The Fascinating Emerging World of NFT Avatars OnlineAug 23, 2021
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HOST: Hey everybody, welcome back to the Unstoppable Podcast. I’m your host Diana Chen and I’m joined today by my cohost Matthew Gould cofounder and CEO of Unstoppable Domains and Jimmy Chang 0xJim on Twitter as you all know him, Product Manager at Unstoppable Domains, and today we are here to talk all about this NFT avatar profile pic craze that I’m sure all of you are seeing all over Twitter with Pudgy Penguins, Cool Cats and then of course the OG CryptoPunks. We’re here to talk about why these projects have blown up and just breaking it down and trying to get a good understanding of what's going on with all these projects.
Thank you so much Matt and Jimmy for joining me today to have this discussion. I think it's going to be very colorful and I can’t wait to hear all of your opinions on these projects. Thank you for being here.
JIMMY CHANG: Thanks for having us.
MATTHEW GOULD: Happy to be here. Definitely have plenty of opinions. We’ll see how many facts we can get out of this.
HOST: Very cool. If any of you have checked out OpenSea recently you’ve seen the top projects are all of these NFT avatars that people are setting as their profile pics. We have of course CryptoPunks at the top, Bored Ape, and we’ve got some new ones too that have risen to the top very quickly like Pudgy Penguins, FLUF World that just came out.
To kick us off, I’m curious to hear both of you just your general thoughts on why people are spending so much money on these, what people might think are just jpegs.
JIMMY CHANG: Sure, I can kick it off. It's a pretty interesting phenomenon and I think pretty distinct from the NFT bubble that we saw earlier this year that was more around arts and to a certain extent collectables and this is less of a collectable and more of just like a, for lack of a better word, a profile picture or identity product. It's these generative art pieces that have basically this similar base and then people change different traits and there's different rarities of traits.
I equate it to two different factors. One is essentially like taking what was popular early this year in crypto which is like a community building around certain projects. You would be into sushi or you’d be into Yearn or Uniswap essentially slapping some form of visual aid and identity on top of it, so people could feel a lot of affinity for some sort of ingroup that they belong to by having this avatar, this profile picture on Twitter on Discord, what have you. That’s pretty interesting. Like a community building and identity perspective.
The second piece is we’re seeing a lot of retail investors participating in this as well. You can get in pretty cheap in some of these projects, the mints are anywhere from 0.02 ETH to 0.08 ETH so call it like $60 to $150 and some of these are quick 10x, 20x sometimes even 100x based on the rarity of your trading so that’s getting a lot of people interested in terms of just the speculation behind it.
HOST: For sure. Matt any thoughts.
MATTHEW GOULD: Yes, I’ll tell my personal journey here. I’ve had friends working in the art NFT space for three plus years and I remember thinking at the very beginning it was a pretty weird collection of people, there are some people like myself and Brayden, we were trying to work on these utility aspects of NFT. There are some people in DeFi as well. We were working on domain names or people were working on ways of backing nonfungible assets and DeFi-like applications but then you had all these people coming over from the art world and I will admit, it was a mystery to me at the very beginning because I was like I don’t get it for digital art.
I’ve watched this space evolve over the last three years and then I have had a few NFTs in the past that were art-based NFTs, but over the past couple of months I’ve gotten much more interested in what are known as these PFP NFTs which stands for profile picture NFTs and you'll see these everywhere on Twitter. I have friends who have CryptoPunks and Bored Apes. I've seen these communities and each one I learn a little bit more. When CryptoPunks came out I was like okay, I get it, it's like high-end visual artwork, digital artwork with a blockchain, I think that makes sense and then here's a collection where people could join. Then I saw the Bored Ape Club come out also and there's this strong community around what they were building and that caught my attention because it was more than just a regular piece of art. If you buy a piece of art, you hang it in your home, nobody else sees it. There's not a lot of interaction around that. The cool thing is having it yourself in our house. Whereas now with seeing these communities form where they have 10,000 different pieces, everyone owns one, and then they all want to build on it and make it better by adding more functionality to it. That caught my attention.
Then I took the plunge over the last maybe month here and started playing around with some of these profile picture projects and just trying to understand how people are identifying with these. I think what I realized and it took me a long time to get here is that people are looking for a representation of themselves in the digital world and they're looking for all sorts of ways to do this. They're doing this with profile pictures on their Twitter where they buy a piece of art on one of these places like E-NFTs, - - like OpenSea and they use that to represent as their picture. They're doing it with domain names where they get one that represents something they believe in like just maybe a user name or something, they’re using that for people to send crypto currency for.
