👉 The news. Bored Ape and other collections are finding their way into the "traditional" economy.
👉 The context. NFT trading volumes have dropped by more than 90% from their 2021 peak.
👉 Why it matters. Only the best-known collections will easily make it through the "bear market".
What's going on in the NFT market? For the past few months, all the indicators have been turning bright red one by one, with no indication of how far the fall might go... One figure provides a measure of the trend: in 2022, trading volumes on the main NFT platforms such as OpenSea fell by more than 90%. 90%!
And yet, contrary to what you might read just about everywhere, NFTs are anything but "dead". While many collections - some of them very far-fetched - will not survive the 'bear market' (and that's no bad thing if you ask us), others are more than holding their own and continuing to develop under the media radar.
These collections are the "Bored Ape Yacht Club", the "Mutant Ape Yacht Club", the "CryptoPunks", the "Moonbirds", the "Doodles", the "Azuki", the "VeeFriends" or the "Nouns"... Aesthetically, they have nothing in common. But when it comes to the rest, i.e. marketing and the community dimension, there's no shortage of similarities, and that's what largely explains their success.
Building a core group The first strength of the major NFT collections is obviously their...community. A community that is created gradually. First of all, there's the time to build up a hyperactive hard core. Some projects, such as Bored Apes or CryptoPunks, started with the support of anonymous collectors. Others, like the "VeeFriends" on the other hand are welded around a clearly identified personality; in this case, Gary Vee.
The American has managed to raise $50 million from the Andreessen Horowitz fund, which along with Sequoia Capital (read their interview with The Big Whale) , is the world's biggest investor in Web3.
Gary Vee's background and reputation as a serial entrepreneur (he has invested in Facebook, Twitter, Uber and the French company Sorare) have made him a key figure in the ecosystem. He has 10 million followers on Instagram! To take as many people with him as possible, Gary Vee has become personally involved in the project. As well as offering educational content on NFTs , he responds directly within the VeeFriends Discord, which brings together... 365,000 members!
The phase of building a core group is essential for any NFT collection, with or without a figurehead. The French Panda Dynasty project got off to a flying start just over a year ago thanks to a particularly dynamic Discord. The project attracted some 8,000 members in just a few weeks.
Developing a community Then comes the phase of opening up the project to reach a wider audience. One of the things that all successful collections have in common is the feeling of "FOMO" (Fear Of Missing Out), i.e. the fear of missing out on a great opportunity. One of the most effective ways of creating this reaction is through hashtags on social networks. Bored Ape and Mutant Ape have used this strategy extensively with the now famous #apefollowape.
This system both gets people talking about the collection and gives members the opportunity to identify with each other on the internet, while increasing their number of followers on social networks. Gaining notoriety, particularly on Twitter, is important. It's an opportunity to showcase your NFT(s), whose value could appreciate as your account gains popularity.
The tour de force achieved by the Yuga Labs studio, which created the Bored Ape and bought out the CryptoPunks intellectual property in 2022, has been to regularly reignite the hype with new projects based around its collections. In June 2021, when the Bored Ape 'floor price' was 20 times higher than the 'mint price', Yuga Labs released a spin-off collection, the Bored Ape Kennel Club (BAKC), enriching their universe with new characters in the form of dogs.
Three months later, Yuga Labs did it again with the release of Mutant Ape Yacht Club, a collection derived from BAYC, this time in the guise of zombie monkeys. "The best collections have clearly understood that the sinews of war are to constantly get people talking about you", points out Stanislas Barthélémi, blockchain and crypto-asset consultant at KPMG.
While this strategy may generate doubts among the "uninitiated", it helps to raise brand awareness. A choice of diversification that some collections, such as France's Panda Dynasty, have precisely not adopted and which is now penalising them. The buzz surrounding a collection is often synonymous with a buying frenzy, overlooking the risks of rug pulls (scams in which the project owners walk away with the cash, which are still legion in the world of NFTs).
Keeping the hype going One of the big advantages of NFTs, and one that is used by the big collections, is that they can be used as profile photos on social networks. Paying Twitter users have been able to do this for a few months now, and Instagram and Facebook users (not yet available in Europe) have been able to do so since this week. But is this enough to build loyalty among members of a community?
Before being a sort of sign of belonging, NFTs are above all proof that you own a unique digital object. This is where NFT technology comes into its own, as it allows owners to be granted benefits - or "utilities" - based on their digital title.
The most popular collections such as Bored Ape also build their success on their ability to offer exclusive benefits to their members: unique clothing, privileged access to events... At the end of October 2021, just a few months after the launch of BAYC, Yuga Labs had organised Ape Fest, an evening on a yacht reserved for 1,000 BAYC or MAYC owners, enhanced by an exclusive concert by rock band The Strokes and rapper Lil Baby.
These very 'hype' events are all opportunities for Yuga to remind people of their weight in the ecosystem. At the last NFT NYC festival in June 2022, Snoop Dogg and Eminem, who themselves own BAYCs, came to do a private show for the other BAYC owners. "The artistic dimension of an NFT is essential, but the benefits it provides have almost become even more important," points out John Karp, co-founder and president of the NFT Factory in Paris.
The strength of the major NFT collections is finally to carry out airdrops - free gifts - of new NFTs for their members. One of the best-known examples is the "Moonbirds" collection. To gain access to these NFTs, you already had to have one of the 1,000 NFTs in the PROOF Collective collection, created in September 2021 by Kevin Rose, who is the creator of the Modern Finance podcast.
This very exclusive strategy has propelled the Moonbirds into the pantheon of the most popular collections with a "floor price" approaching 16 ETH (roughly 23.
In order to avoid speculation, however, the collections put in place systems that oblige their owners to keep them long enough to benefit from all the advantages. In order to evolve and develop specific traits, Moonbirds, for example, have to be "nested", i.e. kept for varying lengths of time.
With the aim of mass distribution, the "blue chip" collections (the most capitalised) are now betting on prestigious artistic directions with a view to creating complete and differentiating universes. For example, Doodles has recruited Pharrell Williams as its artistic director, while Azuki has recruited Rehito Hatoyama, the former head of Sanrio (Hello Kitty), as an advisor. The influx of specialists from the fashion and merchandising worlds is helping to flesh out these universes into brands that everyone can recognise.
Reaching out to the general public The last (and by no means least) step for the collections is to reach out to the very general public. To date, none of them have managed to do so. Perhaps Bored Ape on the fringes, and even then! When the plots of the Bored Ape virtual world, Otherside, were being created, some of the less experienced investors experienced a number of technical and financial difficulties. During the 'mint' (creation) of the plots, the transaction fees alone could exceed 2 ethers on the Ethereum blockchain due to network congestion!
After this episode, Yuga Labs hinted that they might create their own blockchain, fuelling a little more confusion, and putting off quite a few potential new entrants. In any case, this episode showed just how far the sector still has to go before it is simply reserved for... experts.
