Azuki's latest NFT series release has sparked outrage, and the community is bringing up "old accounts," leading to a trust crisis

Author: Mia, ChainCatcher

After making a staggering $38 million with the unoriginal Azuki Elemental, Azuki has fallen into a wave of criticism. Despite Azuki releasing a series of responses and remedies, the community remains wary of the tarnished founder "Zagabond."

Following the launch of the Elementals series, the Azuki series has plunged into a selling frenzy. The number of long-term holders selling Azuki NFTs has surged by 817%. The number of long-term holders selling Beanz NFTs has increased by 155%.

Azuki's downfall has also led the crypto community to lose faith in the already bearish NFT market. Beyond condemning Azuki, it is time to consider the future of faith in the NFT community.

Azuki's New Series Elemental Beans Release Night: Survival or Destruction?

As expected, amidst the heightened enthusiasm of community players, "Azuki Elemental" sold out at a price of 2 ETH before the public sale, with purchasing funds coming from the presale phase for Azuki and Beanz holders. The explosive presale shocked the entire NFT and crypto market, with the Azuki team raking in 20,000 ETH in just 20 minutes, worth nearly $40 million, earning over $2 million per minute. Just when the entire crypto community was marveling at how strong the Azuki community's faith was, everything turned into a completely opposite situation two hours later after the reveal.

Faced with a bunch of "small images" that were nearly identical to the original Azuki, users began to question whether this was not just a minting increase. In an instant, "die-hard fans" completely turned into "haters," with doubt, disappointment, and angry curses flooding the community. It is worth noting that this was the official "masterpiece" that had been brewing for nearly a year, a series that the entire Azuki community had been eagerly awaiting, and even the entire NFT community believed it could bring a turnaround for the PFP market. However, while there was indeed a turnaround, it was not for the players but for the project team to profit. With this set of control+v "skills," the Azuki project team successfully "sucked blood" from the community, taking 20,000 ETH, and successfully placed themselves in the line of fire.

A number of prominent figures on social media collectively criticized Azuki, bringing up not only the "reveal" issue but also other sale problems: Azuki holders only had 10 minutes to mint, leading to website traffic overload in a short time, causing some players to fail to mint, which sparked dissatisfaction among community members.

In response to the "mint window being too short," Azuki co-founder Location tba tweeted an apology, stating that the minting process for Azuki Elementals had flaws and severely underestimated the time needed for Azuki and Beanz holders during the presale's first and second phases. The duration should have been extended to over 10 minutes to allow for sufficient buffer time in case of any issues (which indeed occurred).

As the situation of Elementals having similar images surged, the Azuki team also responded. Co-founder 2PMFLOW replied to the community on social media, stating that the situation was due to a technical fault, as the event logs from the data provider became outdated due to Ethereum block reorganization, leading to incorrect processing of metadata for a few tokens, and indicated that the team was working hard to restore the correct images and metadata. According to data from Opensea, the issue with Elementals having similar images has been resolved.

However, what left community players even more puzzled was that while the project team was soothing players, they quietly transferred 20,000 ETH directly to a multi-signature address just 17 minutes after the presale ended. It is reported that this 20,000 ETH has been transferred to Coinbase Prime. Is this the level of a first-tier blue-chip? This inevitably sparked speculation in the NFT community about whether the Azuki founding team and its founder Zagabond.ETH would "rug" again.

Will the Disgraced Founder "Zagabond" Rug Again?

Azuki founder Zagabond had previously revealed his dark history last May, mentioning in an article titled "A Builder's Journey" on his mirror that he had previously participated in the issuance of three NFT projects: Crypto Phunk, Tendies, and CryptoZunks. Although these projects ended in failure, they provided him with rich project experience. Once this article was published, public attention focused on the three projects that Zagabond had abandoned.

Most NFT players scoffed at Zagabond's behavior of anonymously launching NFT projects. On-chain crypto detective KOL ZachXBT directly commented, "To translate, it means I rug-pulled three projects in the past," and he also disclosed that Zagabond profited as much as $3 million from these three failed projects.

As the article spread, public opinion continued to ferment, and panic surrounding "rug pulls" began to spread among Azuki holders, leading to the first panic sell-off of Azuki, with the floor price plummeting from 18 ETH to around 10 ETH.

It wasn't until Zagabond decided to publicly respond on Twitter Space that the farce began to calm down. However, Zagabond's performance was disappointing; when community players pressed him about the rise of Azuki and the previous increase in Crypto Phunk royalties, Zagabond did not provide a direct response. When asked how he viewed the three previous projects, he stated, "Crypto Phunk, Tendies, and CryptoZunks are experiences I 'learned' on the road to creating Azuki." The word "learned" quickly triggered serious dissatisfaction among holders of the three projects, and due to network issues, Zagabond hastily exited the speaking area, leaving the space unresolved.

