NFT Projects to Hold Through a Bear Market
Few notable NFT projects have been around long enough to bear the brunt of crypto winter. CryptoPunks survived to tell the tale, and a few others have been brought back to life in a Frankenstein-esque resurrection during the recent NFT run up.
Winter always returns, and it seems like it is coming again soon for the entire web3 space. When it arrives, NFT projects will die. Disinterested holders will sell or abandon their beloved jpegs. Founders will close down shop due to project bankruptcy or negligence. Communities will crumble. The streets will run red with the blood of… okay, it’s not that dramatic.
But winter will quell and consolidate many NFT projects in this space. Few will survive, and those that do will be primed to take advantage of the next NFT bull market.
Which projects will bunker down and make it to next spring? It’s impossible to say. But there are a few key indicators to consider when deciding whether or not to hold an NFT project through a bear market.
*NOTE: This article is intended to offer examples of the types of NFT projects that might do well during a bear market. It is not a full list. It does not constitute financial advice. The author does hold a few of these projects.
Key Indicators That an NFT Project Could Last Through the Winter
When winter arrives, the name of the game is to survive. NFT projects have to bunker down and keep building. But perhaps most importantly, they have to preserve capital and retain users.
Capital preservation means opening up the project to non-speculative revenue streams. That is, revenue streams that do not come from venture capital firm raises, marketplace royalty fees, or the sale of expansionary collections.
Projects that already have massive war chests in place can be less concerned about the impending doom when NFT collectors head for sunnier pastures. Capital preservation is not a top priority for these teams, but rather user retention is.
These non-speculative revenue streams can come via gaming, clothing and toy manufacturing and distribution, entertainment and IP licensing, and more. And because these revenue streams are connected to the real world in some way, they also help with retaining users.
If a video game is fun to play regardless of the project’s tokenomics, users are more likely to stick around. The same is true if collectors see their NFTs in movies and television series, in clothing and toy stores, and on celebrities’ Twitter accounts.
But it’s not just about capital preservation and user retention; founder and developer retention also matters. During bear markets, some founders and creatives get bored. There is a lack of attention from the community, and many give up. Find founders that are thinking about long-term time horizons and are genuinely passionate about their NFT projects.
If NFT projects do all of these things right, they might just see spring.
- Gaming NFTs
- Clothing and Toy Brand NFTs
- Entertainment and Licensing NFTs
- NFT Projects With War Chests to Last the Winter
1. Gaming NFTs
If a game is fun during winter, it is more likely to succeed during the spring and summer. Games that do not heavily rely on native token value to convince users to play are good long-term holds during the bear market.
In some instances, the game is already built out and users can farm tokens while the market is down and benefit when the market returns in months or years. Some games even pay out in stablecoins and fiat currencies, which makes them that much more useful during crypto winter.
Be cautious, however, about buying into new gaming NFT projects during a down market. Games are hard and expensive to build. Stick to NFT projects that have already raised funds – whether through VC fundraising, marketplace royalty fees, or expansionary NFT collections – and have enough capital to last multiple years.
Below are a few examples of NFT projects in the gaming and technology space.
Zed Run is a digital horse racing platform built on the Ethereum blockchain. Users can buy, sell, race, and breed horse NFTs.
Paid races are available, and winners are rewarded in USD. Transacting in U.S. dollars should help Zed Run withstand the violent volatility of crypto cycles.
Zed Run already has millions of dollars in investments from industry giants TCG Capital Management, Andreessen Horowitz, Red Beard Ventures, and more.
Cool Pets is an expansionary NFT collection from Cool Cats. Cool Pets quest in Cooltopia to earn $MILK. $MILK is used to buy items and hatch eggs, which then evolve into Cool Pets. Housing, battling, and crafting game mechanisms have already been announced.
Cool Pets sold out its collection of 20,000 NFTs at 0.5 ETH per purchase. Each Cool Cat holder received one pet for free, which means the team netted 500 ETH, or around $15 million at the time of the sale.
