The journey of Pudgy Penguins, a non-fungible token (NFT) project featuring adorable chubby birds, serves as an interesting case study in the world of cryptocurrencies and NFTs. This project, which took flight in July 2021, experienced both the highs and lows within a few months. The community of holders, dubbed Pengus or “the Huddle,” was left disappointed after the project’s founders allegedly drained funds from the treasury and failed to deliver on the original roadmap. In January 2022, the angry community members voted to oust the founders.
Typically, this is where many NFT stories end – with broken promises, disillusioned communities, and fading potential. However, Pudgy Penguins took an unexpected turn when Luca Netz, a Los Angeles entrepreneur and a Huddle member, acquired the brand for 750 ETH (worth $2.5 million) in April 2022. With a vision to rebuild the brand and establish better communication, Netz and his team charted a new course for Pudgy Penguins.
The new leadership focused on developing the project’s intellectual property (IP) and connecting people from Web2 to Web3 platforms. They kept their word and released toys based on the penguin NFTs and a children’s book in the summer of 2022. Netz believed that IP would act as a “Trojan Horse” to attract millions of people to cryptocurrencies and the Web3 ecosystem.
As a result, Pudgy Penguins regained its momentum, hitting new all-time high sales in August and enjoying a revival during the December 2022 holidays. By May 2023, they announced a $9 million funding round, followed by the successful launch of the much-awaited toys, selling 20,000 units in just a few days. This boosted the project’s floor price to 6.2 ETH on OpenSea.
With the introduction of Pudgy World, the team bridged the gap between real-life toy purchases and the digital world, turning toy buyers into NFT holders and crypto wallet users without them even realizing it. This showcased the “Trojan Horse” approach Netz had envisaged earlier.
The key factor behind the successful turnaround of Pudgy Penguins is the project’s ability to earn the trust and support of its community. The new leadership delivered on their promises and maintained transparency through regular updates and community engagement.
In contrast, NFT projects like More than Gamers and Pixelmon NFT faltered due to unclear communication and a lack of transparency, thus failing to bounce back like Pudgy Penguins.
Another aspect contributing to the project’s success is the empowerment of its community to profit from their Penguins’ IP through licensing or other deals. This approach mirrors Web3 giant Yuga Labs, which granted full commercial rights to holders of Bored Apes and other NFTs in their catalog.
Though the future remains uncertain, the project’s current performance seems promising. Pudgy Penguin NFTs have traded over 170,457 ETH in volume (over $300 million), with a floor price of 5.4 ETH or approximately $9,700. The Pudgy Penguins’ story serves as a prime example of how strong community support and effective leadership can help NFT projects rise above setbacks and thrive.