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Nike NFTs and IRL Pudgy Penguins

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Today: Nike’s highly anticipated NFT drop, the attack on Tornado Cash DAO, and Pudgy Penguins’ mainstream debut. Let’s go.


Nike Trips Over NFT Sneaker Collection Launch

No one drops a highly coveted, very limited sneaker collection like Nike—at least when it comes to physical sneakers. NFT versions? Not so much. While Nike’s first NFT sneaker collection surpassed $1 million in sales last week, the road to that milestone has been bumpy.

But first, some context: Nike’s highly anticipated “Our Force 1” (OF1) virtual sneaker collection began its first round of sales on May 15. It was open only to the earliest users of .SWOOSH, Nike’s Polygon-based web3 platform that launched last November with a focus on buying and trading digital collectibles. OF1 is the first NFT collection to be released on .SWOOSH, where Nike hopes to build a thriving web3 community.

Launch problems: Nike called the sale a success, but the OF1 release had some technical hiccups.

  • The “First Access” sale on May 15—which was already pushed back a week from its original drop date—involved several website crashes. As a result, OF1 buyers had to wait hours just to mint their NFTs.

  • When the sale went public on May 24, some users experienced processing delays and others reported being charged for NFTs without receiving them.

The rocky launch left many in the NFT community disappointed, especially given Nike’s experience with managing significant demand for limited edition drops.

The takeaways:

  1. .SWOOSH reportedly handled “insane traffic” during the OF1 launch, suggesting that NFTs are in high demand among the sneaker crowd.

  2. But…good UX is critical for web3 projects targeting a more mainstream audience. If a brand as big as Nike struggled with it? We’ve still got a ways to go.

Taking the Tornado Cash DAO by Storm

Last week, an anonymous attacker took control of the DAO behind Tornado Cash, the disgraced privacy-focused crypto mixer.

The TL;DR: On May 18, the Tornado Cash DAO voted in a seemingly innocent governance proposal about token staking put forth by the attacker. But the proposal’s fine print included a dangerous self-destruct function, which replaced the original proposal with a malicious one.

  • The proposal gave the attacker access to all governance votes and full control over the DAO and its treasury funds.

  • The attacker then used their new voting power to mint 1.2 million TORN tokens, 380,000 of which were swapped for ETH and fed into the crypto mixer.

  • Importantly, the actual Tornado Cash protocol and its underlying smart contracts remained unaffected by the exploit.

Plot twist: A few days after the exploit, the attacker submitted a new proposal to revert the damage and return the tokens they had given themselves, leading crypto Twitter to speculate it was all just a “gigatroll.”

A lesson in DAO security? This highlights the importance of auditing DAO proposals—which can be difficult given that it requires deep technical literacy of DAO members. Bottom line? The DAO governance model is far from bulletproof.

Because Everyone Loves Penguins

Pudgy Penguins is no longer “just” a popular NFT collection. The project smashed its Amazon debut last week, selling over 20,000 physical penguin toys and racking in some $500,000 in just two days.

The details: “Pudgy Toys” range from penguin plushies to figurines. Each toy comes with a QR code that gives its buyer access to Pudgy World, which is tied to a blockchain wallet with NFTs.

  • The collection was so successful that it briefly topped Amazon’s Toy & Games sales charts, ahead of legacy brands like Lego, Disney, and Barbie.

The vision: Pudgy Penguins wants to build a brand that transcends its crypto-native origins by targeting mainstream consumers on retail shelves around the world. If it can do so, Pudgy could serve as a model for other NFT brands to move beyond the web3 world using community-licensed IP.

On a final note (and in danger of dating myself): Anyone else getting flashbacks to Webkinz?

In other news:

  • Binance is launching an NFT loan platform.

  • Bankrupt crypto lender Celsius found a buyer for its assets.

  • Ledger delayed the launch of its controversial new key-recovery feature after major backlash from the crypto community.

  • Hong Kong will soon allow crypto companies to service retail investors, but not without strong regulatory requirements.

  • Reuters reported that Binance commingled customer funds and Binance execs weren’t happy.

Crypto Job Board

  • Want to be a part of the Coinsider team? We’re hiring a Scriptwriter for our YouTube videos.

  • DappRadar, the world’s leading dApp distribution platform, is looking for a Social Media Manager to shape its online presence.

  • If you share Tenderly’s mission of making Ethereum development accessible to everyone, join their team as a Web3 Education Content Lead.

And that’s what you need on radar today in crypto. Don’t forget to check out our first-ever crypto trading challenge over on Coinsider’s YouTube channel. See you back here next Tuesday!