Azuki, an art NFT creator – famous for creating NFS art based on characters that represent the elements of life; water, fire, earth, and lightning – released the ‘Elementals’ collection on Tuesday, selling their NFT art for over $38 million in just 15 minutes.
The artist first showcased hints regarding the new collection in a holders-only event held in Las Vegas, under the name “Follow the Rabbit.” The event included an airdrop of a part of the 20,000 NFT collection, open to attendees.
The sale of the NFT collection started on Tuesday, June 27, at 9 am, but holders of previous Azuki NFTs were given a small window to shop before everyone else got access at 9:20 am. To participate in the presale, Azuki NFT holders needed to deposit 2 ETH.
The collection never made it to the public sale phase as the whole collection was sold out within 15 minutes.
Not long after, fans and NFT holders noticed a serious problem with the new collection, leading its value to drop by over 40% in no time.
Considering art NFTs provide no value besides bragging rights and a way to store funds digitally, is it time to pronounce the market segment dead?
Let’s rewind for a second. Azuki, created by Chiru Labs, a group of Los Angeles-based artists, is a developer of Non-Fungible Token art. The company released its first Azuki collection back in January 2022. The company priced each digital piece for 1 ETH each and managed to sell out.
That means Azuki first made 8,700 ETH (priced at $3,400 each at the time). Quick maths show us that the company made north of $29 million on the first day of its sale.
As far as NFT markets go, the rule is that success brings in more success. That means if the company managed to sell out its whole collection, then it becomes more desirable for future investors.
The same collection ended up going through a second round of sales, bringing in a whopping $300 million.
The company used its success to announce its plans for the future, including immersive 3D experiences, merch, exhibits, and a native currency called $BEAN. These services and projects would only be offered to The Garden, the name the company gave its community, i.e. the people who owned Azuki NFTs.
Fast forward to this week’s Tuesday. The company released its ‘Elementals’ collection, and sold out the whole thing within minutes, making almost $40 million in 15 minutes.
After all the hype died down, users and fans started to notice the uncanny similarities between the Elementals collection and the original Azuki collection.
And, that’s when the problems started. Within hours, the value of Azuki Elemental NFTS dropped from 4 ETH to 1.4 ETH, then stabilized to around 1.5 ETH per NFT. Very understandably, holders of both Elementals NFTs and original Azuki NFTs are furious at the huge loss they’re experiencing due to an obvious artistic error.
To understand the volatility that comes with NFTs, one has to look no further than the time Logan Paul, an internet celebrity, invested over $600,000 in an NFT, only for it to be valued shortly after for just $10.
The issue with NFTs is that they provide no utilitarian benefits. Sure, in some cases, such as with Azuki, they may provide access to exclusive communities, or even a way to connect with certain fan-favorite celebrities.
However, NFTs are not designed for commerce or any function of trading beyond the sale of the asset itself. Many companies, such as Azuki will use NFTs to fund projects that go beyond, such as cryptocurrencies or tools to be used on certain blockchains, such as Ethereum.
Moreover, NFTs are highly susceptible to volatility due to popularity and news in the industry, even more so than crypto tokens. For that very reason, NFTs have been the punchline of mockery brought forward by those who haven’t delved into the market. Cryptocurrencies have received their fair share of scrutiny over time. However, unlike NFTs, cryptocurrencies are getting adopted by regulating bodies, rendering them as viable payment options; a future no one can see for NFTs.