Delphi Digital: What drives the success of PFP type NFT?

Original author:@yh_0x, Researcher at Delphi Digital

The DeFi way

PFP (Avatar Class NFT) is one of the earliest use cases of NFT, intended as a profile picture for online identity. But what drives their success beyond aesthetic appeal? Here are some case studies.

Among the various NFT categories on Ethereum, PFPS account for 70% of the total market cap of NFT. Generative art ranked second with 13.5 percent and virtual land third with 8 percent.

But what is driving the popularity of PFP?

Answer: PFP is easy to understand + hype.

Figure: Market cap size of different types of NFT

News and announcements alone create excitement and can cause prices to rise. This has attracted the attention of traders and collectors.

As early as April 2021, BAYC launched a wave of new PFPS that were hugely successful, and since then, a steady stream of new projects have attempted to emulate their success.

Figure: BAYC NFT ecology

BAYC's dominance of the PFP ecosystem is striking, with a market capitalisation more than four times that of its rivals of comparable strength combined. This success can be attributed to several factors, including the strength of its community building.

Figure: Top five PFP projects by market capitalization

In addition, their ability to gain the attention of celebrities such as Justin Bieber, Steve Aoki, and Stephen Curry will undoubtedly help them increase engagement and understanding among the general audience.

Ultimately, however, prices must be justified by fundamental drivers other than speculation. BAYC recognizes this and is proactively standing out from the competition. So they launched $APE and Otherside in the first quarter of last year - and it was great!

Subsequently, various PFP projects began to create unique ecologies, hoping to also stand out from the competition. In addition, top PFP teams attract strong funding and support from well-known VCS (other than Azuki).

When it comes to Azuki, they managed to establish a clear ecology centered on the community, and the launch of Hilumia is likely to string all that together.

Photo: NFT ecology in Azuki

In my opinion, Hilumia is likely to be a virtual hub with gaming elements. It will also show what the team is building with the community in a highly visual way.

In addition, the team has demonstrated its commitment to building an NFT ecology with a vibrant community.

The future is likely to be one where teams continue to focus on expanding their IP and how to engage their community to co-create new content and unlock a future of higher level visual storytelling.

To RTFKT, last year they focused on multiple airdrops, each targeting a completely different application to bolster their narrative.

The key this year could be Animus, which ties everything together and unlocks the next phase of their legend.

Figure: NFT ecology of Clone X

After outlining their metaverse expansion plans, it was launched in three stages: The Warning (RTFKT x Rimowa), The Signal (Eggperience), and The Exodus (MNLTH Quest 2).

It's clear that the team is aiming for interactive storytelling, and hints that a major offline event will also take place by the end of the year.

2023 is likely to see Team RTFKT continue their plans to expand the Clone X IP, with Animus being their ace in the hole this year. Not much is being revealed at the moment, but I'm very excited about it -- despite some FUD around Clone X.

You should also take more advantage of Nike's strong brand and see how it can be combined with the.swoosh ID, which some have teased is a Nike licensed digital wearable that can be worn on Clone X.

Doodles have also just released their DoodleMap, which clearly demonstrates their intention to become a big entertainment and lifestyle brand, one that goes beyond Web3 and will permeate mainstream consciousness.

Photo: NFT ecology at Doodles

@jholguin  As CEO,@Pharrell  Leading Doodles Music and in the process of buying animation studio Golden Wolf, I'm curious to see where they're going.

The team is focused on expanding to a mainstream audience and will start with Doodles 2.

Doodles kicked off the year by launching Doodles 2 wearables on the Flow blockchain and unlocking the wearables on Flow's Gaia market. With this move, Doodles officially moved toward multi-chain. The Flow blockchain was chosen for its gas-free transactions and potential composability.

2023 could be the year Doodles continues to expand into various vertical entertainment areas, including games, music, animation, and more, with the goal of creating a cultural boom that will lead to demand for the Doodles 2 series - which Doodles 2 is designed for.

The offline experience remains Doodles' strength as it is both inclusive and exclusive and allows the project to build brand awareness and create value for holders at the same time.

The success of PFP projects will go beyond airdrops and other financial incentives. There needs to be an emotional connection and engagement with the brand through storytelling and other unique value propositions.

Retention is important, but so is how to reach new audiences and build new revenue streams.

These projects have built a strong community in Web3 and are building momentum for their interesting road maps for the future, and are sure to be exciting.

2023 will be a critical year for them to get out of the Web3 bubble and venture outside. Expanding to a mainstream audience is truly uncharted territory. While the future is uncertain, there is no reward without risk. Let's hope things turn out in their favor.

See the full report for more in depthInside the Leading PFP Ecosystems.

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