The game is still point-and-click, but the stories are unique and fun. Hatching and evolving Cool Pets at an affordable price will help this game stay relevant during the bear market.
Blitmap is a community-crafted sci-fantasy universe created completely on chain by Vine co-founder Dom Hofmann. It is part of Sup, which owns Blitmap and Supdrive, an on-chain fantasy game console NFT.
The actual game is not yet released for Blitmap holders to play, but Sup recently announced the acquisition of Jason El-Massih as a principal engineer. Prior to joining Sup, he worked at Rockstars Games on popular video games Grand Theft Auto V, Red Dead Redemption II, and L.A. Noire.
Sup is announcing three more hires soon. And the company already raised $12 million from Paradigm, an investment firm focused on web3 companies, and others.
BYOPills is the original NFT project that developed into an entire gaming ecosystem called the BYOVerse. The BYOVerse now consists of the original BYOPills, BYOLand, BYOKeys, BYOVapes, BYOCrafts, BYOWEAR, and Apostles.
The BYOVerse is run on TRYP, the game’s native utility token. BYOLand can be pillaged for resources, and the team is apparently close to launching a racing game involving the Apostles and BYOCrafts.
BYOPills financial situation is unknown, but the team has consistently launched new and innovative NFTs to its community, mostly for free. If they have the funding to continue to build during the winter, BYOPills could be one of the top projects at the start of the next cycle.
Treeverse is a browser-based metaverse gaming platform that includes Treeverse, Timeless Characters, and NFTrees NFTs. The plan is to launch an open-world, fantasy MMORPG with a MOBA-style combat system, similar to the Legend of Zelda and Runescape.
In October 2021, Treeverse raised $25 million from IdeoCo Labs, Animoca Brands, Skyvision Capital, Stani Kulechove, and others. The game is currently in development, but the team should have the funds to withstand a bear market.
2. Clothing and Toy Brand NFTs
Branding is one area NFT projects have leaned into during the bull market. And when executed properly, branding can help projects survive the winter.
If an NFT project’s clothing or toys are only cool and exciting because the price of the NFT is so high, that’s a red flag. But there are some projects in this space that put out stylish streetwear, physical collectibles, and more.
Similar to gaming, building a clothing or toy company costs money. Find projects that already have funds put away to pay for manufacturing and distribution.
A real-world presence could keep some NFT projects relevant, even when their on-chain digital collection is lagging.
Below are a few examples of NFT projects in the clothing and toy branding space.
Bored Ape Yacht Club and Mutant Ape Yacht Club
Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) are currently the pinnacle of sought-after NFT merchandise. Some hoodies and shirts are selling for hundreds or thousands of dollars on secondary marketplace websites like StockX and eBay.
Yuga Labs is the company behind BAYC and MAYC (see below). BAYC is currently the most expensive 10,000-piece NFT collection in the world. It would be shocking to see Yuga Labs fail before the next bull run.
Creature World is a collection of 10,000 NFT artworks by NYC-based artist Danny Cole. The project has fallen short of expectations even during the bull run, but its saving grace has been its merchandise line.
Creature World has some of the most innovative and interesting merchandise in the web3 space. The team has partnered with Advisry and has been featured in global publications like GQ Magazine.
Creature Labs, the entity behind Creature World, is also working on a video game, Cole mentioned on Twitter. With support from industry leaders like Gary Vaynerchuk and funds from clothing sales, Creature World could make it through an NFT and crypto winter.
Cryptoon Goonz is a digital collectibles brand with 6,969 generative rubber hose style character NFTs on the Ethereum blockchain. The project’s artist, Sean, is a former tattoo artist.
Cryptoon Goonz is building out an innovative portal technology as an interactive way to further explore the NFTs. No new NFTs will be created in this process.
And while the team continues to move forward with its digital collection, one of its most impressive accomplishments to date is the development of its streetwear collection. Cryptoon Goonz merchandise is high-quality and stylish.
