• The Drop
  • Posts
  • Pudgy Penguins Flipped BAYC - Here's Why

Pudgy Penguins Flipped BAYC - Here's Why

Yuga Labs Acquires Proof and the community is NOT happy about it

Author

Gannon Breslin
February 20, 2024

Sponsor 🤝 Follow Us 🖤 Recent Articles 📰

All the NFT, web3, and crypto news you need in one Drop!

gm,

Here is the breakdown of today's newsletter:

🚩 What’s Dropping In Web3
📈 A full breakdown of how Pudgy Penguins flipped BAYC
💧 Crypto Update

Reminder: If there is something you think we can do to make this newsletter better (content, format, etc.) please respond to this email with your feedback!

  • SBF: A photo of the infamous FTX founder has been released from jail. See it here. 

  • Alex Arnault: Son of the current richest person in the world (Bernard Arnault founder of LVMH) and the man behind the CryptoPunks x Tiffany&Co collab just sold his Punk #3167 for 161 ETH ($448,853.50 USD). (@cryptopunksbot)

  • BAYC: Tease IRL clubhouse. See here.

  • Doodles: Announced “Stoodio” which is a mobile-first, multichain homebase for the Doodles’ immersive storytelling ecosystem. (@doodles)

  • Bored Cuban: An NFT-inspired Cuban restaurant just opened in Miami. (AX)

Pudgy Penguins Flips BAYC 📈

In a rather crazy turn of events, Pudgy Penguins has officially flipped Bored Ape Yacht Club’s floor price - marking the “Flappening” complete. Many events led up to this and we are going to attempt to break it all down. Keep in mind these are just some of the many factors!

1/ Brand Identity

When Luca Netz took over Pudgy Penguins he was on a mission. One of the first things he did was focus heavily on brand identity by putting massive effort into Pudgie’s various socials. It paid off, and the Pudgy Penguins Instagram account now has over 1.3 MILLION followers. Along with this, the Pudgy Penguins GIPHY account has over 8.7k uploaded gifs with 14.6 BILLION gif views. Both of these accounts don’t even mention that Pudgy Penguins is an NFT - but rather the content is focused on pop culture and social interactions that go beyond web3. It’s safe to say that there are millions of people that are familiar with these cute penguins that aren’t even in web3 or crypto in general. TL, DR: Pudgy Penguins through savvy brand identity and social strategy was able to break out of web3 to the masses.

Most posts on Instagram are everyday occurrences that get people to share with their friends

2/ Revenue Streams

With this strong brand IP, Luca was then able to create Pudgy plushy toys to sell in Walmart. Walmart would have likely declined if they didn’t have strong proof of their massive audience, and that was why step 1 above was so crucial.

Luca showing the plushy toys in Walmart

The plushy toys went against the norm of other projects that did expensive drops (Louis Vuitton, Tiffany & Co., etc.)- The plushy toys were $9 and flew off the shelves nationwide. Holders were going into stores and buying entire shelves worth and posting online - causing a flywheel effect of others doing the same. Unlike many NFT projects, holders could point to a successful revenue stream and true utility. 

3/ Drama

What’s a web3 story without drama??

Yuga Labs Acquired PROOF Collective (Moonbirds, Mythics, etc.)

In a rather shocking turn of events, Yuga Labs (founder of Bored Ape Yacht Club) acquired PROOF Collective, and needless to say, many people were NOT happy.

The list of complaints is too long to mention but here are the main points:

  • Yuga Labs (founder of Bored Ape Yacht Club) has a shocking amount of assets under management. Just to name a few: MAYC, Meebits, CryptoPunks, Legend of the Mara, Otherside, etc. The company now has hundreds of thousands of NFTs and too many unfinished roadmaps to count. Holders felt like the collection was diluted BEFORE acquiring PROOF.

  • Naturally, holders of these collections above were waiting for Yuga to follow through on roadmaps not go and buy another project that many considered diluted as well.

  • Proof was considered a “dead project" by most in the community. Holders of Moonbirds felt that Kevin Rose (founder) and other execs slow rugged the project after gaining over $100 million with little to show for it (besides dropping more NFT sub-collections and canceling the Proof conference). Holders felt that by buying out Proof it was bailing out one of the most notorious grifters in web3 (allegedly).

    With this alignment of stars, Pudgy Penguins was poised to flip BAYC, and less than 24 hours after the Proof acquisition announcement they did just that.

Rebuttal

This isn’t a BAYC hit piece. We share both sides of the story here at The Drop.

According to @ProfKeeting there are numerous reasons why the Proof acquisition made sense for Yuga Labs.

Here it is below:

1️⃣ The deal is: to exchange their own shares for proof's treasury, intellectual property, and community - this could be potentially a very good deal for "small money".

2️⃣ By acquiring Moonbirds, they gain access to a potential additional source of royalties through the new marketplace coming soon.

3️⃣ Yuga now has a larger pool of human resources to select from, enabling them to choose the best talent available. Human resources is a huge problem nowadays for companies like Yuga.

4️⃣ This acquisition grants Yuga access (and competences) to an art market and community that they previously did not have.

5️⃣ Bringing together Proof and Punks could pave the way for a meaningful strategy and future for Cryptopunks.

However, there are downsides to consider:

1️⃣ The community's dissatisfaction stems from a lack of transparency, concerns about Kevin Rose's image, past Yuga projects that failed to meet expectations, inadequate communication, delayed deliveries, staff layoffs etc.

2️⃣ Announcing it after the release of the new marketplace could be better timing

The negative sentiment within the BAYC community may persist until there are new successes or significant improvements in Yuga's operations and communication.

  • Bitcoin: Flys up to $52k, reaching a $1T market capitalization.(CD)

  • LedgerLive: Users can now trade directly in app on Coinbase. (MPM)

  • CNBC Anchor and Gary Gensler: Debate on Bitcoin. (@BitcoinMagazine)

  • Bitcoin demand: Currently outweighs supply by 12.5x. (@APompliano)

Sponsored Content: There is no sponsored content in this newsletter.

That's all for today's issue! Thanks for reading this far and also make sure to give our Twitter a follow daily for breaking web3 news! (@TheDropNFT)

What did you think of today's Drop?

(don't be afraid to respond to our email for in depth analysis)

Login or Subscribe to participate in polls.

Written by: Gannon Breslin

Disclaimer: The Drop DOES NOT provide financial advice. All content is for informational purposes only. The Drop is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any crypto-related asset is extremely risky and could result in significant capital losses.