Pudgy Penguins NFT Project, Once Endangered, Proves Web3 Turnaround Is Possible

Pudgy Pen­guins, a non-fun­gi­ble token (NFT) project made up of cute chub­by birds, has expe­ri­enced waves of suc­cess and mishap since its debut in July 2021, includ­ing a rapid down­turn in price and sen­ti­ment as doubts sur­round­ing the founders emerged lat­er that year.

The com­mu­ni­ty of hold­ers, known as Pen­gus or “the Hud­dle,” was upset that the founders had failed to deliv­er on the project’s orig­i­nal roadmap. Their feath­ers were fur­ther ruf­fled after accu­sa­tions arose that the founders had drained 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 get ground­ed by bad actors and all that remains is a com­mu­ni­ty unit­ed by disappointment.

But this bird tale found a dif­fer­ent flight path: In April 2022, a Los Ange­les entre­pre­neur and mem­ber of the Hud­dle him­self, Luca Netz, swooped in and led the pur­chase of the brand for 750 ETH, or $2.5 mil­lion at the time, with a promise to build out the brand and fos­ter bet­ter com­mu­ni­ca­tion. A lit­tle more than a year lat­er, new invest­ments, real-life toys and a rebound in NFTs sales have restored the pen­guin NFTs’ ethos of “good vibes and pos­i­tiv­i­ty for every­one” and helped the pen­guin prices hit 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 (IP) and “to be the brand that leads the way in onboard­ing peo­ple from Web2 into Web3.” Unlike the orig­i­nal founders, they took steps to start putting that roadmap in place, announc­ing dur­ing the sum­mer of 2022 that they would be cre­at­ing toys based on the pen­guin NFTs and releas­ing a children’s book.

In an inter­view with Coin­Desk TV, Netz said that he was “a firm believ­er that IP is going to be the Tro­jan Horse for real­ly bring­ing hun­dreds of mil­lions of peo­ple into cryp­to and into Web3.”

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“For them to par­tic­i­pate in the space, they’re going to have to fall in love with a char­ac­ter and this char­ac­ter to us is Pudgy Pen­guins,” he said.

The mood and momen­tum had shift­ed, lead­ing to a new all-time high sale in August and a Christ­mas­time ral­ly in Decem­ber 2022, despite the over­all cryp­to winter.

In May 2023, they announced a new $9 mil­lion fund­ing round and short­ly after, launched the promised toys, which report­ed­ly sold 20,000 units in a few days and sent the floor price of the project soar­ing to 6.2 ETH on May 20, 2023, accord­ing to data from NFT mar­ket­place OpenSea.

In tan­dem with the toys, the team unveiled Pudgy World, which con­nects people’s real-life toy pur­chas­es with the dig­i­tal world and onboards them to Web3 in a fric­tion­less way – the very “Tro­jan Horse” Netz spoke about cre­at­ing. Toy buy­ers who reg­is­ter with an email address receive NFTs and a cryp­to wal­let with­out even real­iz­ing it, eas­ing the oth­er­wise bur­den­some process of set­ting up and fund­ing a cryp­to wallet.

Round­ing out a strong first half of 2023, NFT lend­ing plat­form Blend announced the inclu­sion of Pudgy Pen­guins onto their plat­form, fur­ther legit­imiz­ing its place among oth­er pop­u­lar col­lec­tions like Azu­ki and Bored Ape Yacht Club.

The Huddle is key

While the list of NFT projects that looked like the next big thing and then flamed out is vast, there’s a much nar­row­er group of projects that got past a dark, icy win­ter. So what went right for these penguins?

In Web3, the pow­er of the com­mu­ni­ty shouldn’t be under­es­ti­mat­ed. Netz and the lead­er­ship team under­stood they need­ed to earn their trust and sup­port or they could suf­fer the same fate as the founders.

To that end, the team made good on their promis­es to pro­vide “month­ly updates for pen­guins who may have been fish­ing in a cave” on their blog and give reg­u­lar updates on Twit­ter and Dis­cord as well. Fur­ther, they empow­ered the com­mu­ni­ty to cre­ate sub­com­mu­ni­ties or clans and planned real-life and vir­tu­al events to con­nect the community.

On the oppo­site end, NFT projects like More than Gamers have suf­fered from unclear com­mu­ni­ca­tion and a gen­er­al lack of trans­paren­cy, while the Pix­el­mon NFT promised the “largest and high­est qual­i­ty game” and deliv­ered what even they had to admit was laugh­ably bad art. Nei­ther has man­aged to bounce back as of writing.

The Hud­dle is also able to share in the Pudgy Pen­guins’ suc­cess. Part of the DNA of the project is allow­ing hold­ers to lever­age their IP and prof­it off their pen­guins, whether through licens­ing or oth­er deals.

Luca Netz said on 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 the team’s respon­si­bil­i­ty to help the com­mu­ni­ty to mon­e­tize and find licens­ing oppor­tu­ni­ties as the aver­age per­son doesn’t have any idea of how to make a licens­ing deal successful.

Sim­i­lar­ly, Web3 giant Yuga Labs has giv­en the hold­ers of Bored Apes and oth­er NFTs in their cat­a­log full com­mer­cial rights to the IP of those NFTs, and has seen some launch­es by 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 see suc­cess, but the cur­rent fore­cast looks promis­ing. As 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 about $9,700.