I think this is going to continue to happen because everywhere you have a digital footprint you want to have some sort of representation that feels like it's you. That’s where I’ve come with all of these different pictures and I think it's still very early.
HOST: Yes, and you just brought up an interesting point too with a lot of people wanting to set these as their profile pic on Twitter or on Discord or on other channels. This point about digital identity it's something I’ve been thinking about is I’m somebody who’s very attached to my identity like to my name, to who I’ve been for my whole life, but even I have found myself recently changing my profile pic on Twitter from my face to an NFT penguin that I have and I’ve never identified as a penguin in my life before.
If we were to try to dissect this psychologically, what is it about these NFT avatars that is making people want to identify as that instead of as their face, who they’ve been their whole lives. Any thoughts on that?
MATTHEW GOULD: I have a thought for why we haven't seen it quite this way before because you’ve always been able to get a jpeg and put it on your Twitter, but only since these NFT for profile pictures have become popular in the last year or two, and I think it's because you have the ability to own it and it's scarce. That didn’t happen before. There was no way to create ownership and long-term investment inside of that image. If you think about it, it's just another part of your brand.
We’re all remote working now at home so everyone just wears their pajamas, but we used to go out and you would put on your Gucci shoes or your cowboy hat and you wanted to look a certain way when you went out, and you invested a lot in that. Now everyone when they go out, they’re just going on Twitter and giving a hot take and they want to be able to invest in how they look when they're going out and giving a hot take on Twitter. The idea that you can own it and you can represent that I wear Nike or I wear Tommy Hilfiger and you can probably date me based on this, now it's like I have a CryptoPunk or I have a Bored Ape Yacht Club. I think it's interesting.
The other thing they did is they made limited editions, so a lot of these will have a hard cap number that there can be so there can only be so many people inside these communities so that also makes it a little bit exclusive. I feel that ownership has made it so people are interested in investing in these longer term as maybe a part of their image, and I think that we need a lot more supply. You're seeing a lot more of these being created right now because people have different personalities, they have different things they want to emphasize about themselves so there are a lot of new products trying to come out and meet all those different niche use cases. It's like fast fashion almost. It's pretty interesting. I’m not exactly sure how it's going to happen but I’m finally tuned in that I understand why it's happening.
HOST: Something else I wonder with that too is, this is something I’m experimenting with, is I just changed my Twitter profile pic to a penguin and I’m wondering how that’s going to affect my interactions with people on Twitter. A lot of times the way that I get people to come on the podcast is I DM them on Twitter and I tell them who I am, they can see who I am and I say hey, I’d love to chat with you.
Now when I DM somebody on Twitter, what they're seeing is a cute little penguin is sending them a message to come on a podcast. I wonder if that makes me less credible since they're not seeing my face and they're seeing a penguin instead, or if that just changes the dynamic of how people interact with me. Or if I post a serious Tweet or a deep thought that I have and it's coming from this cute little penguin, I wonder if that message gets received differently because of the profile pic that that Tweet is being posted from.
I’m curious to hear your thoughts Jimmy because I know you have been an avatar on Twitter for a while and you’ve already gone through this experiment. I’m curious to hear what your experience has been.
JIMMY CHANG: Yes, definitely. Before we answer that, I do want to echo Matt’s point that this combination of us spending way more time in a digital realm and then also the ability for verifiable ownership on chain through NFTs has definitely led to a ballooning of people wanting to identify with some of these projects. I think we’re in this fever pitch that people resonate a lot with some of these images.
Speaking from my experience because I have been a nonhuman avatar for a while. At first, I was my pretty normal LinkedIn headshot on Twitter and Discord and then I changed into an anime avatar. Now I've been using several NFT profile pictures. To a certain extent, it's definitely the phenomenon that Matt just described. It's like when you're spending that much time in a digital space with your peers you want to have some sort of signaling whether you belong to some sort of group or whether it says something about your character.
If you have a cute profile picture, it says how you view yourself or how you want to view yourself in this digital space. If you have a fierce or badass profile picture that also signals something. It also signals the project that you choose and obviously right now if you have a CryptoPunk that says that you are either A) very successful; or B) you have been an early adopter of crypto and you belong in this very exclusive club of people. I would say Bored Apes is getting to that level as well, as well as people are putting their art blocks on their backgrounds, which is a pretty prominent generative art collection so they’ve put their Fidenza in the background of their CryptoPunk, the CryptoPunk is $150,000, a Fidenza is $80,000 and that says something about a person to a certain extent.
