The rise, fall and redemption of an NFT collection

In the big world of NFTs and crypto, volatility isn’t always just volatility – sometimes rapid increases in the value of a digital asset can predict continued, sustainable growth. And this may be the case with the recent nearly 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 was sold for an astounding 400 ETH – worth $625,758 at the time of writing, according to OpenSea.

This increase comes just months after a multi-million dollar sale led to the project being transferred to new management which trust with the founding team faded. But what exactly happened to Pudgy Penguins that makes the recent redemption so powerful – and perhaps an indication of how larger NFT projects will need to be handled going forward?

Wait, what is a Pudgy Penguin?

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

I also want a Pudgy Penguin avatar! 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 buy.

Is there anyone left for me? How many Pudgy Penguins are there?

There are 8,888 — and the first coin has long since sold out. But luckily, the secondary market on NFT marketplaces like OpenSea is quite active. Community support was so strong after launch that one even raised a cool 225 ETH for his penguin in September 2021; an amount worth nearly $1 million at the time.

Unfortunately, while Pudgy Penguin projects showed promise months after launch, things quickly went 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 away with funds that backers have contributed in good faith towards a project’s development. Even the slightest suspicion from a project’s community that its founders might do such a thing can be enough to raise its value.

That’s exactly what happened in the Pudgy Penguins community at the end of 2021, when they discovered that the founding team had depleted the project’s funds.

Whispers of a Pudgy Penguin Throw Blanket

However, some members of the larger NFT community were not surprised by this development, such as ColeThereum – who created the Pudgy Penguins – had previously been caught engaging in fraudulent 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 January 2022 wave of tweets who openly criticized the founder’s treatment of society, as well as his desire to seemingly abandon ship in this tumultuous time.

Following speculation that they would succeed the Pudgy Penguins founders in leading the project, 9x9x9 publicly revealed that they had rejected an offer to purchase the collection’s IP outright for 888 ETH. Fortunately, 9x9x9’s desire to right the Pudgy Penguins community didn’t fall on deaf ears, as another member of the community took it upon themselves to right the ship.

New management

In April 2022, the Pudgy Penguins team closed a sale and handed over management of the project. The buyer? Luca Schnetzler – who picked up the collection for 750 ETH, or roughly 2.5 million US dollars after being a long-time 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 others bidding on Pudgy Penguins, I knew I had to step in. I’ve built several brands to nine figures in revenue over the past 5 years and I felt my skills were the best to succeed in the job.”

What followed was some members of the NFT community dubbing “the greatest comeback story” it has happened so far in space. In the four months that had passed since the acquisition, the project’s new management 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 leadership team has been working hard to give the community new ways to show their support for the project – as well as finding ways to bring new users into the now rapidly growing community via strong social media presence.

On top of this, Schnetzler showed a deep understanding of the appeal of Pudgy Penguins, calling it “a feel-good brand.” In service of this, Schnetzler has focused rebranding efforts to unlock 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, supporters of currently struggling NFT projects may have new reasons to hope for a return to form for the supported projects. Hopefully, in the future, truly “dead” projects will become the exception, and not the rule after a collapse. “I think with the right team and IP [Pudgy Penguins’ renewed success] can be replicated. I hope when all is said and done, people will look at what we did with Pudgy and will open the floodgates for top-level web2 talent to take this space seriously,” said Schnetzler. Let’s hope he’s right on the money.