Author: Solaire, YBB Capital

Introduction

The recent dismal performance of the NFT market is having a profound impact on long-term investors. Wave after wave of selling appears to be sweeping through the market, and the continued downturn in the NFT market is negatively affecting the sentiment of long-term holders, many of whom are dumping quality collections. About 4.63 per cent of all Azuki holdings owned by Diamond were sold in recent weeks, accounting for nearly 1.88 per cent of the total Azuki NFT on the market. Bored Ape Yacht Club (BAYC) also saw a drop in demand, with nearly 2 per cent of its assets being sold by Diamondhands. The NFT market has been going through a rough patch since its peak in March this year, with daily sales and the number of unique buyers plummeting (data from Coin time). There is no shortage of voices saying that the PFP narrative has run its course. This article will look back at Azuki’s history to consider the factors that contributed to Azuki’s past success and the problems that PFP should address in this current phase.

NFT, a new way to connect

The concept of an NFT (non-homogeneous token) dates back to 2012, when an asset called Colored Coins appeared on the Bitcoin blockchain. These colored coins can represent anything non-monetary, such as stocks, bonds, collectibles.

However, the real NFT technology was developed on the Ethereum blockchain. In 2015, the Ethereum blockchain was released, and its smart contract capabilities enabled developers to create their own tokens, including non-homogeneous tokens. In 2017, the CryptoPunks project was released, which is an Ethereum-based Picture that can be bought and sold, each picture is unique, which can be seen as an early form of NFT and the first Profile Picture (PFP) type project.

The so-called PFP is usually referred to as a profile picture NFT project, its main characteristics can be summarized into six points.

1. Uniqueness: Each token in a PFP project is unique. This is due to the fact that they are all NFT, that is, each token has its own metadata and ownership record and is not interchangeable with other tokens.

2. Artistry: Most PFP projects are works of art. Each token represents a unique, digitized avatar or character with the same artistic style but different characteristics.

3. Community driven: PFP projects often revolve around an active community. The people who hold these PFPS are not only investors, they are also members of the community, participating in various activities such as online discussions and offline meetups.

4. Representative Identity: In many PFP projects, the person holding the NFTS will use them as a representative image on the network, thus showing their digital identity and the community to which they belong.

5. Economic value: Since each PFP is unique and limited in number, they are likely to be bought and sold at high prices in the marketplace. This confers a potential economic benefit on the holder.

6. Interactivity and extensibility: Some PFP projects may include a gaming element, enabling the token to be used in other applications or platforms. This increases the interactivity and scalability of the PFP.

Looking at the characteristics of PFP from the perspective of culture and social interaction establishes a new way of connection. Chen Long, executive dean of the School of Communication and Communication of Soochow University, and Jing Yulun, his research assistant, put forward in their paper “NFT Digital Collection of ** as subcultural Capital and its Practical Significance of Communication” that **NFT as a subcultural capital, Is dominating the production and communication of the network subculture of the youth group. With fun as its base currency, NFT builds up a fluid and all-encompassing network subculture, and the division then occurs between different circles, generations, and members of other communities within society. The practice of engagement around the NFT’s digital collections also has new significance.

Its significance is divided into three aspects: identity, integration and connection.

· Breaking down the circle of identity: NFT breaks down the segregation of various social circles. Individuals can change the NFT they wear to represent different identities, which can span different communities and social media. Individuals can freely move between different circles to express their digital identities.

· Blending value and culture: People focus on NFT both for its artistic value (for example, as an investment or collection) and for its cultural significance (for example, as an artistic expression or spiritual communication). This makes the boundary between value and culture blurred. In the NFT, which is based on digital media and the interconnection of everything, the boundary between value and culture is eliminated, and the two forms an intermingling mode, integrating and living together.

· Weakly connected communities: People connect because of a common interest or interest, even though they may not have any overlap in real life. These relatively weak ties form a vast network that allows for the exchange of information and resources. In other words, people may make connections with others across the globe by buying, exchanging, or discussing NFTS, which may be weak on their own, but together form a powerful social network. The connection of weak ties is stimulated as never before, and groups with different identities complete the aggregation and upgrading of relationships in the cultural resonance brought by NFT, and finally assemble into a network society (community) with weak ties as the core.

This article will also look back at the success and collapse of Azuki in terms of identity, connection and integration, which revolve around the cultural and social perspectives of NFT.

