicted in the blueprint is not yet clear, the potential is unlimited and full of imagination. Early adopters in the encryption industry can have these invisible "Passports" and enjoy early access to explore the metaverse world, to see what the so-called "future" will be like.

3、PFP NFT Future Market Premium Space

Most projects in the Web3 ecosystem rely on the economic environment of the cryptocurrency market, and NFTs are no exception.

Given the current environment where the revenue from NFT royalties is rapidly declining, it is premature and immature to discuss the future market premium space for NFTs. However, we can infer some potential points that may gain a premium advantage in the future from the current market situation of blue-chip projects mentioned above.

3.1 Blue Chip NFT Status

Regarding the four classic blue-chip NFTs listed above, a horizontal comparison can be made by selecting the average transaction volume on Opensea over the past year. It can be found that in the bear market of the past year, the unit prices of these projects have also experienced a halving decline:

The overall trading volume of the NFT market has significantly shrunk, showing a state of "inventory consumption".

3.1.1 CryptoPunks

2023Key Points：

3.1.2 BAYC

2023Key Points：

3.1.3 Doodles

2023 Key Points：

3.1.4 Azuki

2023 Key Points：

The AzukiElementals NFT series launched in June suffered from a lack of innovative images, repeated content, and encountered obstacles in the Mint process, resulting in poor user experience. This greatly impacted the community's loyal users. For more information, please refer to this article from The Block Beats:  Azuki faces trust crisis: new works questioned, prices plummet .

The management made such a huge mistake, perhaps because the development team was praised by the community and became arrogant, or perhaps because the team forgot the original intention of putting content first in the bear market and focused on short-term benefits. In any case, this move has disappointed many holders and caused a significant drop in floor prices.

Azuki has been emphasizing TTP (Trust the process) to the community members, but it seems that their actions have contradicted their words and damaged their reputation.

However, there will always be followers for any one thing. While the departing members are undoubtedly a great loss to the team, it is crucial to adjust the pace as soon as possible, appease the remaining members, and support and trust each other in the community to carry out "post-disaster reconstruction".

It is reported that from November to March next year, Azuki official will support 5 Asian regional communities to hold offline activities and launch AzukiPassport.

When we have seen each other at our worst, and have apologized and been honest with our loyal holders, and have put the community's priorities first, and have built a blueprint for a better future together, this may be the best beginning.

Azuki used to be a good student who submitted many high-quality answers. Its unique blend of culture, exquisite art style, and vibrant community have always been its strengths. If it continues to innovate and make steady progress with its accumulated essence in the future, I believe the market will recognize this craftsmanship spirit and give it a premium value.

3.2 Summary

Amidst the overall economic downturn of the cryptocurrency market this year, blue-chip NFT projects have experienced increasingly poor liquidity and have seen their prices drop by more than half, reaching a low point.

Or perhaps after the bubble of the prosperous period burst, these NFTs finally returned to their original price stabilization positions.

Each project team has encountered significant changes and challenges, and is exploring paths other than JPEG avatar narratives to support and fill their vast blueprints. Only by addressing these urgent issues one by one can we discuss the future market premium space.

No matter how many beautiful words are said about vision and blueprint, no matter how big and round the pie is drawn, the lack of constructive projects delivered in the long term will always wear down the patience and enthusiasm of the holders.

When the living environment becomes harsh and funds are flowing out, how to stick to the original intention and fulfill the promise step by step to build, while also operating the community well, is a challenge that every project party must face in the depressed market atmosphere.

PFP NFT is a value symbol used to showcase scarcity and is an excellent medium for attracting and expanding off-chain users.

When the market is quiet, if the project party also hides in the dust and does not make some noise, it will only accelerate the holder's abandonment.

Being able to continuously attract fresh blood is an inspiring feat, rather than just preying on old users like leeks. Are there no good projects in the market this year that do this?

Actually, there is. The standout performer in the NFT market this year is undoubtedly the Fat Penguin.

4, 23 Years of Excellent NFT Case Analysis - Pudgy Penguins

What is Fat Penguin?

At the end of July 2021, Pudgy Penguin was officially launched and soon caught up with the trend of NFT boom, with a surge of over a hundred times.

However, the founding team gradually faced scandals, and Fat Penguin experienced a sharp drop in floor price and was acquired. Since then, under the leadership of new CEO Luca Netz, Fat Penguin has gradually transformed and has also gained unique insights and effectiveness in marketing.

Although the price has experienced a series of fluctuations and shocks, Fat Penguin experienced a surge in July this year, with the highest average price reaching 10.48 ETH. In terms of Q3, the overall trend is also positive and upward.

4.2 What did the Fat Penguin do right?

1. Marketing

So unlike other projects, the youthful marketing of Fat Penguin is truly outstanding. Within a year, they increased their Instagram account followers by 700,000, uploaded a series of popular Fat Penguin emoticon GIFs on Giphy, and also released short videos and graphic content related to IP derivatives, etc...

On traditional Web2 social media platforms, they have completely forgotten their origins in Web3 NFT and have diligently created high-quality innovative content, attracting a large number of real-world users. These accumulations have also greatly helped the subsequent sales of physical products.

2. Emotional Connection

Don't just treat NFTs as expensive digital toys for adults, but instead use meme marketing and IP derivative production mentioned above to expand its audience to the general public, even children, and overall youthfulness.

