4th Time Lucky?

GM frens,

It's been a bumpy week in the Web3 world.

Last week we broke down the allegations against Zagabond — one of the founders of the popular NFT project Azuki whereby he allegedly rug pulled 3 other NFT projects prior to co-founding Azuki, without showing any remorse.

In today’s edition of The Ground Floor we will be breaking down the past, the present, and the potential future of Azuki in the face of this news.

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4th Time Lucky?

Breaking down the past, the present & the potential future of Azuki...

Web3, like the broader macro environment, has been experiencing turbulent times to say the least over the last few weeks.

Besides the crash of stable coin UST that in turn decimated the market cap of LUNA, once worth $40 billion, the NFT market was also impacted when it became clear that one of the founders of Azuki was responsible for abandoning several NFT projects.

Normally, this wouldn’t make headlines, however, the fact that the 4th project he co-founded called Azuki went on to become one of the top 10 NFT projects of all time has painted this recent success story in a very different light.

A Clever Smart Contract

Azuki gained a lot of attention very early on courtesy of the smart contract they created called an ERC721A.

This smart contract allowed people to mint multiple Azuki NFTs for a fraction of the normal cost to mint a single NFT.

During this time, gas prices on the Ethereum network were reaching all time highs, such that the low cost to mint the Azuki NFTs was widely celebrated.

In the time since, such reductions in the cost of minting an NFT has become an expectation thanks to more efficient contracts, however, back in January 2022 this move made Azuki stand out as pioneers.

Building The Brand

This innovation put Azuki on the map.

Following this, the Azuki artwork also resonated with enough people such that there was significantly more demand for Azukis than there was supply, and the floor price rose very rapidly in the months that followed.

• On January 13th 2022 the average price of an Azuki was 1.9 ETH

• By April 3rd 2022, the average price of an Azuki was more than 36 ETH

These high prices would be short lived, however, during this time, Azuki was increasingly being labeled as a blue chip NFT — a term reserved for projects such as BAYC, Cryptopunks & a very limited number of other projects.

As the demand for Azuki continued to rise, Azuki emulated the BAYC playbook when they announced the release of their second collection BEANZ on the 1st of April which allowed Azuki holders to claim 2 free BEANZ for every Azuki they held.

Damage Control

Everything was going right for Azukis until suddenly it wasn’t.

It remains largely unclear what prompted Zagabond — one of the founders of Azuki to suddenly come clean about his not so clean track record with NFT projects, however, on the 9th of May he made a stunning announcement.

Prior to working on Azuki, Zagabond announced he had previously founded a number of NFT projects that were since abandoned.

In his eyes, these projects were stepping stones to the current success story of Azuki, however, this response resulted in significant backlash as he failed to show any empathy for the projects he failed to support.

What Happened Next?

In the beginning, Zagabond framed these past rug pulls as learnings.

Thankfully, he quickly changed course and offered a more emphatic response whereby he promised to rectify these wrongs by redistributing the funds they had raised back to the communities.

The Future For Azuki?

The most valuable currency in the Web3 world is trust.

Moving forward, people will be slower to trust Azuki as a result of this new information coming to light, however, with over 2,000 sales in the 48 hours following this news — the Azuki community has remained resilient.

Say what you will about Azuki, and the mistakes made by one of the co-founders, it’s amazing to see a community demonstrate that a project can grow to be much bigger than any one individual, even if this individual founded the project.

3 Things You Need to Know

1) NFT Volumes Plummet

As per Dune analytics, NFT volumes have really dried up in May 2022. They are still relatively high considering the infancy of the technology - but it seems that even JPEGs aren’t safe from a macro environment that is this tumultuous.

2) A16Z State Of Crypto Report Reveals Staggering Figures

According to A16Z’s State of Crypto report - NFTs have already surpassed 50% of the value generated for artists on Spotify and 25% of the value generated for creators on YouTube. Those figures are staggering. 

When you consider that there are probably only ~1 million (if that!) active wallets participating in the NFT space — it’s wild to see such significant value generation.

3) Spotify to Test NFT Integration

Speaking of Spotify…the music streaming goliath is supposedly testing out a feature that allows artists to promote their NFTs on their profile.

Considering the heat that Spotify has come under over the years regarding their huge take rates and inequitable distribution of revenue, this is a positive move.

We don’t know quite where music NFTs will go, but if they can generate more value for independent artists who are struggling, they will be deemed a success.

Tweet of the Week

The feel good story of the week.

Artist JMW327 tweeted that they would try out NFTs.

Claiming that they could no longer go on making $10k a year.

What ensues, of course, is a plethora of hate from their fans. 

What happens after that however, is incredible.

Their genesis piece sold for north of $40,000 on Foundation. Famous artist and collector Fvckrender the lucky winner.

What. A. Story.

Community Update

Floor Community Team Program

This week Floor announced the beginning of a new community program.

The basis behind this program is that individuals building amazing communities in Web3 oftentimes are not the ones being rewarded or compensated for the community’s success.

We want to help push the industry toward a place of more equitable outcomes.

Floor Community Team Applications are open thru Sunday, May 22nd. Click here to read more about the open positions.

Thanks for the read,

See you next time! — OB1, Pet & Corwin.

This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.