For me I think it comes down to twofold for why I choose to be not myself on Twitter. One is it is definitely community signaling, so for me to be a penguin or for me to be a Cool Cat that says something about who I like to affiliate with on a digital space. I think the wholesome nature and the collaborative nature of these communities is definitely something that I want to signal.
To your point, Diana, when you say you're a penguin and you're DMing people and it's less credible. I would almost argue the counter and I think it would be more credible because you're signaling to people that you are a crypto native, that you belong in this community that is full of crypto native folks, and that’s probably more powerful than even having your IRL picture because that probably signals that you come from a Web 2 background, in my opinion. That’s the first piece.
The second piece is definitely some level of pseudonymity and I don’t want people to assume any sort of preconceived notions about myself. I want to start from a blank slate outside of, of course, the signaling of whatever NFT community you're a part of. I don’t want people to assume that I’m a certain age, that I’m Chinese American or anything like that. I just want to be Jimmy. I just want to be like a blank slate behind that. Even as an experiment that’s been thoughtful because I think people can put that aside and see you for your content or see you for the character that you want to project into this digital space.
HOST: A hundred percent. I love that and I think that goes to the whole ethos of decentralization and replacing the middle man with these smart contracts is eliminating a lot of human biases that we all have, all of us have innately so yes, I think that’s a good point.
Another thing I wanted to get your take on, both of you, is this element of community that has come up so many times already in this conversation. I think when most people think about community in the traditional world, they think of people form communities around either shared interest, shared background, you see a lot of ethnic groups forming communities together, you see people of similar interests, hiking groups, foodie groups, all of these different things and when you're talking about community around an NFT avatar project that just seems a little more random and less logical I guess, or less like what we’re used people forming community around. How do you think of this community that’s formed around just a shared interest in this NFT avatar project and the strength of that or the potential strength of that community?
MATTHEW GOULD: I have a couple thoughts here. This is the part that is interesting and new about this type of, I guess, maybe brand affinity is another way to call it. I was thinking about this and I was thinking to myself it makes sense to me that now that people are spending more time online that they're going to want to be associated with digital brands just like they are in the real-world, like I used to want to own Nike shoes or wear a Michael Jordan jersey or something like that and I can imagine a lot of these NFT profile picture projects I could easily see brands evolving here to create this type of art for people to be a part of.
The thing that’s different here is that you can talk to the other people who own this art and they have these Discord channels and these communities, so it feels like the next generation of brands I guess is what I’m trying to say. I’m saying that because I’m coming from an older style background but I was thinking through will brands emerge here and I then they could. We’re seeing these projects being made by just a couple of developers get together and then they produce together, and they're mostly for people in the crypto space but I think there's a powerful opportunity here for people to start building brands around ideas where communities can interact on these digital spaces to display their affinity for certain things like breast cancer. Everyone knows is associated with the color pink or at least here in the U.S. that’s very common. We can see a lot more things like that start to happen in this NFT space.
That also made me think of another thing and I mentioned a little earlier, it feels like fast fashion. You're asking am I going to be this profile pic of this animal avatar for forever. I had a profile picture before this of myself and I had it made like a cartoon because for privacy reasons, they're scanning your photos everywhere on the internet. I liked having an avatar instead to represent me online for just a lot of reasons. I thought it felt better to me so I’ve recently updated to one of these NFT PFP projects and I’m testing it out but I could see myself rotating and trying another one next month or I could see myself having a digital image that I associate myself with for Christmas or maybe for breast cancer awareness month or for some other thing that I’m participating in. My head is getting wrapped around I think there's a lot more to be done in this space. I think it's going to be much bigger and there's going go be a lot more supply of these coming on. Not everyone is going to have a CryptoPunk for a hundred thousand dollars. It's impossible. I do think we’re going to get mass market, fast digital fashion for five bucks where you could buy something and display your affinity for that brand or that cause for a time period in your digital spaces.
HOST: Yes, for sure. As with anything I think there's two sides to the coin. When I think about this new way of forming community I definitely think the positive is that instead of forming community around the way that we traditionally did around shared interests, shared backgrounds, shared perspectives, we now have access to people from all over the world who we may not share the same beliefs, have the same political views, the same backgrounds but now through this shared interest in an NFT avatar project we can maybe expose ourselves to people that we otherwise wouldn’t have come across in the traditional world and that can help us open our minds to different perspectives, to different backgrounds, different cultures, different learnings, and I think part is really exciting and awesome.
