Editor's Note: The author, Po On Yeung, is a BFF community member and You holder. This is an opinion article reflecting on the author's observations during the bear market from 2022 to 2023. It is not financial advice.
Profile picture (PFP) projects were all the rage in 2021, with quirky pixelated avatars and unique animals claiming the spotlight all across social media. Lovers and enthusiasts of these non-fungible tokens (NFTs) looked for projects that provided utility, or special perks, along with a robust community. As long as the floor prices were soaring — which happened at a fever-pitch pace during the 2021-to-2022 bull market — NFT aficionados were content. But as we’ve now spent months into a bear market, stripping away the façade of hype, which projects have continued to innovate and create enduring value?
Let's dive into some acclaimed blue-chip projects, gleaning insights from both their triumphs and setbacks.
The 10,000 generative avatar project Azuki arrived onto the scene with a bang — a quick sell-out mint and substantial secondary market activity which earned the project a spot in the coveted blue-chip league. My journey with Azuki came full circle when I went from admiring its signature art in 2021 to attending the much-anticipated Elementals launch in June 2023 — a launch that, regrettably, faced immediate criticism.
My first encounter with Azuki was during my initial days working at Coinbase in January 2022. A colleague's striking elemental avatar, prominently showcased in our NFT slack channel and met with awe, piqued my interest. With a long-standing appreciation for anime, as evident from my glittery Sailor Moon phone case I sport, I was instantly a fan of Azuki's characters and their modern street aesthetic.
Being pioneers of the anime NFT domain, Azuki was a magnet for anime enthusiasts who hadn't yet seen this art style represented in Web3. But as the project's floor price soared, reaching a staggering 30ETH, and trading volumes spiked, Azuki was elusive to most. While many chased profits as their main motivation, I also heard friends rave about the fun and creative Azuki events, like the one at NFT NYC 2022, demonstrating the team's commitment to their community.
But that sheen faded by this past June. I received a random last minute invitation to attend an event in Vegas to celebrate a new Azuki Elementals collection. This was intended to welcome new members into the community by introducing a new collection of 20,000 pieces to their existing lore — double the amount of the first PFP project.
Their first mistake was auctioning these items to existing holders first. If they truly wanted to make this project accessible to new audiences, existing holders shouldn’t have been the ones to dominate their pre-sales.
More disappointing though, is when they finally revealed the new collection, it looked almost identical to the original collection. This immediately brought the value of both collections down since the uniqueness was diluted, and both prices and sentiment still haven’t recovered.
The lesson? Engage your community by communicating more clearly what your roadmap plans are and how you will execute them. People were excited at the idea of expanding the community, but nobody knew what that would look like. Another tactic the Azuki team could have deployed is to involve the community and empower them in the decision making — this is where online polls (via Discord or Twitter) and governance votes have been successful with other projects. In those cases, the community could then see that a specific decision is rooted in a majority vote, with accompanying discussion. Perhaps it would have been fruitful for their team to have conducted some community research and tested the reaction to the new art, as an early indicator of potential backlash. In these testing times, accessibility and innovation are not just options; they are imperatives for a project to succeed.
In these testing times, accessibility and innovation are not just options; they are imperatives for a project to succeed.
In keeping with the theme of in-person events for holders, World of Women (WoW) knocks it out of the park. My personal opinion — strongly held — is based on my experience of the high quality and breadth of their community events across the globe, including an impressive signature gala. WoW was one of the first women PFP NFT projects and established themselves as one of the rare women-led blue-chips with a commitment to diversity and inclusion. The project's brand value of community, representation and celebrating equal opportunities for all manifests in their art and initiatives, like the WoW Foundation.
My first rendezvous with WoW was during Art Basel 2022's Galactic Gala where I was grateful to be invited as a +1 by a friend and NFT enthusiast. Amidst a plethora of NFT events I attended, WOW's event was a class apart — from an awards ceremony to on-the-spot poetry compositions, makeup artists complete with body gems and a Tarot card reader. It was a magical experience I still dream about.
This project’s high floor price does somewhat hinder the ability for more people to join, but I can see so much of the team’s energy and costs that went into their Gala, and how they create real, physical value for holders. For non-holders like me, I do appreciate WoW's regular community events, such as their educational event at Consensus that was open to all and even included free swag. In addition, the team launched a more accessible project — WoW Galaxy at a lower price point to welcome more into this space and support emerging global creators. Part of the proceeds from the WoW Galaxy launch went to funding their Foundation.
Two years into their journey, WoW continues to stay true to its mission, forge meaningful partnerships and empower their community to initiate local engagement.
Admittedly, I have not been to an IRL event for this community, unlike the other example projects above, however Pudgy Penguin's strategy to target mainstream audiences for broader adoption is noteworthy for several reasons. The team has successfully pivoted from digital artifacts to physical goods by launching plushie collectibles. These toys appeal to an audience that doesn’t need to know about crypto to participate, and likely doesn’t even care about how blockchain technology works.
Just the other day, I saw online posts of their adorable penguins splashed across the giant screens of New York City's Times Square. In addition to this top-tier marketing, It appears that they have many distribution channels for these toys - from purchasing directly online, being sent as gifts and even appearing in toy claw machines around the world.
These physical toys are the gateway to the world of NFTs and introduces people to the concept of unique IP rights, which is a much more accessible and user-friendly way to get people interested in new technology.
Pudgy Penguins CEO Luca Netz tweeted a useful thread on how he’s thinking of continuing to innovate in this space and drive value for the Pudgy Penguin community of holders. His post was in reply to someone saying that customers buying a physical good doesn’t help the NFT’s value. He outlines what I consider to be some helpful takeaways for projects to be successful in the long term by building a strong, globally recognized brand, via six main actions.
Netz starts off by observing how every project could more easily find success and ride the wave in a bull market, but now in the bear, projects need to invest resources into marketing the top of the funnel so that they can solidify demand for the NFT.
Second, he emphasizes the importance of an emotional connection. He shares a video of a young girl excitedly hugging her Pudgy Penguin plushie and makes the case that someone will be less likely to sell their penguin, knowing the joy it brings their child. In short, demand grows with these sticky emotional connections.
...demand grows with these sticky emotional connections.
Netz's third point is about sustainability and the economics of supply and demand — something I believe the Azuki project could have kept in mind before diluting its supply with lookalike artwork. Netz's fourth and fifth points I view as similar: touchpoints and experiences matter more than tokenomics. I believe you need to stay relevant with your community. During Art Basel in 2022, so many projects were successful in creating IRL touch points and memorable experiences which helped them stay top of mind for holders and reminded them of the value they get via access to exclusive events. Plus it’s a great way to actually expand the community when you offer +1 access and can bring a guest.
Netz closes his brand building advice by comparing NFT sales to crypto degenerates or "degens" (a term of endearment for crypto enthusiast), and eventually to institutions, with institutions being the key to long term success.
In the world of NFTs, staying relevant means constantly evolving. As we navigate the current bear market, these projects remind us that community engagement and innovation matter above all. Creating tangible value and staying true to your brand's core mission are crucial for long-term success.
Po On Yeung is an avid community builder and an advocate for women in web3. Previously at Twitter, Coinbase and now Head of Community at Warbler Labs, contributing to the Goldfinch Protocol and participating in a number of DAOs.
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