Azuki, the magic of integration

*Ready to take the red bean? — *Azuki’s pre-birth tweet

When Azuki went on sale on January 2, 2022, it was a smooth ride from birth and quickly became one of the Big three alongside CryptoPunks and BAYC, unlike CryptoPunks’ historical significance and BAYC’s deep understanding of Western markets.

The success of Azuki lies in the clever integration of artistic value and culture. As an NFT with a strong Japanese style, its success lies not only in its artistic value (recognition of its efficiency and drawing level), but also in the successful integration of Eastern and Western cultures. In terms of painting details, Azuki adopts the style of manga, plus the American thick outline and various elements of Eastern and Western style (such as hip hop, sword, and clothing of different ethnic groups). This mixed art well reflects the propaganda of their slogan, “committed to becoming the largest decentralized brand established and owned by the community in the metaverse world”. As well as their values.

Azuki values:

◼ Community first: Everything starts and stays true to the community. The moment we prioritize something else over the community, everything will be lost. We will not allow this to happen because community will always be Azuki’s number one value.

◼ Be the industry’s top streamer: Azuki is creative, fearless and resilient. It’s easy to follow trends and improve gradually, it’s much harder to be original and different. We do things differently.

◼ Gradual process: Many good things happen over time. Decentralized actions don’t cut through the clutter as quickly and in one go as centralized actions do, and good and bad things happen together. Decentralization does not mean that there cannot be leaders. The core team will provide guardrails and resources for all Beans to grow together, but it won’t happen overnight.

Welcome anyone in the world to join, welcome to create the largest decentralized brand. Why not appeal to those of us Web3 natives who are attracted to the vision of decentralization.

Today, Garden (Azuki Community) is home to 66 communities created by Azuki enthusiasts, which proves the magic of Azuki integration.

However, the road for Azuki has been very difficult. The bad deeds of the project side and the conflict of ideas have led to their collapse, and the community has not been able to save them time and time again.

Azuki’s defense, the power of connection

A single drop of water will quickly evaporate even if it falls on hot sand, but tens of millions of drops add up to become an ocean. — Karl Marx

Before the collapse of the Elementals series, Azuki had actually experienced Fud once. In May 2022, Azuki founder ZAGABOND (hereinafter referred to as ZAGA) posted A Builder’s Journey on the Mirror. Revealed that his team in the past year has operated the CryptoPhunks, Tendies, CryptoZunks three projects, and ended in failure.

This disclosure caused a stir in the market, in their view, ZAGA himself admitted to be behind the three Rug projects, Azuki then plunged by half to 10ETH, but the negative impact did not last long, supporters believe that entrepreneurial failure is not a shame, but ZAGA’s bold admission of failure and the spirit of innovation is very important. So soon after the halving, Azuki quickly rebounded to 16ETH.

However, in my opinion, the argument that entrepreneurial failure is not terrible is not the key to this turnaround, and this argument is a stolen concept, ZAGA threw a pool of mud to the community after Rug, not a simple entrepreneurial failure. It would be understandable if the attitude was sincere after the failure, but ZAGA just left a black and white announcement after a few weeks of failure and disappeared.

Rugs are extremely sensitive words in the Crypto world, not to mention the fact that they are behind three Rug projects in a row. The key to the real turnaround of Azuki is that the holder connection is strong enough. The love for Azuki art style and interest relationship firmly connect countless groups of weak relations who do not know each other together to form a powerful community. At this moment, as a community, the voices of internal discontent will be shaken and drowned because of the connection. The external FUD seems to be insignificant in the face of the floor price that the community holders are actually paying.

Azuki’s first battle for his life and death was thus safely defended by the community, and Jeremy Cahen, the founder of Not Larva Labs, who repeatedly accused and insinuated ZAGA as a fraud, became the biggest public enemy of the Azuki community.

Looking back, the reason why the first Fud can survive safely is not only the strength of the connection, but also because the point of Fud has not impacted the value of Azuki itself.

Elementals, the breaking of the value of identity

Scarcity is the source of all commodity value. — Adam Smith

In June of this year, Azuki Las Vegas Offline Conference unveiled the new series of Elementals through a crazy cool western animation short film, the broadcast of the short film immediately triggered the community’s climax, and holders almost swept the news on social media.

However, the opening picture a few days later pulled the entire NFT market to the freezing point, how high the so-called expectation, how deep the disappointment. Elementals’ opening has almost nothing to do with the various new elements shown in the trailer, but that’s not the worst part. The most important thing is that the new series is almost a one-to-one reproduction of the elements of the Azuki OG series, which can be said to be officially launched as a “pirate” series, and due to technical problems, the elements are completely repeated and the images are distorted.