Returning to the present, with the Azuki new series release blowing up, outsiders can hardly avoid thinking this might be another one of Zagabond's so-called "learning experiences." Will Zagabond choose to "return to his old profession"—to "rug" again? The project's team’s "impatience" in quickly transferring the sale funds further exacerbated community players' concerns about a rug pull. In no time, "Zagabond rug" trended on Twitter, with people speculating whether Azuki had already begun a "feast." Meanwhile, major Azuki holders mockingly commented, "I hope they enjoy the yacht; I paid the bill for them."

Previously, in the face of various criticisms from the community, Azuki had released a temporary remedy plan, announcing a new NFT series called GreenBean (绿豆) with a total of 10,000 pieces, which may be airdropped to Azuki holders.

Today, Azuki co-founder Zagabond and two other co-founders, steamboy and location tba, held an AMA event in the Azuki Discord. According to NFT community user @lasertheend's summary of today's "holders only AMA" by the Azuki team:

Regarding why Elementals closely resembles Azuki, the team stated that they wanted to continue the currently proven successful PFP but did not anticipate the dilution issue and underestimated its impact (they believed people would appreciate the subtle differences in the elemental characters like luxury watches). The team reiterated the priority of OG holders and will launch a community path to vote on updating the backgrounds of Elementals to differentiate them.

Zagabond stated that a new product would soon be launched, which would determine the distribution for Azuki holders through "points." He emphasized that OG Azuki will always be more valuable than Elementals, even if the art styles are similar, because the tokens themselves are different. Azuki is working on developing a new type of anime content, planning to start with short animations as part of their anime works.

Additionally, Zagabond stated that Green Bean is an NFT that has long been prepared, not a new PFP, but related to anime, and trading will not be supported in the short term.

Clearly, this response was lukewarm. For the first official AMA held after the incident, can the once "check your wallet" Zagabond regain the community players' confidence in the project, or will he be completely abandoned and "pulled down from the altar"? As for the current market response, the effect has been minimal, with no large-scale bottom-fishing occurring; more players are in a wait-and-see state.

The Collapse of Faith in the NFT Community: Azuki Series Falls into a Selling Frenzy

According to on-chain data analysis company Nansen, after the launch of the Elementals series, long-term holders of Azuki NFTs began to sell off massively, with 132 long-term holders selling off this week, and the number of long-term holders selling Azuki NFTs increasing by 817%. Additionally, Beanz NFTs also faced massive sell-offs, with 89 long-term holders selling the NFT, and the number of long-term holders selling NFTs increasing by 155%.

Amidst disappointment and anger, a well-known Azuki holder in China, the leader of the Hongdou Chinese community, "Princess," also chose to liquidate all Azuki holdings, stating that Azuki's poor delivery and the high price of "2 ETH" in a bear market made the Azuki community builders look like clowns. "The PFP model has reached its end; the current NFTs are just a Ponzi scheme, and no project team can break out of the Ponzi shell and complete the transformation." Furthermore, "Princess" jokingly tweeted, "If you were Zagabond, what would you do?------Directly withdraw and rug, becoming rugabond."

Afterward, "Princess" also candidly mentioned in a space that they might consider splitting the existing Hongdou community after the official compensation announcement from Azuki. Azuki's "believers" could choose to stay and create a purer Hongdou community, while another group wanting to leave and "do their own thing" while still loving the Hongdou Garden community would establish a separate DAO-like organization. This would mean that some core players who were "deeply hurt" by Azuki would choose to part ways with the project. "Princess" updated on Twitter that the Hongdou Chinese community has been handed over to dashuo.lens, and the original OG members of the Hongdou Garden will establish their own DAO organization.

Crypto KOL Xin.Sats also frankly stated in his article "Victory Belongs to Long-Termists" that he had sold all his Azuki and Beanz before the presale, expressing that he did not have much confidence in Azuki's new release, stating that "this release format is actually a re-harvesting of old fans and does not bring in new players and users."

Meanwhile, foreign community holders are also in a state of division. The well-known Azuki derivative community spiritDAO claims it will continue to stay with Azuki and "TTP (Trust the process)." However, some holders expressed opposition, believing that Azuki's new release is clearly a "scythe" operation, and if the project team is allowed to act recklessly, the entire community will eventually perish.

In addition, many NFT community players angrily criticized Azuki while also expressing concerns about the already deeply bearish NFT market.

"Azuki not only siphons off the already meager liquidity in the market but the subsequent trust crisis in the NFT community may lead the entire market into a winter."

