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 a hero, and even fewer have gone the other way. Azuki’s story is one of those stories: that of having reached the absolute heights of hype and falling into relative mediocrity.
Launched in January 2022 by four anonymous founders, Azuki was one of the few NFT avatar collections that everyone thought did everything right. The execution of Chiru Labs, the startup behind Azuki, was so good that many were quickly convinced that the project could become “the next Bored Ape Yacht Club” – then and still today the most prized NFT collection in the industry.
The community was vibrant and growing. The roadmap, or as Azuki called it, the “mindmap“, was promising and well thought out, but perhaps more importantly, it existed. Many such NFT collections have no roadmap at all, let alone a team capable of executing it. Azuki seemed to have all of that and was fortunate enough to be recognized by the community. The 10,000 piece collection sold out immediately upon release, at a price of about 1 ETH each. Sales on the secondary market immediately began to rise, reaching a low of about 7 ETH within days of release and about 15 ETH by the end of the month.
By mid-March, the collection’s low price dropped to about 9 ETH and interest waned slightly, but then Chiru started offering surprises the community couldn’t live without. On March 30, the team dropped 20,000 NFT “something” to Azuki holders, rekindling the massive interest of speculators in the collection and the “something” dropped. A day after the drop, the unwrapped digital gifts-later unveiled as Azuki avatars called BEANZ-had reached a low price of about ETH 3.14, bringing the cumulative value of the drop to over $213 million. This equates to a payment of about $21,000 for each Azuki avatar collector held.
In the period leading up to the air drop, the floor price of the collection doubled from about ETH 9 to about ETH 34, or an approximate value of $115,000. In April, internet skaters were at the top of the digital collectibles hype. That’s when talk of Azukis reaching blue chip status and even potentially buying out BAYC began to heat up on Twitter. In April, BAYC’s floor price rose from around 110 ETH to its record price of around 155 ETH, while Azukis was trading at around 30 ETH. Still, talk of flippening continued, and many collectors seemed to believe it.
However, that was until one of the anonymous founders of Azuki, Zagabond naively decided to make a big mistake: to talk about his past failures.
The Fall From Grace
On May 9, Zagabond published a blog post entitled, “A Builder’s Journey.” In it, he opens up about his past failures in the NFT space and outlines some of the lessons he has learned along the way. “During these formative periods, it is important that the community encourages creators to innovate and experiment. In addition, each experience is accompanied by key lessons“, he said.
Although his intentions were pureIn hindsight, this was one of the worst mistakes Zagabond could have made, as he only tarnished the impeccable brand Azuki had built up to this point by associating him with dubious projects that many in the community later labeled as outright scams. He revealed that he had run CryptoPhunks, Tendies and CryptoZunks, three NFT projects that eventually disappeared.
CryptoPhunks was hit with a Digital Millennium Copyright Act (DMCA) after receiving a takedown request from CryptoPunks – the first NFT collection to achieve blue chip status – Zagabond was forced to abandon it. But he didn’t do so without getting rich, as pointed out by a Twitter user. According to on-chain a few months after CryptoPhunks went bankrupt, its creator executed a “wash trade” on the NFT LooksRare marketplace 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, as inflating trading volumes can mislead investors into believing there is genuine interest in the asset.
Zagabond’s second NFT experiment, Tendies, failed from the start, with only 15% of the collection minted at launch. However, a collector who calls himself 2070 on Twitter reported. That Tendies was in fact a stunt. According to the anonymous collector, who was allegedly involved in the sale of Tendies, the project ceased all activity after the launch, abruptly deleted all of its social networks, and closed the Discord channel within a month of the sale.
With CryptoZunks, Zagabond was ousted for engaging in questionable behavior to promote the project on social networks. Prior to the launch, he allegedly posed as a woman named Amanda and used a female CryptoZunk 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 struck gold.
To top it off, when Zagabond found gold with Azuki, he managed to turn it into lead by severely damaging the project’s reputation. In the days following the publication of his blog post, Azuki’s share price was more than halved from about ETH 20 to about ETH 7.5.
The state of play
While many NFT projects have come and gone over the past year, the disgrace of Internet Skaters will probably go down in the NFT history books as one of the worst in history. Not because Azuki hit rock bottom, far from it, but because it was one of the only projects that seemed to have a real chance to dethrone the two darlings of the sector, CryptoPunks and Bored Apes.
And while Azukis is still very expensive, with the collection remaining the eleventh largest in terms of total market capitalization, its fall – measured from its peak to its current price – is hard to overstate. At their peak, Azuki’s low price was about $115,000. Today, it’s about $12,000, which represents a nearly tenfold drop from the peak. For comparison, CryptoPunks and BAYC brought in about $440,000 and $435,000 at their all-time highs, and today they are trading at about $127,000 and $114,000, respectively.
The upside of this story is that Azuki’s decline can be used to teach NFT collectors a valuable lesson: every reputation-based project, even the most promising, is one naive mistake away from falling into obscurity.
Azuki’s story is not over, and collectors may well witness a redemption arc, but the old adage still applies: reputation is like a house of cards – it takes a long time to build and flies away quickly.