A launch gone wrong
Azuki’s copy and paste NFTs
Welcome back. Meta’s Twitter rival Threads went live last week. And while it’s not based on blockchain tech, Zuck’s new app is already tapping into the promise of decentralized social media—content on Threads will be interoperable with content on other Twitter clones like Mastodon. Which begs the question…is crypto Threads the next crypto Twitter?
Today: Azuki’s spectacular launch flop, some humbling crypto funding numbers, and the shrinking relevance of NFT royalties. Let’s dive in.
Azuki’s NFT Debacle
When blue-chip NFT project Azuki announced its forthcoming NFT collection Elementals to heavy fanfare in June, it sent ripples of excitement through the digital collectibles space. And Elementals made plenty of headlines when it finally dropped on June 27—for all the wrong reasons.
Some background: Azuki is among the most successful NFT brands in terms of trading activity, boasting over $1 billion worth of secondary trading volume since its debut in 2022. The 20,000-piece Elementals collection promised to continue Azuki’s winning streak. What went down ➡️
10,000 Elementals were airdropped to existing Azuki holders shortly before the official launch.
The remaining 10,000 NFTs sold out fast once the presale went live. The auction raked in an impressive $38 million worth of ETH in just 15 minutes.
But…when the Elementals artwork was revealed shortly after the mint, it triggered a massive sell-off of other Azuki collections and the project’s floor price tanked. Why? Elementals NFTs are virtually identical to the original Azuki collection, fueling fears of value dilution through increased supply.
Did Azuki just raise $40 million to release the Walmart version of Azuki?
— becc (@urbrobecc)
Jun 27, 2023
Damage control: The team behind Azuki apologized and promised to update the Elementals artwork to distinguish it from existing collections. Other plans for bringing more value to Azuki holders also appear to be in the works, with ideas of an Azuki-based anime series floating on Twitter.
Big picture: The Elementals mishap demonstrates that even blue-chip NFT brands are under serious pressure to deliver and innovate during this bear market. Azuki collections are not alone with their struggles—most other major NFT collections (most notably Bored Ape Yacht Club) are facing strong headwinds, crashing 30–60% in recent weeks.
Crypto Funding Takes a Back Seat
Twitter’s user count isn’t the only thing down right now—funding for crypto startups dropped for the fifth consecutive quarter in Q2, according to TechCrunch.
By the numbers:
$2.3 billion in venture capital was invested in 382 blockchain and crypto deals last quarter.
That’s a steep decline from the all-time high of $12.3 billion in crypto funding during the same period last year.
What’s behind the decline?
Regulatory headwinds in the U.S. are making investors apprehensive of pouring capital into new crypto ventures.
Last year’s slew of crypto companies filing for bankruptcy protection tempered investor confidence.
Investors prioritize profits over growth during economically uncertain times like these, resulting in a decline in startup valuations.
But it’s not all doom and gloom. Although 2023 funding is down compared to funding in the last bull market (which arguably wasn’t sustainable), $2.3 billion is nothing to sneeze at. Ultimately, slower growth doesn’t have to be a bad thing if it means that the crypto industry is growing more sustainably.
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NFT royalty payments plummeted to a two-year low in June, according to new data from blockchain analytics firm Nansen.
Royalties allow creators to earn a cut of secondary sales of their NFTs.
Typically, the percentage of the sale going to royalties is set by the creator at the time of minting.
What gives? With the meteoric rise of royalty-optional NFT marketplace Blur, other marketplaces (like OpenSea) are dropping royalties to stay competitive. If this race to the bottom continues, NFT creators might have to rethink their revenue models to stay in business.
In other news:
Aptos’ Twitter account and several Multichain bridges were hacked last Friday.
At least three top executives left Binance last week in response to the exchange’s handling of investigations by the U.S. Department of Justice.
Belarus plans to ban peer-to-peer crypto transactions to reduce fraud.
Gemini sued Digital Currency Group and its founder Barry Silbert on allegations of fraud.
BlackRock’s CEO did a 180 by outlining his bullish predictions for crypto.
Crypto Job Board
Data science and research firm Almanak Blockchain Labs is hiring a Simulation Engineer to optimize DeFi protocols.
Produce high-quality crypto content as a Social Media Executive at crypto exchange CoinEx.
Gemini is looking for a Principal Growth Product Manager to level up its suite of retail products.
And that’s what you need on your radar today in crypto. Will you be ditching crypto Twitter for Threads? Hit that reply button. See you back here next Tuesday!