The remedy of the project side for this situation of picture duplication is to directly change the NFT pictures that have been issued immutable directly through the URl in the contract. The problem of Elementals elements and OG series duplication is directly admitted by the announcement. They are designed in this way, and also according to Beanz (small bean, Azuki’s sub-series) to release another mung bean.

The operation of this wave of confusion immediately attracted ridicule from all quarters, and the once impregnable community fell apart overnight, and some core members of the community even formed Azuki DAO and 20000E DAO to file a lawsuit against the founder to recover the 20,00eth that ZAGA.BOND received in the Elementals sale. In a more cynical twist, legal aid and evidence may also require the help of Azuki’s public enemy Jeremy Cahen.

While Chiru Labs (the Azuki development team) had a good idea of what it meant to be cool, they didn’t understand the value of the identity that Azuki brought, and as ZAGA said in an interview after the event overvalued themselves and underestimated the community. Elementals series is fatal to Azuki’s economic value and identity value. Azuki, as a blue chip PFP project, was one of the best avatars on social media. In the past, you could often see famous Kols on Twitter and veteran Web3 players wearing them around. It symbolizes not only a member of the strongest blue chip community, but also a symbol of wealth. But when the same project side released a low-priced collection with almost identical elements, these symbols lost their meaning, and I’m sure even ZAGA couldn’t tell the difference between the Elementals and Azuki avatars on social networks, wearing Azuki avatars (which could also be Elementals avatar, XD) is now the butt of jokes in other communities.

ZAGA did almost everything they shouldn’t have done in the Elementals incident, not only trashing the entire meaning of NFT but also betraying their commitment to community as part of their values, as Azuki’s strong connection crumbled from the core.

The balance of the game, the sword of Damocles hanging over our heads forever

Before writing this article, I have read many thinking articles related to the collapse of Azuki, mostly from the perspective of IP and narrative, to discuss how to do IP well, how to find better narrative and application scenarios, but how to do IP well and how to expand PFP narrative. Which makes no sense given the size of most NFT project teams and the plummeting royalty revenue in the current extreme NFT bear market. And Yuga Labs, the only one capable of doing it, has already demonstrated it. While Yuga Labs’ forerunner’s courage and action is admirable, the meta-universe narrative of BAYC didn’t save NFT. The continuous release of new projects and new narratives has only resulted in the continuous decline of BAYC and its derivative series.

As for finding new application scenarios and new NFT narratives, there is no better answer than PFP at present. From the perspective of culture and social interaction, PFP is a narrative with natural communication and cohesion, which cannot be done by other types of NFT.

The extremely centralized problem of PFP project at this stage is not a secret, we believe that the project side will not do evil, but based on the game point of view, as the project side of the community of interests, there is no reason to change the plan or malicious issue, but unfortunately this game is contrary to the development of the project side. All the meaning of NFT is built on the premise of decentralization, but the project side has absolute domination of the fate of the project, how can a small team of a few people or a dozen people ensure that every major decision does not make mistakes? Is the image I purchased mine or is it stored in the project’s computer? If the scarcity and immutability of the NFT were always central, then I’d rather buy Walt Disney stock than expect small teams to continue to perform miracles.

Addressing the issue of trust and delegating power is the order of the day. While it is the culture created by the project that connects the community, any project requires the community to build on its achievements. The holders contribute everything to the community, and they do not even have the right to know when there is a problem at the core of the community.

Azuki’s manifesto

Here comes a new wave…

And surfing here is different.

Breaking down barriers.

Building open communities.

Creating magic internet money with our friends.

To those who don’t get it, we tell them: gm.

They’ll come around eventually.

Here’s to the ones with the courage to jump down a peculiar rabbit hole.

One that pulls you away from a world that’s created by many and owned by few…

To a world that’s created by more and owned by all.

From The Garden come the human beans that sprout into your family.

We rise together.

We build together.

We grow together.

This is the declaration from the Azuki official website to the community members, although it may seem weak and feeble at this moment. However, in the past, they have always been the best project in embodying the true spirit of “We.” There is still a long way to go for rebuilding, and we hope that this time ZAGA will treat its community properly.

About YBB

YBB is a web3 fund dedicating itself to identify Web3-defining projects with a vision to create a better online habitat for all internet residents. Founded by a group of blockchain believers who have been actively participated in this industry since 2013, YBB is always willing to help early-stage projects to evolve from 0 to 1.We value innovation, self-driven passion, and user-oriented products while recognizing the potential of cryptos and blockchain applications.

Website | Twi: @YBBCapital