Pudgy Penguin’s $9 million seed round could point to a growing NFT industry

Image credit: Pudgy Penguin

Welcome back to Chain reaction.

Earlier this week, Pudgy Penguins, an NFT collective that doubles as a web3 IP company, raised $9 million for its seed round.

Why does this matter?

Pudgy Penguins isn’t the first NFT-focused company or collection to raise money. However, the seed round is another indication of the growing digital asset sub-sector and how projects that can seemingly be interpreted as just a collection of profile pictures (PFPs) can be turned into something more.

For context: Last September, Doodles raised $54 million at a $704 million valuation in a round led by Reddit co-founder Alexis Ohanian’s VC firm Seven Seven Six. And in March 2022, Yuga Labs, the company behind three blue-chip NFT collections, raised $450 million at a $4 billion valuation.

Pudgy Penguins, which reminds me of Club Penguinwas launched in 2021 and acquired by Los Angeles-based entrepreneur and web3 enthusiast Luca Netz in April 2022. Since then, it has expanded from 8,888 NFTs to a series of real-world products and experiences that provide collection owners with live events, physical merchandise and licensing opportunities.

The fundraising round was led by 1kx, an early-stage investment firm, with participation from Big Brain Holdings, Kronos Research, the founders of LayerZero Labs, Old Fashion Research and CRIT Ventures. The funds will be used to scale its intellectual property, its team and to “enhance offerings” for the community.

As it stands, Pudgy Penguins ranks 21st in NFT sales volume across all chains. The collection has over $252 million in sales over the past 30 days, it had $4.2 million in sales, up 102% during that time frame, according to CryptoSlam data.

Of the 8,888 NFTs, only 566, or 6.4%, are listed for sale, according to the website. The floor price, or lowest selling price, for a Pudgy Penguin is about 4.18 Ether, or $7,700, at current prices. The most expensive is currently listed for 900 ether, or $1.6 million, although it was sold two years ago for 0.009 eth, or about $16.

Going forward, Pudgy Penguins and other large NFT collections can act as leaders, paving the way for larger movements of intellectual property in the subsector. These projects make money not only through sales, but also through investors. And with that, there can be a snowball effect (no pun intended).

This week in web3

Tensor is climbing to the top of the totem pole on the Solana NFT market (TC+)

Just two months ago, NFT trading platform Tensor raised $3 million in a seed round. Fast forward to today, and it is close to regaining its position as the largest Solana-based NFT marketplace, based on market share. The platform launched a private beta in June 2022 and opened to the public the following month. By March, it had over 30,000 monthly active users, and by April, MAU was up about 317% to over 125,000, co-founder Ilja Moisejevs said.

Crypto needs a global view to build better regulatory models (TC+)

The crypto industry is increasingly concerned that US regulators are pushing too hard on the space. Predictably, it’s prompting companies in the space to look beyond to regions that have clearer policies in place, and it appears industry and regulators around the world could learn from looking beyond their borders.

Former FTX CEO Sam Bankman-Fried is trying to deny most of the US charges against him

Former CEO and founder of FTX, Sam Bankman-Fried, has filed a motion to dismiss 10 of 13 charges against him, according to court documents. In Monday’s filing, Bankman-Fried’s attorneys from the law firm Cohen & Gresser seek to dismiss the conspiracy to commit wire fraud and wire fraud charges. The lawyers are also seeking to dismiss a few other charges, including allegations of bribery and political contributions. However, his lawyers did not appeal three charges: conspiracy to commit securities fraud, securities fraud and conspiracy to commit money laundering.

Arbitrum co-founder sees DAO’s voter drama resolution as ‘testament to decentralization’ (TC+)

It’s been just over a month since the Arbitrum Foundation drama, in which the foundation transferred funds from the Arbitrum DAO without community approval, sparking an uproar. But if you ask Steven Goldfeder, CEO and co-founder of Offchain Labs, this blunder was just one of the early steps in the journey towards decentralization.

Mastercard, PayPal and Robinhood dive deeper into crypto as industry shows ‘promise’ (TC+)

As the crypto market works its way through a downturn, more incoming money and users could help it weather the storm. But right now it is sometimes challenging for the layman to get into crypto. Understanding gas taxes and wallets isn’t intuitive, and the perceived miasma of complications currently surrounding the space doesn’t help either. To help drive user adoption and the resulting infusion of capital, web3 needs smoother ons and offs to make it easier to buy into and interact with blockchains. Trusted providers with existing mainstream audiences are betting they can help fill that gap.

Investors cheer as Coinbase beats first-quarter expectations (TC+)

Coinbase reported its financial results for the first quarter of 2023, beating expectations. In the first three months of the year, the US cryptocurrency exchange generated net income of $736 million, a net loss of $79 million and adjusted EBITDA of $284 million. Analysts had expected a much slimmer $655 million in revenue and a bigger loss from the company in the first quarter. In after-hours trading, shares of Coinbase are up a little more than 7%. Certainly, Coinbase’s results are a welcome data set for both crypto bulls and investors in the company.

The last pod

This week we have a bonus episode from a fireside chat Jacquelyn did with Nadya Tolokonnikovacreator of the protest art collective Pussy Riotat NFT NYC in April.

Tolokonnikova was sentenced to two years in prison in 2012 after being found guilty of “hooliganism motivated by religious hatred”, but was released early under an amnesty.

Fast forward to 2023 and Tolokonnikova has continued to use the name Pussy Riot to fight for women’s and LGBTQ rights and against Russian control under President Vladimir Putin. As of March, Tolokonnikova was added to Russia’s most wanted criminals list.

Tolokonnikova has also spoken before the US Congress, the British Parliament, the European Parliament and has appeared on TV shows such as House of Cards.

We dove into a deep conversation around Tolokonnikova’s mission, how she uses NFTs as a form of activism and how she got into the space.

We also discussed:

• How others can use NFTs for activism
• Future visions for NFT tools
• Advice for projects in the room

ICYMI: In last week’s episode, Jacquelyn the interview Jake Chervinsky, Chief Policy Officer of the Blockchain Association, a non-profit organization focused on advancing “pro-innovation” policies for the digital resource world. He is also a board member of the DeFi education fund and advisor for a web3 seed stage fund Variant.

Prior to his work with the Blockchain Association, Chervinsky began his legal career in private practice focusing on anti-money laundering and anti-corruption compliance and investigations, financial services litigation and government enforcement. He spends a lot of time in DC testifying at hearings to help bring clarity to the crypto industry in hopes of leading it in the right direction.

We talked about all things regulation, from how Chervinsky views the current regulatory landscape to whether we’re in a “crackdown” era, as people call it.

We also discussed:

• Regulators’ views are changing
• US crypto companies
• Are cryptocurrencies commodities or securities
• Stablecoin Legislation
• Future legal framework and guidelines

Subscribe to Chain reaction on Apple Podcasts, Spotify or your favorite pod platform to catch up on the latest episodes, and leave us a review if you like what you hear!

Follow the money

1. Crypto media platform Blockworks raised $12 million at a valuation of $135 million
2. Decentralized crypto wallet provider Odsy Network raised $7.5 million
3. Webb Protocol Raises $7M to Expand Cross-Chain Privacy
4. Multichain NFT ecosystem-focused Artifact Labs raised $3.25 million
5. Siphon Lab, a DeFi platform on the Sui Network, raised $1.2 million in a seed round

This list was compiled using information from Messari as well as TechCrunch’s own reporting.

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