On the flipside it's like these NFT projects that are blowing up right now like CryptoPunks is $150,000. Obviously, only a very limited number of people can get into the market for a CryptoPunk if you didn’t get in like the super-early days. In that sense it's like are you almost signaling that you have to be wealthy to be part of this club? Are you shutting certain communities who just can’t afford to pay, I won’t even day a 150 thousand, even like a hundred bucks for an NFT is not something that everybody can do?
Matt, you’ve got some thoughts.
MATTHEW GOULD: I do. New technology a lot of the times will happen for the high-end consumers first. Car phones were a thousand dollars back in 1990, whatever and then now to personal computers. Sometimes they just start at the high end and as the technology is adopted the supply comes down then everybody’s got it and everyone’s got a cell phone in their pocket now. I think that’s maybe temporary. What I’m saying is, and we’ll see if this plays out in the market or not, but I think you're going to see a lot more of these projects. I’m in here just to learn. I’m not an avid NFT collector or anything like that. I’m just here playing around with these projects to see how they work. I think that what's interesting to me is how it's going to change people’s behavior online because I think that if you have the ability to own digital goods and images of yourself or whatever, you can invest in presenting some sort of image of yourself and that’s worth spending some time and some thought in over time, just like people think about how they dress up or something like that. That’s how I’m viewing it, so maybe I’m less on the investing and speculative side, although I know there's a lot of that going on and I’m more thinking about longer term, how people are going to use this type of artwork digitally to express themselves or maybe give a different opinion.
I don’t know about you, but when I was growing up and I went to public school, I like the fact that they let me wear whatever I wanted to school. We didn’t have uniforms because that gave a way to feel out and express myself and I think it's the same thing online. These platforms need to open up and allow people more ways to express themselves and I think this is part of that project where people can own it.
JIMMY CHANG: Yes. On the point of accessibility, for some of these digital art projects I do think one potential solution is the normalization of fractionalizing some of these pieces. There have been projects that are trying to, and honestly in my opinion, successfully normalizing the ability to share these NFTs. They in and of themselves formed these micro-communities and so I’m thinking about the Zombie Punk bid on fractional art which is a project thinking about fractionalization and a Zombie Punk is very, very expensive now. I think the winning bid was over a million dollars and there were several hundred people that were participating in this bid essentially collaborating and pooling their resources together and getting some representative portion of the Zombie Punk and once they won the bid everyone on Twitter changed their profile picture to either the actual Zombie Punk or like a derivative of the Zombie Punk where it had a party hat and one of those blowing popper things out of it's mouth to signal that they're part of the bid. That, in and of itself is its own subcommunity, has its own community on Discord and that’s pretty interesting to see subcommunities forming around these premium art pieces and it doesn’t, I think, diminish the value of it either. If anything, it augments it so I think that’s one potential solution as well as just the proliferation of other projects.
HOST: Yes, a hundred percent. I think those are all super-good points. Another question that I have for you is we have seen so many of these NFT projects come up and some of them have been more successful than others. I’m curious to hear your take on what makes one of these NFT avatar projects more successful or less successful?
Jimmy, do you want to start this one?
JIMMY CHANG: Sure. Honestly, I've thought about this a lot in terms of what makes a project successful. At first, I thought it was arts, then I thought it was like roadmap in terms of some of these projects have broad and aspirational goals to be a video game or have a metaverse space or something. I think it just comes down to a combination of mimetic desire and community building.
Mimetic desire is basically like things are valuable because other people value it. That goes down to us from an evolutionary perspective needing to belong to some sort of ingroup. When you see people that you respect and that you want to mirror yourself after, adopt these, it becomes a self-fulfilling prophecy. A great example is this one project called 24 pixels or 24px which is a derivative of the Cool Cats. It has no dev, the dev made it and just disappeared. It has no community team; it has no roadmap. The art is somewhat of like a derivative of CryptoPunks slapped onto Cool Cats, but it's been absolutely exploding because a community formed around the fact that there's no intrinsic utility in this project which is antithetical to what you think is a successful NFT project. That’s because a lot of people just started adopting it organically and it just spread like wildfire. I think that’s one piece.
The second piece I think definitely comes down to execution of community building. I think community building can be organic, but it needs to have a framework in order to grow rapidly. There's been projects of course like Bored Ape Yacht Club is the golden example of this, of how to deliberately build and mobilize community members who literally want to add value to this community for free. Any combination of those shows what is a successful project versus one that is just purely arts or maybe even lacking some other dimensions.
HOST: Would you argue that the artwork itself is the least important factor in how successful a project becomes and it's more about the execution on community building, maybe having celebrities or influencers Tweet about it. I’m thinking Gary B Tweeting about World of Women and seeing that just blow up and maybe the storytelling behind it like some of those other factors you would place higher than what the avatar looks like itself.
