PFP Status & Future: Finding the True Narrative of PFP

Author: Shrimpwen.eth

Recently, due to the innovation of SudoAMM and the large-scale liquidation of BendDAO, the NFT market has gained a bit of vitality. Taking this opportunity, I would like to discuss the true narrative of PFPs, which serves as the final article in my PFP trilogy.

First, it is important to emphasize that NFTs are a large category, and this article will only discuss the current situation and future of PFPs, attempting to find the true narrative of PFPs.

This article is divided into the following 5 parts:

1. Current Situation & Reasons for the PFP Bear Market
2. PFP as a New Paradigm of IP
3. The Advancement of Web3
4. PFP's Goal - To Become a Cultural Symbol
5. IP Revenue Should Replace Copyright Fees

1. Current Situation & Reasons for the PFP Bear Market

To understand the current state of the NFT market, let's look at a statistical chart from Opensea. Although there are reasons such as the rise of Looksrare and X2Y2, and the decline in ETH prices, both the number of transactions and the transaction value are far below peak levels.

From the perspective of "blue chips," the floor price of BAYC has dropped by more than 50%, while the floor prices of projects like Azuki and CloneX have seen declines of 70%-80%.

Opensea Data

In my view, there are two main reasons for this situation:

1. Typical characteristics of a bear market: the profit-making effect declines, and original holders tend to sell. Without new blood joining and without capital inflow, these two aspects lead to continuous outflow of funds from the NFT market, resulting in a constant decrease in blue chip floor prices, while other PFP communities have almost completely lost liquidity.

2. The failure of PFP narratives: The path opened by BAYC primarily empowers through airdrops for outsiders. Whether it is BAKC or the potion mutation into MAYC, or the Otherside land airdrop, these are all actions of continuously issuing new assets to empower the main asset. This narrative cannot be sustained; in a bull market, there are buyers, but in a bear market lacking funds, where does the value of new assets come from?

On the other hand, narratives such as cultural genes, spiritual resonance, and identity recognition have not continued to develop, leading to the overall failure of the PFP narrative.

In summary, the current pain point of the PFP market is: to develop its true narrative and attract new users.

My View

2. PFP as a New Paradigm of IP

Let’s return to the essence and see what PFP really is. PFP: Profile Picture, the name itself indicates that PFP reflects the value of avatars in social networks. People can pay for their favorite PFPs, thus extending narratives of identity recognition and new social networks.

In my previous article, I have discussed in detail that PFP is a new paradigm of IP.

IP is the true narrative of PFPs; once we realize this, we understand how the future of PFPs should unfold. The power of IP far exceeds people's imagination and is the best way to penetrate people's minds.

IP has always run through human history; gods and Buddhas are all IP, the embodiment of cultural symbols.

First, let’s clarify the following two facts:

1. In different eras, IP has different carriers and forms. In the earliest times, people passed down stories orally, then wrote them on paper, and later through movies, television, and the internet. Disney built its IP empire through television channels. So, what will be the carrier of IP in the next era?

2. Different eras require cultural symbols that align with the trends of the times. From the Hundred Schools of Thought and the Renaissance to more recent symbols like The Beatles and rock music. Prometheus, who stole fire, Adam and Eve, who ate the fruit of wisdom, Nezha, who cut flesh to save his mother, and the Monkey King, who fought against heaven, are all cultural symbols of different eras.

Once IP becomes a cultural symbol, it will possess strong cohesion and vitality, transcending time.

3. The Advancement of Web3

At this point, we must ask: Why NFTs & Web3? Why do I believe that Web3 will give rise to globally sweeping IPs?

The advancement of Web3 lies in the fact that all actions have value; Web3 liberates human creativity. Here, I will quote from my article "PFP: A New Paradigm of IP" and will not elaborate further.

"The difference between Metaverse IP and traditional IP lies in the transfer of value. In the Web2.0 era, if I liked Pikachu, I could only express that through playing Pokémon games, watching animations, or buying merchandise. In other words, I could only express my love through consumption; all my creations were truly powered by love. Even if my fan creations played a significant role in spreading the IP, I still received no benefits. All the profits went to the IP owners, which is the company.

Metaverse IP is different; if BAYC receives more attention, their value will naturally reflect in the price of the NFTs. The holders will then receive the benefits of the expanded IP, with each PFP's floor price rising as a reflection of the overall IP value increase.

Isn't this the meaning of Web3.0? Web3.0 liberates human creativity. Based on this, all PFP holders have great motivation to create for the IP. Such actions are no longer just powered by love; the value we create belongs to us."

Whoever can create the best community and unleash the creativity of the community is most likely to seize the dividends of Web3. The IP of PFPs will not be solely constructed by the project parties; community members have already begun to participate in building in their own ways.

Below is the IP map of the BAYC community organized by @Harry_forj, showing that BAYC's IP authorization has already blossomed in multiple areas. BAYC's IP extends from Web3 to the Web2 market, attempting to ape everyone.

4. PFP's Goal: To Become a Cultural Symbol

Next, let’s think from the perspective of narrative.

Currently, PFPs, as Will said, lack stories and soul. In my view, the soul is embedded in the story; God needs the Bible to spread the gospel, and Siddhartha Gautama fed the eagle with his flesh to convey the Buddhist teachings.

Can PFPs potentially become the cultural symbols of this era?

First, they need to tell good stories; content construction is an indispensable part of IP building. For example, BAYC chose to establish a metaverse to convey the spirit: monkeys swimming in the Metaverse.

Perhaps many people think that a PFP being linked to a symbol of the era is too much? This image can represent my thoughts.

In my view, NFTs will eventually penetrate all our lives, and now NFTs have reached the stage of Brands; the next step is Culture - the carrier of the spirit of the times is likely to be NFTs.

Starting from telling good stories, we build the soul of PFPs. Using IP to reach a larger audience, letting them hear the story of PFPs, and making them appreciate the spirit of PFPs. This is the only way to break the negative cycle of price decline and player loss.

I do not hope for PFPs to become myths that last for thousands of years, but we look forward to PFPs emerging projects that can stand alongside the top IPs of Web2. PFPs are a combination of culture and finance, maximizing the cultural attributes is a necessary path to solve the pain points of PFPs.

5. IP Revenue Should Replace Copyright Fees

The rise of Sudo has raised concerns about whether 0% copyright fees will toll the death knell for PFPs, causing project parties to lose their largest source of income. However, the characteristics of NFTs determine that platforms with 0% copyright fees will eventually emerge; there will always be some people who do not wish to share their profits.

We should learn from the growth path of the largest IP in Web2: Pokémon. Let the licensing fees of IP and brand physical economy gradually replace copyright fees as the primary income source for PFP projects. This is the only way to achieve sustainable development and allow every PFP holder to profit, providing the community with great motivation to unleash its creativity and form a positive cycle.

In my previous article, I discussed why CC0 is not suitable for PFPs, as it would lack IP licensing fees.

At the same time, we must not forget that the development of PFPs has only been around for about a year; BAYC was minted in May last year, while Azuki was born just 7 months ago. Their development speed has exceeded our imagination, but more time is needed to solidify the foundation.

If you believe that Web3 will occupy people's lives and that the number of users will grow exponentially, then do not focus solely on the short-term fluctuations in prices.

Look further ahead, and find the IP that is most likely to sweep the globe from PFPs.