Pre-Established Sneaker Brands (NIKE, adidas, etc.)
Sneakers were one of the top collectibles far before NFTs. And now, sneaker NFTs – or, at least sneaker companies creating NFTs – are gaining in popularity.
Nike purchased NFT studio RTFKT (the company behind CloneX, see below), and created digital sneakers called CryptoKicks. Another major clothing and shoe company, adidas, entered the NFT scene with its adidas Originals: Into the Metaverse collection.
As NFTs become more popular around the world, expect most major sneaker brands to join in on the revenue-generating opportunity.
Pre-Established Fashion Brands (Gucci, Dolce & Gabbana, Prada, Louis Vuitton, Burberry, etc.)
Pre-established fashion brands have already started entering the NFT space. If these brands take their NFT offerings seriously (a big if), it could be worth watching out for collaboration efforts.
Gucci has already collaborated with SUPERPLASTIC; Dolce & Gabbana set a record for $6 million in fashion NFT sales in collaboration with NFT marketplace UNXD; Prada and adidas launched a collaborative NFT project; Louis Vuitton is entering the NFT gaming market with Louis: The Game; and Burberry dropped NFTs in Mythical Games’ Blanko’s Block Party.
3. Entertainment and Licensing NFTs
Entertainment and licensing goes hand in hand with branding, and a lot of the same NFT projects listed above could also be listed here.
Cartoon-style NFTs are well suited to be used in… well… cartoons. Entertainment companies care about popular and trendy topics. NFTs that have already struck deals and started development on television series or movies are in the best position to benefit, even during the bear market.
Licensing extends beyond just cartoons, too. Look for fun-loving and empowering projects to perform the best in this area.
Below are a few examples of NFT projects in the entertainment and licensing space.
Doodles is a collection of 10,000 pop-art cartoon character NFTs created by artist Burnt Toast. The team has continuously pushed the boundaries of technology and in-real-life experiences with its Space Doodles non-dilutive expansion, parties at South by Southwest, and its most recent Dooplicator NFTs.
But the project isn’t only pushing technology boundaries; it’s also pushing entertainment and IP licensing boundaries with its recent CEO hire. Julian Holguin, the former President of Billboard, is joining Doodles to grow and expand the brand into the mainstream consumer market across music, culture, and entertainment.
Cool Cats is a collection of 9,999 randomly-generated and stylistically-curated cute cat NFTs created by artist Colin Egan (Clon). Half of the team, Tom Williamson (xtremetom) and Rob Mehew (Lynqoid), are working on the project's technology offering in Cool Pets and Cooltopia. The team also hired a gaming developer from Microsoft.
But much like Doodles, Cool Cats is also focused on branding, entertainment, and IP licensing. Evan Luza (ELU) leads the brand expansion efforts, and Cool Cats recently signed with Creative Artists Agency, an American talent and sports agency managing celebrities like Reese Witherspoon and Justin Bieber and sports stars like Devin Booker and Dwayne Wade.
It has always been Clon’s dream to create a television show based on his Blue Cat concept.
World of Women
World of Women is one of the most popular female-backed NFT projects in the space. It is a collection of 10,000 diverse and powerful women NFTs celebrating representation, inclusivity, and equal opportunities for all.
Reese Witherspoon, who holds a World of Women NFT, is looking to create a movie or television show for the community. World of Women signed with Guy Oseary for Hollywood representation, and Witherspoon’s Hello Sunshine company, which is responsible for Wild, Gone Girl, Big Little Lies, and Little Fires Everywhere is developing feature films and a television series based on the NFT collection.
TIME (Toy Boogers, Smilesssvrs, the littles, Robotos)
TIME Studios is entering the NFT space and using popular collections to develop and release animated franchises. It has already announced partnerships and collaborations with Toy Boogers, Robotos, Smilessvrs, and the littles.
"NFTs are allowing us the opportunity to work with diverse creators that cover a broad range of ages and world-views," Maria Perez-Brown, the Head of Kids & Family, Time Studios, said.