JIMMY CHANG: It's pretty hot take and I think it would definitely stir up a bit of controversy, but I do think that art is not even in the top five considerations. I think for people that are interested in this project, they have to at least not hate the art and there are definitely projects where tastes vary. Some of them are much more paper realistic even like 3D renderings, some of them are incredibly simplistic, like 24-pixel format of the CryptoPunks.
You have to like it to a certain extent but again, things around community building around ingroup signaling are important. I want to pushback that it's a one size fits all. It's not like if you get influencers to adopt this and talk about it a lot, is it going to pay off. There needs to be a layer of authenticity behind it. That’s why I think World of Women did well because they have a good story and they have a lot of authenticity behind it. Yes, Gary B and Digital Art Chick and other NFT influencers were helpful in the success of the project but that wouldn’t have happened without those foundational pieces.
HOST: Matt, any thoughts on that?
MATTHEW GOULD: Yes. I’d love to maybe step back here for the skeptics because I would put myself definitely in that category and I’ve been watching this space for a couple of years. How skeptical do you have to be to sit on the sidelines for three years. What made this make sense for me was the idea of digital fashion and now that you can own things and you can put them on in a sense by displaying that as your profile picture across these digital platforms and I think it's a huge new market. I think the richest guy on the planet right now is the guy who owns a fashion company, the French gentleman, LVM--, I don’t even know, I’m not great at fashion.
HOST: Louis Vuitton?
MATTHEW GOULD: Yes, Louis Vuitton, there you go. I think he’s worth $200 billion, something ridiculous. Fashion is gigantic. It's a huge industry and this is digital fashion and it's like we were saying earlier why all of a sudden now is this a thing. You can finally own things digitally that you couldn’t and so that helped me get my mind around it. That’s why people are paying a lot of money for this because it's digital fashion and there's not enough supply here. I think there's a lot of opportunity for people to come in and build out digital fashion. We already know this works but I think Second Life all the way back in 2000 or 2004, whenever Second Life just started out, people were selling skins in Second Life and making money. People are selling skins now on Fortnight or I guess these other places. These companies are making billions of dollars selling this type of stuff.
What's happening in the crypto space with NFTs is that consumers can buy these digital fashion products, this is essentially what I see them as, and then they can own them and then they can use them across a bunch of different platforms. I can display my NFT that I bought at OpenSea I can show that on my Twitter, I can show that on my Discord. I don’t know if I can do that, but I can post it on my other social profiles. That's very interesting and I got into this obviously, I think about domain names all the time because that’s what I’m working with all the time and we see that happening with domain names too. We see people put their domain names different places on their social profiles. It's a little bit different because it's more like a different type of signaling. I want an easy way to look it up or it's a little bit different but there's a lot more options for creativity on the visual display side of things with these profile pictures. That’s why this space is blowing up.
For the skeptics out there, I would just say that if you can agree that fashion is a big industry and you can, you can just look at the evidence and then you can agree that we’ve had this change that’s happened in the digital economy right now where we have the ability for people buy and own these NFT fashion pieces, then to me, that’s what explaining this explosive market.
I'm dating myself here, but I think there's going to be brands in this space and yes, there's going to be the Louis Vuitton’s of NFTs out there and I think those brands are being developed right now and you're seeing that happening. Then you're also going to have your Nikes, your midlevel tier, and you're going to have your store-bought brands, but I think everyone is going to be participating because fashion is something that humans have been doing forever. Now we’re just doing it in the digital realm.
JIMMY CHANG: I want to push back on your last point on brands. Well, there are two points to it. One is I think there's going to be a paradigm shift of there are brands that are being built right now that will be powerhouses in a few years. Bored Ape Yacht Club has been very deliberate about how it wants to build its brand in collaboration with fashion and streetwear brands. That’s definitely something to keep mind of, to be cognizant of going forward. There are -- brands right now that are young, hacky upstarts, but they will be powerhouses, that’s my belief, in the next few years. That's one piece.
The second piece of established brands entering in this space and finding success, I think this is where we’re going to see a lot of deviation based on the execution of what these teams want to do. I think a good EG is looking at two recent entrants in the NFT space in terms of established brand perspective. One is Louis Vuitton and the second one is Coca-Cola. Louis Vuitton had a pretty interesting entrance into the NFT space. One is they built this digital game that is pretty beautiful. It's a little buggy, but it's beautiful. You can tell there was some love and some intention put into this in order to win NFTs that are in collaboration with Beeple. Beeple is a pretty established name in the digital art/NFT space especially given his $96 million sale earlier this year. People are fairly excited about that.
