Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.
The Pudgy Penguins are a set of cartoon penguins sold as NFTs, or non-fungible tokens. The penguins are cute, and they are immensely valuable. The average price for a single penguin, as of late September 2021, was $8,600.
One reason is that there are just 8,888 penguins, each displaying a handful of 150 hand-drawn traits. But lots of things are scarce and hand-drawn. Why are the Pudgy Penguins so valuable, and what’s NFT technology all about? Read on to find out.Buy and Sell Bitcoin, Ethereum, and over a dozen other cryptocurrencies with Wealthsimple. Sign up and Trade here.
Primarily, the penguins are collectibles based on a blockchain—a decentralized ledger that lets other users verify financial transactions rather than banks or governments. These ledgers support virtual currencies, like Bitcoin or Ethereum. Cryptocurrencies, which have a combined market cap in the trillions of dollars, are fungible, meaning that each Bitcoin is interchangeable for the next.
Tokens like Pudgy Penguins are non-fungible, which means that each one is unique and can’t be swapped for another. That’s why each of the 8,888 penguins can be distinguished from one another. Some wear crowns, others bamboo hats, and others eggs. Some smile, others wink, and many hide behind sunglasses.
Although it’s possible to create your own Pudgy Penguins project and copy-and-paste the images onto your own NFTs, you might have a tough time generating the clout of the original Pudgy Penguins project. This is because, due to the immutable and transparent nature of the Ethereum blockchain (on which Pudgy Penguins are based), you can tell which penguins were created by the original Pudgy Penguins code.
In other words, you can spot a copy from a mile off. And in the world of NFTs, verifiability and proof of provenance often confers value. Another factor that might explain why these penguins are so valuable is that no more of these penguins have been minted—only 8,888 exist.
One other reason for the Penguins’ high prices could be that people prize them. It’s not uncommon to see a Pudgy Penguin replace a mugshot of a major tech executive on Twitter. In fact, it’s a badge of honour to show that you’re rich enough to fritter away thousands of dollars on a picture of a penguin, the sole owner of an original Pudgy Penguin and part of the Pudgy Penguin community. Consider it like buying a virtual Rolex watch.
“There are all these ways to tell everyone that you’re wealthy. But a lot of those things can actually be faked. And with an NFT, you can’t fake it,” a Pudgy Penguin co-founder told The New York Times.
Of course, not everyone is buying a Pudgy Penguin for bragging rights. For others, they’re a speculative opportunity. “The average consumer has been priced out of those projects,” Tiffany Zhong, a crypto entrepreneur, told The Times. “And so people who are trying to get into this are like, What’s the next big project I can get into?”
Pudgy Penguins are one of half a dozen projects to command this kind of status online. In response, Twitter is working on a feature that can prove whether an NFT profile picture is authentic. But this status, it should be noted, can be fleeting, since new projects come out all the time, and the Penguins have already become somewhat passé if sales volumes are anything to go by.
Rival profile picture projects, sometimes called Blue Chip NFTs, include the far more lucrative CryptoPunks and Bored Ape Yacht Club. Other major NFT projects include Axie Infinity, a monster-battling game that uses NFTs as trading cards, Loot, a community-created fantasy RPG game, and Art Blocks, a platform for selling generative art.
So how does Pudgy Penguins stack up? The Penguins have racked up $117 million in all-time sales, as of this writing, making them the 10th most popular NFT project and the 5th most popular profile picture NFT project. By comparison, Loot, #7, has amassed $244 million in sales, while more direct rivals Bored Ape Yacht Club and CryptoPunks have generated $496 million and $1.3 billion in sales, respectively. Axie Infinity is the resounding winner, having generated $2 billion in total sales.
However, all-time high sales do not reflect the sharp decline in Pudgy Penguin sales. According to data from CryptoSlam, sales averaged about $100,000 after the project launched on July 22, 2021. Things really took off for Pudgy Penguins in mid-August—a couple of weeks after the NFT boom of summer 2021 started. On August 13, sales peaked at $13 million. But sales have since dwindled to about $300,000-$500,000, as of late September. This is consistent with the overall NFT market, which had sunk by September after peaking in late August.
