The phrase “what doesn’t kill you makes you stronger” rarely applies to NFT projects. Even the slightest whispers of leadership misconduct can sink the value of a project and cause massive hemorrhaging of community members. When that happens, once-loved Web3 entities usually find themselves dead in the water.

Not so for Pudgy Penguins – the project represents one of the best comeback stories from the NFT space. Having made a grand entrance on the scene during the NFT bull run of 2021, Pudgy founder Cole Thereum (and his teammates) were accused of draining funds from the project. Rumors of a rug pull grew louder, and after a failed leadership transferLuca Schnetzler, longtime Pudgy fan and owner of the CEO, bought the collection for 750 ETH (approximately $2.5 million at the time).

The team is now making the project’s tumultuous history a proud part of its history. Schnetzler and his team have developed a growth strategy that relies on leveraging Pudgy Penguins’ IP beyond the walls of the NFT ecosystem, with the goal of taking the brand into the future and incentivizing greater rewards for community engagement, in a new Web3 benchmark for onboarding. blockchain skeptics.

Building the future of chubby penguins

Last week, Pudgy Penguins partnered with Sotheby’s for an auction of 11 Pudgy Penguins NFTs. Called Snowed In: A Rare Pudgy Penguins Sale, it is a digital auction running November 18-30 and features Cole Thereum’s well-known Pudgy Penguin #4609, which was transferred to Schnetzler and team following the sale of the collection earlier this year. . And the timing couldn’t be more apt: the Art Basel party and the Sotheby’s auction arrive as if in sync, just as the story of the return of the Pudgy Penguins seems to have reached critical mass.

The NFT (Penguin #4609) is a crucial part of the project’s journey and is on sale along with the rare Penguin #7315, #505, #7405, #6615, and several others. Those who obtain a Pudgy NFT at the Sotheby’s auction will also receive the auction house’s first Soulbound Token which functions as an authentication certification, proving that they participated in the auction. Speaking about the community auction, Schnetzler told nft now: “We’re using the Sotheby’s auction as an opportunity to start our community fund called The Cozy Horizon Fund.”

“All proceeds from the auction will go into this fund so we can use it to fund fun community events.” One such event is NFT Winter, the team’s welcome party for holders attending Art Basel in Miami this week, which it is hosting in collaboration with cryptocurrency exchange Uniswap. “Right now, [the space] is going through a tough time, and we wanted additional coverage to make sure we can deliver amazing experiences to the community,” Schnetzler said.

Chubby penguins at the retail market

In a Web3 environment where crypto markets are as volatile as ever, and where the relatively straightforward methods of success that marked the 2021 bull run no longer apply to NFT projects, Pudgy Penguins is leveraging its IP potential for stability. and longevity.

“We have our own vision for the PFP space,” Schnetzler said. “This IP is valuable. We believe the Penguins are valuable, especially in the retail market.”

That is why the brand is preparing a series of physical chubby penguins products ranging from plush toys to children’s books that the company plans to launch in the first quarter of 2023. The team is currently closing deals for retailers that focus on licensing agencies in the area of ​​family intellectual property. PMI Toys, a children’s toy manufacturing, marketing and distribution company, will produce the physical Pudgy toys.

The team has changed their NFT usage agreement to open up the brand’s intellectual property, allowing holders to use their Pudgy for commercial purposes. If a licensee’s business venture exceeds $500,000 in annual revenue, they are expected to work collaboratively with the team to enter into a larger license agreement.

“This allows us to negotiate important deals like the one with PMI Toys, where we can give people a revenue share based on sales,” Schnetzler explained.

Schnetzler and his team have licensed more than a dozen Pudgies so far to be part of upcoming toy releases, and have also chosen five Pudgies to be part of a children’s book deal with publisher Green Kids Club. In order for holders to be eligible to have their Pudgy chosen to be part of these agreements, they must apply on the project website when the team announces a potential new license agreement. They then choose which one they think would be the best fit for the proposed deal. For example, for an upcoming huggable plush release, the team selected a Pudgy wearing a polar bear hat. Once chosen, the owner of Pudgy’s will receive a thirteenth percentage of revenue over the life of the agreement.

“We have over 8,000 penguins, and every time we open one of these deal shipments, we have several hundred in the first hour,” Schnetzler said. “People really want to see your IP, they just don’t have the time to make the connections they need to take advantage of it. We’re trying to create more opportunities for our owners to experience the power of that intellectual property because we know they’re busy. They’re not the stereotypical NFT degen that people can sometimes make them out to be.”

Schnetzler acknowledged that closing such licensing deals can be challenging at times due to their notorious complexity: companies are naturally wary of committing to a contract with several different parties in the mix. Ultimately, however, enthusiasm for the potential of IP carries them through. The goal of the Pudgy team in orchestrating these deals is largely to create compelling and valuable physical products tied to digital experiences.

Moving Web3 brands beyond Web3

Pudgy’s strategy to diversify into IRL products is only part of the team’s vision to grow the brand. With a strong Instagram presence that promotes mental health and positivity, and mentions nothing of NFT, Pudgy Penguins are slowly and organically bringing Web3 onto the public’s radar.

“We’ve seen a lot of projects go into Web3, and they just focus on Twitter and Discord engagement farming,” Schnetzler observed. “And that worked in the bull market. But when we took over [Pudgy Penguins], we decided to build a really wide network on Instagram where we don’t even mention NFTs. We just consistently post positive affirmations. That has helped to get people interested in the brand. And if they touch our Linktree, they realize that there is much more to the community. With everything that’s going on [in the NFT and crypto space]we need to make NFTs and cryptocurrencies a bit more accessible.”

Foster trust and transparency in the community

The Pudgy team has also begun onboarding community members to help them work on new projects and developments. Schnetzler noted that 11 of the team’s coders are Pudgy incumbents who have come on board to help code several of the brand’s upcoming projects. That, along with the team’s strategy of over-communicating even small project changes to their owners, helps them foster trust and transparency at a time when even the average NFT enthusiast is feeling wary.

“The community knows we’re actually building things because they’re helping us build them,” Schnetzler said. “We understand how hard it is to trust any type of player in the NFT community right now. So how do you close that gap? You over communicate.

Collaboration with brand charities

Ten percent of Sotheby’s auction proceeds will go to Oceanites, a nonprofit organization that researches Antarctic penguin populations in support of climate science. The Pudgy team is on the lookout for potential charities as long as they align with their brand and mission. Penguin research and climate science are a clear fit, but the team’s leadership also recognizes that their strong presence in the positivity and mental health advocacy spaces means there are avenues to explore in that direction.

“As long as it identifies with our brand, we are interested in it,” Schnetzler said. “These charitable collaborations are something we are very excited about.”

The rest of Web3 has reason to be excited about Pudgy Penguins’ moves as well. The project could be a great example of how NFT brands can establish themselves as serious and sustainable entities and demonstrate their ability to break through the sometimes isolating walls of Web3, to extend a reassuring hand to NFT skeptics. And, at this stage in Web3’s evolution, there are few holy grails that will successfully assuage public concerns around blockchain technology.