Despite the hundreds, if not thousands, of NFT projects launched since the NFT avatar scene exploded in early 2021, few have gone from zero to hero, let alone come back. Azuki’s story is one such story: that of reaching the absolute heights of hype and falling to relative mediocrity.
Launched in January 2022 by four anonymous founders, Azuki was one of the few NFT avatar collections that everyone thought had done everything right. The performance of Chiru Labs, the startup behind Azuki, was so good that many were quickly convinced that the project could be completed”The next Bored Ape Yacht Club” – then and still the most valued NFT collection in the industry.
The community was vibrant and growing. The roadmap, or as Azuki called it, the “mind map“, was promising and well thought out, but perhaps more importantly, it existed. Many NFT collections of the genre have no roadmap at all, let alone a team capable of executing it. Azuki seemed to have it all and was lucky enough to be recognized by the community. The 10,000 coin collection sold out on release, priced at around 1 ETH each. Secondary market sales immediately started to climb, reaching a rock bottom of around 7 ETH in the days following release and around 15 ETH by the end of the month.
In mid-March, the collection bottom price dropped to around 9 ETH and interest waned slightly, but then Chiru started offering surprises that the community couldn’t live without. On March 30, the team dropped 20,000 NFTs”Something” to Azuki holders, rekindling the enormous interest of speculators in the collection and “SomethingA day after the airdrop, the unpacked digital gifts — later revealed as avatars of Azuki named BEANZ — hit a rock bottom of about 3.14 ETH, bringing the airdrop’s cumulative value to over $213 million. equates to a payout of approximately $21,000 for each Azuki Avatar Collector held.
Leading up to the sky drop, the collection’s bottom price doubled from about 9 ETH to about 34 ETH, or an estimated value of $115,000. In April, internet skaters topped the digital collectibles hype disaster. Then the talk about Azukis potentially reaching blue chip status and even potentially buying out BAYC started heating up on Twitter. In April, BAYC’s bottom price fell from about 110 ETH to its all-time high of about 155 ETH, while Azukis traded at about 30 ETH. Still, flipping was talked about and many collectors seemed to believe it.
However, that was until one of Azuki’s anonymous founders, Zagabond naively decided to make a big mistake: talk about his past failures.
The Fall of Grace
On May 9, Zagabond published a blog titled, “A Builder’s Journey.” In it, he talks about his past failures in the NFT space and describes some of the lessons he learned from his journey. “During these formative periods, it is important that the community encourages creators to innovate and experiment. Plus, every experience comes with important lessonshe stated.
Though his intentions were pureIn hindsight, this was one of the worst mistakes Zagabond could make, as it only tarnished the immaculate brand Azuki had built up to this point by associating it with questionable projects that many community members later called it an outright scam. He revealed that he ran CryptoPhunks, Tendies and CryptoZunks, three NFT projects that eventually disappeared.
CryptoPhunks was hit with a Digital Millennium Copyright Act (DMCA) after receiving a withdrawal request from CryptoPunks – the first NFT collection to reach blue chip status – Zagabond had to drop it. But he didn’t do it without getting rich, as indicated a Twitter user. According to on-chain a few months after CryptoPhunks went bankrupt, the creator conducted a “laundry shopon the NFT Marketplace LooksRare for a profit of 300 ETH after increasing the creator’s royalty rate to 5%. Wash trading is a form of market manipulation performed to artificially inflate trading volumes for a specific asset. It is illegal in traditional markets because trading volumes that are too high can mislead investors into believing that the asset is generating genuine interest.
Zagabond’s second NFT experiment, Tendies, failed from the get-go, with only 15% of the collection being minted at launch. However, a collector who bears the name 2070 on Twitter has indicated that Tendies was actually intentional. According to the anonymous collector, who allegedly participated in the sale of Tendies, the project ceased all activities after its launch, abruptly deleted all its social networks and closed the Discord channel within a month of the sale.
Along with CryptoZunks, Zagabond was impeached for questionable behavior to promote the project on social media. Prior to the launch, he reportedly impersonated a woman named Amanda and used a CryptoZunk female profile picture on Twitter. To many observers, Zagabond presented himself as an opportunistic NFT founder who jumped from project to project with little regard for investors until he found gold.
To top it off, when Zagabond struck gold with Azuki, Zagabond managed to turn it into lead that seriously damaged the project’s reputation. Within days of publishing his blog post, Azuki’s price had more than halved from about 20 ETH to about 7.5 ETH.
The state of affairs
While many NFT projects have come and gone in the past year, the internet skater’s disgrace will likely go down in the NFT history books as one of the worst in history. Not because Azuki bottomed out, far from it, but because it was one of the few projects that seemed to have a real chance of dethroning the two industry darlings, CryptoPunks and Bored Apes.
And while Azukis are still very expensive, with the collection remaining the 11th largest by total market cap, their decline — measured from their peak to their current price — is hard to overstate. At their peak, the Azuki bottom price was about $115,000. Today it is around $12,000 which is almost a tenfold drop from the high. In comparison, CryptoPunks and BAYC hit around $440,000 and $435,000 at their all-time highs, and today they are trading at around $127,000 and $114,000 respectively.
The silver lining of this story is that Azuki’s demise can be used to teach NFT collectors a valuable lesson: any reputation-based project, even the most promising one, is one naive mistake away from being forgotten.
Azuki’s story isn’t over yet, and collectors may very well witness an arc of redemption, but the old saying still applies: reputation is like a house of cards – it takes a long time to build and flies away quickly.
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