Other buzzy projects have since usurped the Penguins. As of late September, Pudgy Penguins was the 29th most popular project by sales volume. CyberKongz, Anonymice, CrypToadz, and Sup Ducks are among more popular projects. Each does, roughly, the same thing: function as a means to display status online, and also to belong to an online community.
Inside Pudgy Penguins
Pudgy Penguins was released to the world on July 22, 2021 by a team of, at the time, pseudonymous developers. A New York Times article has since identified some of the founders.
Mrtubby, real-name Clayton Patterson, is a computer science student in his early 20s. He started Pudgy Penguins with three classmates. “There was huge meme potential in fat-looking penguins, so we decided to roll with that,” Patterson told The Times.
Pudgy Penguins holders and fans hang out on Discord, Telegram, and Twitter—the social media sites that spawn much of crypto culture. In Pudgy Penguins lore, penguins are “pengus,” owners are part of “The Huddle” and known as “huddlers,” and “tufts” are rare penguins.
The 8,888 Pudgy Penguin NFTs are held by 4,657 accounts. This is more than Loot (2,583 accounts for 8,000 pieces) and CryptoPunks (3,148 owners of 10,000 NFTs), but fewer than the 1.7 million owners of Axie Infinity NFTs or the 560,395 owners of NBA Top Shot trading cards.
The founders earn a royalty each time a Penguin gets sold, but holders can buy and sell their penguins as they please. The Discord chat, which functions as a kind of virtual watering hole for Pudgy Penguins holders, contains about 8,000 people as of this writing, none of whom are obliged to hold a Penguin NFT.
The chat is filled with discussions about trading and learning about the NFTs: “(I’ve hear[d] ow[n]ing a pudgy penguin has passive income. Can someone explain that to me?” asked one member. “It does not,” replied another). It’s also full of memes, bots that announce recent trades and updates from the founders.
What next for Pudgy Penguins?
A rough draft for a roadmap released on September 20, 2021 outlines the future of the project. There will, first of all, be two seasons for Pudgy Penguins merchandise: fall/winter and spring/summer. Each season contains clothes, accessories and “other merchandise.” It’s unclear whether these are real clothes and who is eligible to buy them, but other projects, including the Bored Ape Yacht Club, have held exclusive merch sales for holders.
There are also grand plans for literature and media around the Pudgy Penguins. On the way is a Pudgy Penguins children’s book, written “to educate the next generation on the technology of non-fungible tokens and the blockchain” and “create a fun and memorable story about Pudgy Penguins.” Parents and guardians will also get the opportunity to claim “a free NFT for their child to enjoy.” There will also be a coloring book, which will also contain an NFT.
The creators behind Pudgy Penguins also want to produce an anime series: They wrote in their update that they have “a vision to incorporate the Pudgy Penguins into an animated series inspired by Japanese culture and cinematic aesthetics.” A manga cartoon will create the story for Pudgy Penguins at “the highest level of production.” Why? “The team at Pudgy Penguins are huge anime fans, and we are not taking this goal lightly.”
In terms of NFTs, Pudgy Penguins will introduce 88,888 Lil Pudgys. These are, essentially, more NFTs.
How to buy a Pudgy Penguin
All the Pudgy Penguins have now been bought. To buy one of your own, you’ll need to buy one from a secondary NFT marketplace. This means that you’ll buy Pudgy Penguins directly from another holder for a price they set.
The most popular marketplace at the time of writing is called OpenSea. To buy from OpenSea, you’ll have to connect your Web3 wallet—a popular one is MetaMask—and then deposit cryptocurrencies to buy your Pudgy Penguin with.
Some Pudgy Penguins are rarer than others and thus are usually more valuable. “For example, 357 Pudgy Penguins have Headbands, but only 58 have a Crown,” points out Pudgy Penguins in an FAQ in the Discord chat.
To buy the NFT, you’ll have to win a bid against other users or buy it directly. Again, the seller dictates the terms of the sale, and there is no guarantee that you will win the bid. However, if you do, you’ll become part of The Huddle.
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