3. Sustainable external revenue sources.

Do not obtain profits by blindly issuing new NFTs, which would dilute the value of existing NFTs. Instead, find more sustainable sources of income and lead the project to grow efficiently and steadily at scale.

5.1

5.2

5.3

5.4

These three things complement each other and each one is indispensable.

In the rapidly changing market, there is certainly no completely secure thing, but at least it is a good indicator for you to refer to.

5.5

The various fluctuations and changes in the early stage can be regarded as a small step in trial and error. We still have to believe that there are many builders with strong vitality on this soil full of opportunities.

Maybe adversity can stimulate our willpower. We can hold on to hope and patience, and give the project and the project team time to grow.

"We need to stand up and face the difficult we have, give more tolerance and confidence to what we loved.

The dawn will arrive."

彩蛋之发散思考：无社区，不 NFT？

Easter Egg: Divergent Thinking - No Community, No NFT?

From the development history of several NFT projects mentioned in the article, it can be found that what is interesting is that...

Every project team that dreams big and wants to create differentiated "after-sales service" will turn their attention to the community.

And human nature is complex and fickle, especially in the Web3 world that relies heavily on attention economy.

6.1

Looking back at the present moment of the encryption industry, it is clear that a project can attract attention by creating beautiful bubbles through storytelling. However, no matter how frequent or appealing the story is, if it does not translate into actual action, it will eventually be questioned and abandoned by people.

任何商业项目说到底都是要和人性打交道，那就要了解人性的痛点，抓住弱点，顺着爽点，最后满足痒点。

Although it may not sound pleasant, to put it bluntly, the fundamental factor in trading is greed.

According to Liang Ning's "30 Lectures on Product Thinking", human pain points are fear, pleasure points are instant gratification, and itch points are the ability to satisfy virtual selves.

Greed, which can endlessly nourish unlimited needs, drives people to do various operations. In the NFT trading market, these points can be more concretely refined as follows -

6.1.1

Fear, like a big stone that was originally pressing on your heart, has been removed. Negative emotions from all directions will take the opportunity to enter and repeatedly beat your heart.

When trading, it can lead to FOMO (Fear of missing out), and may also form a FUD matrix (Fear, Uncertainty, Doubt).

Its existence is to shatter what you originally believed in, and then fill your mind with a bunch of confusing information. If you cannot overcome your fear, the result may be that you passively lose your direction, your mind becomes empty and unable to hold any of your own opinions, and you just set off in a car on the roadside after casually listening to someone else's words.

6.1.2

Instant gratification can be reflected in the increase of asset value and positive interaction feedback among community members.

For example, if the NFT you hold has skyrocketed, the more enthusiastic and optimistic the market's discussion is, the more it shows that you have done the right thing and the more sense of achievement you will have.

For example, finding many like-minded friends in the community, although strangers and in different places, when people with the same interests and visions come together to speak out and work for a common project, the resonance generated is a wonderful chemical reaction that is indescribable and addictive.

6.1.3

Satisfying the virtual self, this statement seems to be a perfect match for the Crypto and NFT markets.

It pinched a perfect image of itself in its mind, which is not something necessary to have and cannot survive without, but it can bring you spiritual satisfaction and comfort, like the superstructure that contrasts with the economic foundation.

In my opinion, the itch in the NFT market is, to put it simply, the intuitive avatars of virtual worlds, and to put it more deeply, the long-term compound interest that this NFT project can bring you (whether it is in terms of asset value or spiritual growth).

We never need to beautify the transactions in the financial market, which are actually bloody and cruel. Many people enter the market with a fighting spirit, hoping to make quick profits and then enjoy a peaceful life by going all in and taking a few big wins.

So, compared to that, taking the long-term compound interest route is a "can but not necessary" secondary choice for them. But for most people who are not good at frequent operations, the immediate sense of satisfaction is more like a good thing that needs the support of the trend, the collection of favorable conditions and people, and only sticking to long-termism is the ideal self that needs to be satisfied.

Unlike instant gratification, which can bring you strong stimulation in a short period of time, long-term compound interest is like a thick good book, which can give you even a little new inspiration every time you read it, but it also brings a persistent and solid sense of peace of mind.

6.2

And a good project/team must be able to take care of all the aforementioned points -

Can soothe your fears, dispel your anxieties, satisfy your greed appropriately, bring you periodic waves of instant gratification, but fundamentally cultivate your mind, make you identify with the project's long-term vision, follow the roadmap, slowly taste the fruits of progress, and help you find relative certainty in uncertainty, and relative calm in turbulence.

Therefore, according to this logic, in order for a project to operate well, it is necessary to clearly understand the current needs and emotions reflected by the community members, and accept, dispel, and be honest with each other. The direction of community members' opinions is based on the operation of the project itself, which returns to the essence of content is king. The project party should work hard on IP content, have good planning, and implement it in every step of the way, presenting a systematic and positive trend.

6.3

This is a bidirectional positive cycle between the project party and community members.

The project team needs to stick to the original intention of starting the project, shield the temptation of Rug Pull, and continuously provide new things to community members; community members also need to stick to their original intention of joining in, make psychological preparations for a long run, cooperate with the project team, organize community activities among members to build a cultural atmosphere, actively interact and respond, speak up for the project, and inject a continuous stream of enthusiasm.