You contrast that to Coca-Cola or there's a slew of other established brands launching NFT projects and they're falling flat, at least within the communities that I belong in like the more crypto native, NFT native communities because they realize that there's no authenticity behind it. It's like oh, like a coke NFT. Fine. Or even like the Twitter NFT. It's did well financially but there’s no community behind it. It's like okay here, have your money and then leave but we’re trying to build something authentic and community-driven here. That’s my observation at least.
MATTHEW GOULD: I’ll say that I think that you're definitely going to be different and I think that maybe one of the things that going to be indexed differently on is community participation because with digital brands it's a lot easier to get customer feedback. It's a lot easier to get feedback from users maybe if you can all them user feedback. If you’ve bought something before, they're like hey, complete this user survey. I’ve filled out maybe two of those my entire life; whereas, if you buy digital goods I can immediately jump into the Discord and then say exactly what I think about that digital project within five minutes of buying it.
I would pushback again. Maybe brand it not a good word, but I still think these things are brands and I think that one you brought up that people don’t know Bored Ape Yacht Club, BAYC, is I think, one of the more innovative ones in the space because I’ve been looking at them and trying to understand how their communities are built around these profile pictures and they are building some brands underneath themselves. Maybe they wouldn’t call them that, but they have the topline profile pictures with apes as the choice of their character, and then they made another derivative one with dogs called the Kennel Club and I think they continue doing that a lot of different times. Then you could see that becoming a consumer brand. I don’t know if they’ve taken that big of a view yet. Are these NFT projects going to be the Webvan or the Pets.com. Is this the nineties bubble for these NFT projects or are some of these going to go the distance and become the next Instacart’s of this industry? I think we are there and they're multibillion dollar industries and I understand that people don’t like calling them brands but form one lens that is a good way to try to understand what these people are doing.
I think they're going to be the next evolution. Maybe it's like brand 3.0 because they're going to have to listen to the community members because it's so easy to get feedback now.
HOST: Matt, I’m glad you brought up Bored Ape Yacht Club and how they’ve done such a good job with building community because that is something that I wanted to talk to you more about. What are some of your favorite NFT avatar projects right now, and I’d love to hear your perspective on how they’ve been building their community and what aspects of that have been successful. I think that’s the million-dollar question in crypto right now is community building. Everyone recognizes the importance of building community but what does that mean. How do you build community? It's a lot easier said than done, and so I’d love to hear from what you’ve seen being in these Discord channels and these communities for your favorite projects, what is it about their community building or their execution that has been so successful?
JIMMY CHANG: Yes, I can take that. There are definitely a lot of projects that are doing novel things in terms of community building. I still think it's the wild west in terms of experimentation of how you foster a vibrant community for your brand, as Matt calls it.
I think when we look at the canonical example of great NFT community building it is the apes and I think what kickstarted that explosion of community vibrancy was the innovation of commercial rights. When you own a Bored Ape, unlike a CryptoPunk or some of these other NFT projects, you own the commercial rights to it so you can print them, you can make merchandise for your specific ape. You can’t do it for other apes, you can’t do it for other ape-affiliated trademarks, but you can do it for your ape. People took that and ran with it with a bunch of remixes in a bunch of ways that augmented the brand and you make that creative experience or that entrepreneurial experience bottom up because everyone is incented in order to drive value for their ape. They feel a lot more ownership behind it when they realize that there's some sort of financial upside as well. That was something that I think kickstarted it, call it a few months ago. Maybe around May in terms of there is a reason why I want to invest my time into my Bored Ape because I feel so much affinity towards it. I think that's the best example that I've seen of community building. It started this whole wave of other PFP projects that have very similar dynamics.
Another project that I enjoy is the Cool Cats and I enjoy them for somewhat of a different way. I like it because the team behind it is very mindful of not stifling organic attention. I don’t think they did anything deliberate in order to make their project incredibly successful outside of having a pretty strong team, outside having a pretty clear roadmap and obviously having a very distinctive art. They were pretty mindful of allowing derivatives to flourish, other remixes, allowing community members to create art for other members and not restricting that and basically allowing the community members to do whatever they want. Not whatever they want but - - like writing articles, doing features within other projects. They took stuff like lightning in a bottle and let if flourish which I think was pretty successful.
HOST: Yes, for sure. Matt, I know you recently got into the Pudgy Penguins. What was it about that project that drew you in?
