The Rise, Fall, and Redemption of an NFT Collection

In the wide world of NFTs and crypto, volatility isn’t always just volatility — sometimes, rapid surges in the value of a digital asset may predict continued, sustainable growth. And this may be the case with the recent near 400-percent surge Pudgy Penguins has experienced since August 18, according to data collected by CoinGecko.

And it’s not over yet — on Monday, a Pudgy Penguin sold for an astounding 400 ETH — worth $625,758 as of writing, according to OpenSea.

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Pudgy Penguins floor prices as of August 23, 2022. Source: CoinGecko

This surge comes just months after a multi-million dollar sale saw the project turned over to new leadership as trust with its founding team faded. But what exactly happened to Pudgy Penguins that makes its recent redemption so powerful — and perhaps indicative of how bigger NFT projects need to be handled moving forward?

Wait, what is a Pudgy Penguin?

During the NFT market’s bull run in 2021, another animal-themed PFP project quickly shook up the NFT ecosystem following the massive success of the Bored Ape Yacht Club. It was Pudgy Penguins — a collection of, you guessed it, pudgy penguin avatars.

I want a Pudgy Penguin avatar, too! But how do I buy one?

First, you need to decide where you want to buy them, and OpenSea is ready to go, so that’s where you can buy them. Then you need to set up an account with Coinbase or Gemini, fill your account with crypto, and voila — you’re ready to purchase.

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Source: OpenSea

Are there any left for me? How many Pudgy Penguins are there?

There are 8,888 — and the initial mint has long sold out. But thankfully, the secondary market on NFT marketplaces like OpenSea is quite active. Community support was so strong following its launch that one collector even shelled out a cool 225 ETH for their penguin in September of 2021; an amount worth nearly $1 million at the time.

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Pudgy Penguin #6873 — the most expensive Pudgy Penguin sold thus far. Source: Pudgy Penguins

Unfortunately, while Pudgy Penguin projects showed promise months after launching, things quickly spiraled downhill.

A fall from grace

Perhaps the ultimate faux pas in the NFT space is the rug pull, or when a project’s founders run off with funding that supporters contributed in good faith toward a project’s development. Even the slightest suspicion from a project’s community that its founders may do something of the sort can be enough to tank its value.

That’s exactly what happened within the Pudgy Penguins community in late 2021, when they discovered that the founding team had emptied out the project’s funds.

Whispers of a Pudgy Penguin rug pull

Some members of the larger NFT community weren’t surprised by this development, however, as ColeThereum — who created Pudgy Penguins — had been previously caught engaging in scam-adjacent behavior long before the launch of this PFP collection. Immediately after the project’s community caught wind of the founders’ recent — and past — behavior, several of its most prominent members took to social media to voice their concerns about the future of the project. Namely, 9x9x9 — who reportedly owned over 200 Pudgy Penguin NFTs at the time of their January 2022 barrage of tweets that openly criticized the founding team’s treatment of its community, in addition to its desire to seemingly abandon ship during this tumultuous time.

Following speculation that they would succeed the Pudgy Penguins founders in leading the project, 9x9x9 publicly disclosed that they had rejected an offer to buy the IP to the collection outright for 888 ETH. Thankfully, 9x9x9’s desire to do right by the Pudgy Penguins community did not fall on deaf ears, as another member of the community took it upon themselves to right the ship.

New leadership

In April of 2022, the Pudgy Penguins team closed a sale, and handed off leadership of the project. The buyer? Luca Schnetzler — who picked up the collection for 750 ETH, or roughly 2.5 million in U.S. dollars after being a longtime fan of the project and its community. “Pudgy Penguins was my first PFP NFT and I knew when I first bought it that Pudgy Penguins had the highest upside when it came to brand potential,” Schnetzler told nft now. “When I saw other people bidding on Pudgy Penguins I knew I had to step in. I’ve built multiple brands to 9 figures in revenue over the last 5 years and I felt like my skill set was the best to succeed at the job.”

What followed was what some members of the NFT community are dubbing “the greatest comeback story” that’s happened thus far in the space. In the four months that had passed since the acquisition, the project’s new leadership went all-in on establishing the Pudgy Penguins IP as a force to be reckoned with in the space. Whether it’s in media or merchandising, the new management team has been hard at work giving the community new avenues to show their support for the project — in addition to finding ways to onboard new users into the now rapidly-growing community via a strong social media presence.

On top of this, Schnetzler showed a deep understanding of the appeal of Pudgy Penguins, dubbing it “a feel-good brand.” In service of this, Schnetzler has focused on rebranding efforts to unlock the IP’s ability to “uplift people and make their day a little easier.”

As the project continues to stay within striking distance of the top of OpenSea’s volume charts, fans of currently-troubled NFT projects may have new reasons to hope for a return to form for their supported projects. Hopefully, in the future, truly “dead” projects become the exception, and not the rule following a collapse. “I think with the right team and IP [Pudgy Penguins’ renewed success] can be replicated. I hope when it’s all said and done people will look at what we did with Pudgy and will open the flood gates for top tier web2 talent to take this space seriously,” Schnetzler said. Let’s hope he’s right on the money.

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