In Defense of Azuki

Polkachu Team | 2023-07-06

Azuki, a popular NFT project on Ethereum, has upset its community as it minted 20K more NFTs with similar designs. The 3x dilution of volume leads to a large price collapse. Many think that Azuki founders have rugged the community and Azuki will lose its blue-chip status as a result.

I think otherwise. It is never the responsibility of an NFT project to keep the price high. In fact, it is their responsibility to keep the price low so it can expand its cultural reach by admitting new up-and-coming cultural elite.

In my seminal piece Every NFT Project is a Race Between Culture and Price, I argue that an NFT project will become a boomer project if its price rises too quickly while pricing out new cultural elite. In fact, every NFT project should strive to gradually increase its supply and dampen its price. That would inevitably upset the incumbent JPEG owners short-sighted about the true cultural mission of NFTs. They will dump the JPEGs, and new buyers will come in to catch the knife.

The end result of the Azuki saga is 1) more supply, 2) cheaper floor price and 3) a large project treasury chest. This feels like a dream scenario for an NFT project. Of course, we can pick on some tactical mistakes from the team, but the strategy is directionally correct.

For every NFT project out there, hear me out: You cannot dominate the culture with 10K high-price JPEGs. Rather, you only have a chance if you have 1M JPEGs with various price tiers for everyone. Such brand extension exists all around us: cars, detergents, handbags, you name it. NFT needs to do the same. The first few attempts might upset the community with clumsy tactics, but the general direction will be here to stay. It might not be the future we want, but it is the future we deserve.