MATTHEW GOULD: I’m a huge animal fan. For people who have been following on several domains for the past three years, we did our own version of NFTs with animals maybe two or three years ago and there's a few people who are collecting. We were very early so we didn’t think to have limited editions of these like they do with any of these like 1 of 10,000. We didn’t have a cap on the number of those originally being minted. We didn’t build these Discord communities around them, we didn’t do any of the innovation around ownership of the commercial rights to them like Bored Ape Yacht Club because this is again, two years ago or more. I’ve always had an affinity for animals. I’ve been watching these for three years and not understanding what was going on. It just so happened that this was a project that was happening during this time and I was like okay, I think I get it now. Then I stepped my toes in. It takes me a while.
It was the exact same way for me with the bitcoin too. I literally read about bitcoin from very, very early on and it took me two or three years before I finally put my toes in in 2013, because I like to think a lot about these types of things before I get there. If I don’t understand it, I don’t want to use it yet. If I feel like I understand it, then I will step in.
That’s why I’m in there. I think these are super-cool. I would encourage people to check out some of these projects and find ones early, get in. I think there's going to be a lot more of these. Hopefully - - will continue to make supply so that there could be more people trying out these types of communities. I’m interested to see where digital fashion goes. It's a lot easier to pay attention if you have some skin in the game so I did it so that I could get in. That’s my story for why Pudgy Penguin.
HOST: Speaking of digital fashion, that’s something that I think about too with NFTs and what's possible for NFTs. I think I have all of these ideas about all these cool things you can do with these NFT avatar projects, but because I’m not a technical person I don’t know if any of this is technically possible or not. I’d love to run some of these through you guys and get your take on what is technically possible and what's not.
One thing I think about a lot is would it be possible to design fashion like shirts and hats and clothing and accessories and things for your different NFT avatars and have it be in a way that it would fit a Cool Cat and it would also fit a Pudgy Penguin and it would also fit a Bored Ape. I could put it on any of these clothes. Say I have an Unstoppable Domain hoodie and I want to put that on all of my animals. Maybe today I’ve got my penguin as my avatar. I want my penguin to wear it today and tomorrow I want my Cool Cat to wear it. Is that something that would be possible, maybe even having a digital tailor for NFTs to tailor it to these different animals? Is that something that would be possible?
MATTHEW GOULD: Yes, but there aren't any standards around making these interoperable because a lot of these are generative so they have some sort of base layer. I think they have a base ape or a base penguin or a base whatever happens to be the avatar of the month. Then they have things that get generated on top. I don’t think anyone’s worked on trying to figure out how to make that work across these different collections yet. We’ll probably see a collection and try that out in the future. It's still super-early but I think there are very few limits of what you can do with these avatars and with digital fashion. I think it's going to be super-flexible. I could very easily see ways for you to put that into the smart contract. I can see how that would be possible to be done and then make it extensible. Have different brands be able to prove that they are that brand or something so that you could have a Nike hat for your Bored Ape and then it would come from Nike. It probably won’t be one of these traditional brands to start out with but who knows, maybe it will be as some of these guys have dived in. There are very few limitations on the technical side. There's a lot that needs to be done on standardization I would say.
HOST: Gotcha, gotcha. It would be supercool to have digital fashion moving around from avatar to avatar and then be able to take your avatars across virtual different lands. I can take my avatar to decentral land and then I can move to cryptovoxels and I can do whatever I want to do there.
Another think I think would be cool is an evolution of an NFT. There's an NFT that cats. Crypto community loves cats and maybe when you first mint the NFT or first buy it it's just a baby kitten and then the longer you have it the more it grows and evolves like a real live cat and eventually it will turn into an adult cat then it will turn into a senior cat and have that natural evolution happen over time. I think that would be pretty cool too.
MATTHEW GOULD: You're talking about the gamification, which I think is also going to come as we broaden the size of the market. Again, for the skeptics out there, I would say some of the biggest companies on the planet and some of probably the most forward-looking people out there like Mark Zuckerberg, he believes your going to be in VR in your social networks in the future. If you're going to be in VR or he even said the metaverse, Mark Zuckerberg is saying out there, and they’ve got 3 billion people on their platform, and he wants to move everybody into VR. I think there's going to be a lot more digital fashion coming your way. If everyone is meeting up in Facebook VR, you're definitely going to want to be able to—my Instagram is just full of people trying to show how cool they are with all the different photos that they're taking.
I think if we’re going to be in VR people are going to want to do the exact same thing with these fashions and I would just say the crypto market is just telling us in the future here is going to be these limited supply NFTs that are essentially community led brands would maybe be a way of phrasing that. I think you can see the future here ahead of everybody else and I always say I want to make sure the people who tune in here are getting the alpha like how is culture going to change from this new technology that’s happening and it's happening quick. This is happening fast for me, so I would say I’m just calling this out. I want people to pay attention. I do think there's something big here and it's worth tuning into.
