Welcome to “This Week in the Metaverse,” where Fortune rounds up the most interesting news in the world of NFTs, culture, and the metaverse. Email marco.quiroz-gutierrez@fortune.com with tips.
The Azuki NFT collection, launched by Los Angeles–based Web3 company Chiru Labs in 2022, lost some of the luster that made it one of the most popular PFP projects after the disappointing launch of its Elementals series this week.
Many Azuki fans felt that the 20,000 Elementals, although highly anticipated, were too similar to the original collection, despite a lower price tag. Some took to Crypto Twitter questioning the uniqueness and value of Azuki NFTs, causing the price of the company’s original non-fungible tokens to fall 34% in the 24 hours after the Elementals mint, according to Leticia Melo, the author of a DappRadar report on the drop published Wednesday.
“The lack of differentiation left the community feeling misled, damaging community trust, which is vital for the success of any project in the blockchain and NFT space,” Melo said in an email to Fortune.
Everything over the past 24 hours should be a death knell for Azuki.
— batz (@batzdu) June 28, 2023
> Minting experience was subpar
> Didn't grow the "garden" with new members, only grew their wallets with new ETH with a totally accessible 2e mint to people already in the garden.
> Art is uninspired and in… https://t.co/uRdltqWhwL
The sale still raised about $40 million from the new drop, but instead of attracting new buyers, some said sales came mostly from existing buyers.
The official Azuki Twitter account quickly put out a statement owning up to its mistakes and putting some of the blame on its “ambitious goals.”
“We know that we lost a piece of trust today, but nothing gets us more motivated to make things right,” wrote the Azuki Twitter account on Wednesday.
But for some holders it was too little, too late. That was the case for Arthur0x, the founder of crypto investment firm DeFiance Capital, who before Friday owned seven Azuki NFTs, he said.
Shortly after the Elementals drop, he published a tweet offering five of his NFTs for sale. He’s already sold three. Arthur0x said the mistakes Azuki made with the launch have affected his desire to keep rare Azuki and that he’s worried about the price floor getting diluted.
“Disappointed and surprised how out of touch they are,” he told Fortune.
Azuki did not immediately respond to a request for comment.
The Elementals drop brings into focus the tough environment for NFTs as the crypto market continues to lag. The best NFT projects have survived because of their strong communities and by providing value to their members. In a down market, cultivating this community becomes even more important.
Collectors that are active during bear markets are those who are deeply invested in the progress and development of their favorite projects, said Melo. Any misstep will be more likely to be noticed and called out by this group, and according to Melo, their backlash can be swift.
“The incident surrounding Azuki Elementals tells us that no collection, big or small, is immune from the community’s merciless judgment.”
In other news:
A federal judge permanently banned the creator of MetaBirkins, Mason Rothschild, from selling the NFTs and said he had to airdrop the court order to current holders. The order also prevents Rothschild or his associates from marketing the NFTs or making it seem like MetaBirkins are tied to fashion brand Hermès in the future, Decrypt reported.
The fashion models Kendall Jenner and Kate Moss will join musician J Balvin, artist Jeff Koons, and filmmaker Baz Luhrmann in judging an NFT competition that aims to benefit AIDS research, Decrypt reported. Submitted designs will first be narrowed down by a public vote on voting platform Prospect 100, before the finalists are judged by the celebrities.
Auction House Sotheby’s announced a new generative art program to launch on July 26, CoinDesk reported. The program will promote two to three generative artists per year using fully on-chain sales through the Art Blocks Engine, which specializes in generative art.
Warner Music Group and Polygon Labs launched a music accelerator program this week that aims to support developers launching music-related projects and dApps on the Polygon network, according to a press release. Applicants will be accepted on a rolling basis, and those who are chosen will get funding from both organizations and support that includes mentorship and check-ins as well as help with marketing and promotion.
Bored Ape creator Yuga Labs launched its latest game, HV-MTL Forge, which will incorporate NFTs that have a link to one of its most recent games, Dookey Dash. The newest Yuga game revolves around building custom workshops that are then voted on by community members.
