This week, we saw the much-anticipated launch of Azuki’s third PFP collection, Azuki Elementals. 

Following an incredibly successful event in Las Vegas that culminated in one of the best Web3 trailers of all time, expectations were sky-high.

Unfortunately, the whole thing has degenerated into a story of betrayal and backlash.

And now, millions of dollars are lost, and confidence is eroded.

Is this the end of Azuki?

What does the future hold for NFT projects in general?

A quick trip down memory lane 📙

Azuki quickly gained popularity upon its launch in January 2022, capturing the attention of the NFT community. The project boasted a unique and relaxed vibe and a sleek website. 

The team was also on fire with its execution, and the mint sold out in just three minutes, raising an impressive $28 million.

Azuki further delighted holders with initiatives like Bobu Fractionalization, a garden party event, and the Beanz Airdrop.

The community was captivated by the NFT reveals, driving up the floor price from 1 to 30 ETH within two months.

Zagabond profited from the initial sales of these NFTs and then abandoned the respective communities. There were also allegations that Zagabond had impersonated a female founder named Amanda during one of the launches, adding to the community's outrage. 

Zagabond eventually agreed to return funds to those affected, referring to these incidents as "learnings." 

Consequently, the floor price of Azuki's NFTs tumbled from 30 ETH to 10 ETH within a month, signalling a potential end to the Azuki dream.

Azuki’s comeback: when money trumps ethics 💰

What sets NFT projects apart from traditional Web2 companies is the unwavering dedication of their holders. Owning an NFT means you have a strong financial incentive to see the project soar. There’s also an unparalleled sense of community.

When the Zagabond bombshell detonated, numerous deep-pocketed investors found themselves staring at colossal losses. The value of their Azuki NFTs plummeted, and the outlook appeared grim.

But then, a focused narrative campaign took centre stage, determined to reshape perceptions and breathe new life into Azuki. The community rallied, unleashing an endless stream of positive stories across social media, lauding the brand and Zagabond himself. They masterfully reframed his past missteps as learning experiences and stepping stones leading a Web3 empire.

And those whales who had already invested millions? They chose to double down, unleashing a relentless wave of activity on the Azuki marketplace. Their strategic moves created an illusion of soaring volume and insatiable demand.

The team also continued with its flawless execution:

• Twin Tiger Jacket Free Airdrop
• Enter the Alley - IRL Event
• Innovative Online Collector’s Profile
• First Physical Backed Token in Web 3
• Selling 9 Golden Plated Skateboards to their community for $2.5 million
• Ambush Merchandise Collaboration
• RedBull Racing Partnership

By the end of the year, all was forgiven as the floor price had recovered. The team and community ruthlessly silenced any mention of previous failings, making Azuki the second-biggest project in Web3.

Azuki Elementals: a story of failed expectations 🤬

Over the last week, Azuki took Las Vegas by storm, hosting an epic event filled with community celebrations, swag giveaways, and inclusive experiences. The grand finale was a mind-blowing trailer unveiling their newest collection, Elementals—the talk of the Web3 town.

With 20,000 fresh NFTs expanding the Azuki universe, questions emerged about the mint mechanics.

• Airdropping 10k for free to Azuki holders and auctioning off the other 10k among them and Beanz holders raised eyebrows. How would this foster growth?
• What’s with the 10-minute window for minting during both phases? Why the rush? Was it a deliberate ploy to induce FOMO?
• At a hefty 2 ETH mint price, the team aimed to rake in a whopping $40M. But did this encourage new participants? 

With the entry price for an Azuki NFT already at 17 ETH (over $30k), concerns about potential dilution loomed large.

Yet, doubts were brushed aside. The team's stellar track record garnered unwavering trust. People liquidated everything they could to secure their minting position.

Major Azuki investors seized the opportunity, investing a staggering $7.8M to acquire 20.3% of the total supply, doubling down on the Azuki ecosystem.

Not so fast!

The community eagerly anticipated the new artwork, as Azuki dominated social media trends. But the reveal turned into an absolute disaster. Major holders were livid, discovering duplicates in the collection. 

Many saw this as a cash grab and a severe breach of trust. Some people have lost millions of dollars.

The community arranged a call with the team, seeking solutions to restore value and exclusivity to the original Azuki collection—the proposed change: community voting on changes to Elemental NFT backgrounds. Desperate holders embraced the proposal, hoping to break even. This temporary fix sparked yet another uproar.

The essence of NFTs lies in decentralisation and ownership. The team's unilateral decision to alter artwork without consent contradicted Web3 ideals. Elemental owners, who paid over 20 ETH ($35,000+) for aesthetics, questioned the team's authority to change their images.

The Azuki saga epitomises why the mainstream often frowns upon the NFT space. A year ago, doubts about the founder's character were glossed over and whitewashed in pursuit of profits, leading to the community’s predicament today.

Will Azuki stage another miraculous comeback, overcoming the latest setback? Only time will tell.

Cryptonary’s take 🧠

With the downfall of the second-biggest project in the NFT space, trust in NFT PFP teams has hit rock bottom. Buyers seek refuge in established stores of value and PFP projects with minimal external dependencies. 

So, what should you consider in this ever-evolving landscape? 

Here are our recommendations:

Short Term

• BAYC/MAYC
• DeGods
• Memeland

Long Term

• Cryptopunks 
• CC0 Projects: Opepen/Checks, Mfers, Rektguy
• Generative Art: Squiggles, Fidenza, Autoglyphs, Ringers
• Bluechip Digital Art: XCOPY, Claire Silver, Grant Yun etc…

Remember, just like startups, most NFT projects will fail. Founders often lack experience or may have questionable histories. 

So, tread carefully, and seek projects with solid fundamentals, visionary teams, and a commitment to community trust. 

As always, thanks for reading. 🙏

Cryptonary, out!