HOST: To wrap this up, I want to get both of your thoughts on the long-term outlook on these NFT profile pics, avatars, whatever you want to call them. Is this just a craze, this is bubble that we’re in where everybody is super-obsessed with these NFT avatars right now or is this just the beginning and we’re going to see more and more of this in ten years. Everyone is going to be representing their identities with an avatar on Twitter and across all social media. What do you see as being the long-term outlook of these NFT avatars?
JIMMY CHANG: I think like with any nascent technology people overestimate the impact of it in the short-term and underestimate the impact of it in the long-term. That is to say that there are boom and bust cycles like what Matt said this stuff is moving so fast. We’ve already had one for NFTs earlier this year and we’re in the second wave of NFT euphoria.
There are a lot of projects and quite frankly they're all in the green. That’s not incredibly sustainable from a market health perspective. I think if you cut through the noise, you'll see that there are a lot of dramatic take aways that you can have from this moment in history. That is the fact that people are seeing NFTs as an augmentation of their identity. I don’t think that was abundantly apparent earlier this year in the first NFT deal. There was a lot more around collectables. It's was collecting Top Shots; it was collecting generative art still but like Hashmasks and stuff like that that were not PFPs. The team at Hashmasks have gone around and say they did not intend for Hashmasks to be profile pictures and they're actively working on changing that for their V2.
This was something that no one predicted and people resonate with it. It's not just media. Some of these people are legitimately in it for the identity, the signaling and the art and they’ll hold it to zero. That's product market fit right there. We’re going to see more of this coming. To your point, there is extension of this. There is evolution in terms of having an NFT evolve with you based on whatever activities you have on chain or whatever other factors may happen off chain through some sort of oracle network.
There are accessories. You can add things to your NFTs and there's also interoperability. You can take your NFT and it has different representations. Your Bored Ape might be in the racing game as a little trinket on your dashboard. Your Bored Ape might be a little hat on some web free version of the Sims. There's definitely a lot of areas that we can expand that this problem space and I think we’re just going to see, honestly, we’re going to see innovation come in later this year that no one expected. That’s the craziness of being in this space.
MATTHEW GOULD: I would say on the tech side in the short term we definitely have a limited supply and that has created a small bubble in this space. On the tech side we need to try out a lot more formats. You suggested some things here on the call. They're like maybe video, there's all sort of new ways that we need to try expressing digital fashion and then standards need to be developed so that its easier for these to be interoperable across different platforms or verified or whatever, these things are going to be important.
Throwing money around won’t just solve the problem because you need to get developers and engineers and creators to come in here and then help build out these new community led brands. I think what's happened here is we’ve seen a lot of interest spike in the short-term but I think it's a good long-term signal. If you ignore maybe the short run in the next one to two, three years and you look out over the next decade and you realize that this is a big move in digital fashion with these new community led brands. I think that’s the important thing to pick up. If you're interested in where things are going long run and you want to tamp down on the noise, that’s what this is showing. I’m very excited to see what people build.
HOST: I think one thing I heard from both of you in that concluding thoughts is that where we’re shifting with all this NFT stuff is more and more towards identity and I think that with these NFT avatars with even blockchain domains, I’ve been playing around like crazy with these dot NFTs that we have and I know Jimmy and I have both gone all out on the penguins and we’re degen Penguins on Twitter and it might be different by the time this comes out and it's live, but it's so much fun to play around with it. You can get creative with it and find different elements of your identity in your domain name and your profile pic and all of these things and I’m excited for that element of it.
I’m excited to see a playout also if you're a developer or if you're a builder make sure you join our Discord community and we’re always looking for people to help build new cool features for us if you're interested in identity and all that stuff and you're a builder, hit up our Discord. Jimmy runs that group and he’s awesome obviously, so join our Discord, chat with us, connect with us and help us build.
Thank you both Matt and Jimmy for joining me on this. I know this was super-last minute. We all just got super-excited by this NFT avatar craze and wanted to do an episode on it, so I appreciate you joining me last minute. Hopefully all of you listeners found this to be beneficial and heard some interesting things in this conversation and we’d love to continue the conversation with you as well and get your thoughts on all of this. I know everybody’s got some different thoughts right now so make sure you Tweet us at Unstoppable web or you can Tweet us individually as well. We would all love to continue the conversation with you. Thank you so much for tuning in and we’ll be back again soon with another episode of the Unstoppable Podcast.