"The creativity of the NFT spaces continues to deliver incredible talent whose IP and built-in audience will translate seamlessly on screen," President of TIME Keith A. Grossman added. "As we grow our roster of NFT creators, TIME and TIME Studios are expanding the possibilities that NFTs have to transform entertainment and continuing the pursuit of becoming the de facto studio for the web3 era."
BEANZ, the companion collection to Azuki, is cute, playful, and full of energy. Unfortunately shrouded in drama after Azuki founder Zagabond openly admitted to working with less reputable and possible rug projects like CryptoPhunks, CryptoZunks, and Tendies, BEANZ still offers upside in the entertainment and licensing space.
Azuki has the capital (see below) to withstand the winter. BEANZ is a brand new project and details about brand expansion are not yet available. But the Azuki team, despite this setback, has continued to deliver time and time again.
4. NFT Projects With War Chests to Last the Winter
Non-speculative revenue streams are important because they help keep a project alive during a downturn in the market. Revenue streams pay for founders, developers, and other employees. As long as projects can continue to build during winter, they have a much better chance of success when it ends.
A select few projects already have a war chest large enough to outlast the coldest of winters, assuming they can lower their burn rate. Those projects are the most likely to still be around the next crypto cycle.
Below are a few examples of NFT projects that already have large war chests.
Yuga Labs is the company behind Bored Ape Yacht Club, Mutant Ape Yacht Club, Bored Ape Kennel Club, the Otherside metaverse, and Otherdeeds. It also acquired CryptoPunks and Meebits from Larva Labs earlier in 2022.
There is no shortage of capital for Yuga Labs, and it would be shocking to see the company collapse during the bear market. In March 2022, Yuga Labs raised $450 million at a $4 billion valuation from Andreessen Horowitz, Coinbase Ventures, Moonpay, and others.
Yuga Labs has earned over 14,000 ETH on secondary marketplace royalty sales for Bored Ape Yacht Club on OpenSea alone. It also recently dropped 100,000 Otherdeeds NFTs at ~2 ETH per purchase.
Moonbirds is the official pfp (profile picture) collection of PROOF Collective, a members-only NFT club hosted by serial entrepreneur and technology venture capitalist Kevin Rose.
Moonbirds recently minted out its collection of 10,000 NFTs at 2.5 ETH per purchase. Since then, it has collected nearly 7,000 ETH in secondary marketplace royalty fees.
With a strong backing and huge war chest, Moonbirds should withstand even the longest of NFT winters.
Steeped in controversy, Azuki’s floor price has dropped significantly over the last few weeks. One of the project’s founders, Zagabond, has been accused of being a serial rugger and deceiving NFT collectors for months. But that doesn’t change the amount of funds Azuki has accumulated since launch.
With over 230,000 ETH in total volume traded, Azuki has brought in more than 11,500 ETH in secondary marketplace royalty fees. The team’s companion collection, BEANZ, has traded over 57,000 ETH in total volume, too.
Regardless of what the project ends up doing with regard to Zagabond, it has plenty of capital stashed away for a down market.
CloneX is a collection of 20,000 avatar NFTs by RTFKT and Takashi Murakami. Murakami also has other projects, including his Murakami Flowers.
CloneX itself has done nearly 200,000 ETH in total volume traded, which means the project has brought in almost 10,000 ETH in secondary marketplace royalty fees.
If that isn’t enough, Nike purchased the collection’s primary NFT studio, RTFKT.
VeeFriends is an NFT project created by entrepreneur, author, and internet personality Gary Vaynerchuk, better known as Gary V. The project is built around meaningful intellectual property and community.
VeeFriends has the highest secondary marketplace royalty fee of all the above-listed projects at 10 percent. That means it has brought in more than 5,000 ETH from its 52,100 ETH in total volume on OpenSea.
VeeFriends Series 2 has also accomplished more than 23,000 ETH in total volume traded. With Gary V’s continued support, VeeFriends will likely be around for the next NFT bull market.