Pudgy Penguin’s NFT Project, Once Endangered, Proves Web3 Reversal Is Possible
Pudgy Penguins, a non-fungible token (NFT) project made up of cute chubby birds, has experienced waves of success and misfortune since its debut in July 2021, including a rapid decline in price and sentiment as doubts surrounding its founders emerged later that year .
The community of holders, known as Pengus or “the Huddle”, were upset that the founders had failed to deliver on the project’s original roadmap. Their feathers were further ruffled after allegations emerged that the founders had siphoned funds from the treasury.
This led to some very angry birds in the Huddle, who moved to oust the founders in a community vote in January 2022. This is where most NFT stories end – the high-flying promises and hopes are foundered by bad actors, and all that remains is a community united by disappointment.
But this bird’s tale found another flight path: In April 2022, a Los Angeles entrepreneur and member of the Huddle himself, Luca Netz, stepped in and led the purchase of the token for 750 ETH, or $2.5 million at the time, with a promise to develop the brand and promote better communication. A little more than a year later, new investments, real-life toys and an upswing in NFT’s sales have restored Penguin NFT’s ethos of “good vibes and positivity for all” and helped Penguin prices to new heights.
The penguins’ march to success
After Luca Netz and the new team took over the project, they laid out their plans to focus on building out the project’s intellectual property rights (IP) and “to be the brand that leads the way in taking people from Web2 to Web3.” Unlike the original founders, they took steps to start putting the roadmap in place, announcing in the summer of 2022 that they would be making toys based on the penguin NFT and publish a children’s book.
In an interview with CoinDesk TV, Netz said he was “a firm believer that IP is going to be the Trojan horse to really bring hundreds of millions of people into crypto and into Web3.”
“For them to participate in the space, they have to fall in love with a character, and that character for us is the Pudgy Penguins,” he said.
The mood and momentum had changed, leading to another all-time high sell-off in August and a Christmas rally in December 2022, despite the general crypto winter.
In May 2023, they announced a new funding round of $9 million, and soon after they launched the promised toys, which reportedly sold 20,000 units in a few days and sent the floor price of the project to 6.2 ETH on May 20, 2023, according to data from NFT marketplace OpenSea.
Coinciding with the games, the team unveiled Pudgy World, which connects people’s real-world toy purchases with the digital world and puts them onboard Web3 in a frictionless way — the very “Trojan Horse” Netz talked about creating. Toy buyers who sign up with an email address receive NFTs and a crypto wallet without even realizing it, easing the otherwise onerous process of setting up and funding a crypto wallet.
Rounding off a strong first half of 2023, NFT lending platform Blend announced the inclusion by Pudgy Penguins on their platform, legitimizing its place among other popular collections such as Azuki and Bored Ape Yacht Club.
The Huddle is the key
While the list of NFT projects that looked like the next big thing and then flamed out is huge, there is a much narrower group of projects that have passed a dark, icy winter. So what went right for these penguins?
In Web3, the power of community should not be underestimated. Netz and the management team understood that they needed to earn their trust and support, or they could suffer the same fate as the founders.
To that end, the team kept their promises to provide “monthly updates for penguins who may have fished in a cave” on their blog and provide regular updates on Twitter and Discord as well. Furthermore, they gave the society the power to create sub-communities or clans and plan the real life and virtual events to connect the community.
At the opposite end, NFT projects such as More than Gamers have suffered from unclear communication and a general lack of transparency, while Pixelmon NFT promised the “biggest and highest quality game” and delivered what even they had to admit was laughably bad art. Neither has managed to return at the time of writing.
The Huddle is also able to share in the Pudgy Penguins’ success. Part of the DNA of the project is to allow owners to leverage their IP and profit from their penguins, either through licensing or other deals.
Luca Netz said in a Twitter Spaces with Blur founder Pacman on May 25 that the toys were created with “the IP of 16 different holders.” He added that he felt it was his and his team’s responsibility to help the community make money and find licensing opportunities, since the average person has no idea how to make a licensing deal work.
Similarly, Web3 giant Yuga Labs has given the holders of Bored Apes and other NFTs in its catalog full commercial rights to the IP of those NFTs, and has seen some launch of entrepreneurial holders such as branded restaurants, beverages, clothing and even musicians using Apes as avatars.
Only time will tell if the project will continue to be successful, but the current forecast looks promising. At the time of writing, Pudgy Penguin NFTs have done a total of 170,457 ETH in trading volume (over $300 million) and have a floor price of 5.4 ETH, or around $9,700.