Currently, we cannot determine whether Azuki's subsequent remedial measures will help the community regain confidence, but it is undeniable that this is indeed an emotional stress test for Azuki community members and all players in the NFT ecosystem. If the community can successfully pass this test with strong consensus, there may still be a glimmer of hope for the NFT track; however, the NFT consensus community, repeatedly deceived and exploited by the project team, is now in tatters, and whether it can withstand this blow (which could be understood as a scythe) is uncertain. Perhaps this battle will become Azuki's "Waterloo."

Azuki Whales Step In to Save the Day, Major Influencers Start Buying the Dip

After the "blow-up" of the Azuki new series release, Azuki whale, NDV fund founder, and Manes LAB co-founder Christian stated on social media, "It is unwise to destroy a $1 billion project (and the most loyal community on earth) for a profit of $38 million. I am willing to offer $40 million to buy the entire company." Of course, this may just be a joke, but it also reflects the anger and helplessness of community players. As the saying goes in the NFT community, "What’s the problem if everyone buys their favorite artwork?" For projects they believe in, aside from support, can they "short-sell"?

According to on-chain data, Christian has spent 820 ETH to mint a total of 410 Azuki Elementals Beans.

Perhaps influenced by the community's faith, many major influencers began to invest money to buy the dip. Crypto KOL "Professor Always Profiting in the Crypto World" Wesley Fei bought multiple Azuki Elementals, BEANZ, and Azuki series NFTs yesterday despite the market downturn; while "Brother Maji" Huang Licheng also bought 394 Elemental Beans at an average price of 1.72 ETH yesterday; 18 Azuki at an average price of 8.7 ETH; 14 Elementals at an average price of 4.38 ETH; and 22 BEANZ at an average price of 0.66 ETH, later selling 59 Azuki Elemental Beans for a total of 113.62 ETH through swing trading.

According to OpenSea data, the largest holder of Azuki Elementals is beanwhale.ETH, holding 580 Azuki Elementals NFTs, accounting for 6.76% of the current total circulating supply of Azuki Elementals. As of the time of writing, beanwhale.ETH has revealed all Elementals and has not engaged in secondary trading.

In other recent news, Christian tweeted that after negotiating with Azuki's founder about the acquisition, he believes the $40 million offer is too low. "I just spoke with Zagabond (the founder of Azuki), and I think the $40 million offer is too cheap. Now I am waiting for the community meeting that will start later."

Zagabond has responded to him on Twitter, "I am happy to discuss the CN community and hear your feedback, looking forward to tonight's show. I know that part of your tweet about the offer is just a joke; I just want to clarify to the readers."

It's Time to Establish a Community Trust Mechanism

With the emergence of trading platforms like blur, more and more NFT projects are shifting from being driven by "community" to "financialization." NFT traders have shifted their focus from community and roadmaps to trading activities themselves. In this shift, the faith in NFT communities has become precarious, and the trust issues between NFT communities and project teams have intensified. Azuki's "betrayal" of the NFT community has once again brought this issue to the forefront.

In this regard, we interviewed Azuki holder and NFT community trust mechanism researcher @dr_uzuz, who stated: "In fact, faith in products with strong financial attributes cannot be considered true faith, as every community user trusts their own awareness and judgment the most. Faith is merely a euphemism; trust is a better term. Equal, fair, and free, or decentralized relationships are very rare. The transformation of the production relationship between the launcher and the community is due to the shift in technological forms and industry consciousness, but the essence of business remains unchanged: one sells, and one buys. Establishing trust is the most crucial part of commercial activities. In fact, before trust is established, both buyers and sellers are in a state of non-equilibrium game dissipation. After trust is established, the liquidity and stability of the commercial system can reach a balanced state."

As shown in the figure, the current mainstream voting mechanisms are 1d1v (one dollar one vote), 1p1v (one person one vote), and QV (quadratic voting). Both 1d1v and 1p1v will encounter unfair turning points during the evolution of the trust system, while quadratic voting can solve this problem. Vitalik is currently actively introducing QV into the Ethereum Foundation to ensure fair decision-making.

So, applying the trust mechanism to Azuki, if the project team could create a fair voting decision-making mechanism with the community before releasing new projects and increasing supply, perhaps the release of the new series would develop in a positive direction. Establishing a trust mechanism is not an extremely difficult task; it is just that the establishment of trust mechanisms in most Web3 contexts still largely relies on verbal and written commitments, with only a small portion introducing mechanisms for maximizing their own interests, and very few genuinely incorporating fair and open voting mechanisms to maintain the trust relationship between project teams and the community.

As the NFT winter approaches, perhaps only those community members who truly believe in the team can weather the storm together, recovering chips during the market reshuffle to usher in another NFT spring.