Morning Minute | Azuki Expands with Elementals

GM!

Take a minute to catch up on the latest in the Web3 space with today's NFT market analysis, top movers, and upcoming mints.

TylerD's Market Summary

Azuki brings excitement back to NFTs with its surprise Elementals drop at the Vegas party. Catch up on all the details and prepare for the mint with this overview, plus learn about new NFT lending protocol Zharta.

🐇 Azuki Elates with Elementals

Expectations were high.

And Azuki delivered.

In their now second "check your wallets" moment, Azuki delighted their Vegas party attendees with an airdrop.

How has the market reacted, and is this really a win for holders?

What Happened? 

Live at the event, the Azuki team debuted a teaser video and introduced Elementals as their new collection of 20,000 NFTs.

It came with a 2-part airdrop as well.

Each Azuki and Beanz owner received a Soulbound Token for attending the party as a memento.

And each Azuki owner was airdropped an unrevealed Elemental Beans token, that was locked for trading until the official sale (10,000 NFTs in total).

The Elementals come in 4 tiers of rarity, with tier 1 being the most common and tier 4 being the most rare (only 117 tier 4s so far).

Holders won't have to wait long for that sale and reveal, coming on June 27.

Elemental Mint Details

Here's the TLDR of the upcoming Elementals sale:

• What: 3-phase mint for the remaining 10k supply, with a 1st phase for Azuki holders, 2nd for Beanz, 3rd for public
• When: June 27 at 12 p.m. ET (10 minutes for phase 1, 10 minutes for phase 2, then public)
• How: 2-phase presale priced at 2 ETH, then Dutch auction*, starting at 2 ETH and dropping by 0.1 ETH every 5 mins
• Where: At Azuki's site azuki.com/elementals
• When reveal? "Elementals will be available to reveal immediately after sale ends"

*The Dutch auction mechanic will include a deposit by minters with a refund provided after the sale based on final price.

A few takeaways from the sale mechanics:

• The 10 minute mint window for Azuki holders is very tight and leaves little room for error. If the site gets attacked or can't hold up to the traffic, things could get messy. It also ratchets up the FOMO.
• The NFTs will be available to reveal post-sale, meaning it's optional and will likely lead to a Renga Black Box-like price discrepancy between revealed and unrevealeds in the near future.
• It's unclear if the Elementals will be linked to its corresponding Azuki (i.e. MAYC to BAYC) but seems less likely based on what we know so far (still possible though).

Market Impact and Reactions

General sentiment seems pretty positive and hype is going off the charts.

This is the Azuki MAYC collection moment, and traders are already projecting a 3.5+ ETH floor on these out of the gate.

With that floor prediction, the mint itself is expected to complete within 10 minutes, ending in a gas war for Beanz holders to fight over the remaining supply.

Azukis in loans won't be able to mint, so current guesses are 7,000-8,000 Elementals minted in the Azuki phase 1 window, with 2k-3k left for Beanz. That means gas war to get those deposits in.

It also means the final price will likely be 2 ETH, resulting in an 20,000 ETH raise for Azuki (a $38M raise) - a huge payday for the team.

As for the market impact, a few thoughts:

• Azuki has already fallen by about 2 ETH to a 14.8 ETH floor; expect another 2+ ETH drop after the sale
• Beanz are down about 8% to 1.28 ETH; expect them to go sub-1 in the days and weeks to follow, as Beanz have been officially relegated to the BAKC of the Azuki eco
• Elementals will have a huge rare lotto attached, with every mint able to reveal a grail and the tier 4s likely to catch a massive premium
• Revealed Elementals will likely trade in the 1/4 - 1/5 ratio compared with Azuki once the dust settles

It's also likely we will see some selloff across other collections today / tomorrow as holders free up funds to chase Elementals.

Conclusion

At first I thought of this dilution as lazy, copying the Yuga playbook almost to a tee now with how Azuki has expanded via Beanz and Elementals.

But if Elementals are done well, this is likely a net positive for the team and holders.

The team will be seriously boosting their treasury and runway to do dope shit for a long time to come.

And if Elementals are good, the larger brand gets strengthened as the team will have proven they can deliver high-quality digital collectibles.

While the floor prices will likely dip in the immediate future, mid-to-long term this could be the mint that pushes Azuki to the next level.

They've brought excitement back to NFTs, something missing for awhile. Tomorrow is going to be a big day...

💰 Zharta and NFT Financialization

NFT lending is on a major upswing, largely driven by the recent entrance of Blur onto the scene with its BNPL and Blend program.

Total cumulative NFT borrow volume recently crossed the $2B threshold in a major milestone.

As the market matures, more players are coming in and finding niches.

For instance, while Blur's Blend is dominating volume right now, it's only live for a handful of PFP projects.

Enter protocols like Zharta who are looking to compete in their own way.

Zharta made a splash on the NFT lending scene in 2023, recording the highest-ever Fidenza-backed ETH loan.

Zharta's primary differentiators from other lenders operating in the NFT space include:

• No auto-liquidations: Pay back the loan and never worry about losing the NFT. There is no threshold in which the NFT would be liquidated and taken.
• Owners retain NFT utility: Zharta has partnered with Delegate Cash to ensure the NFT owner is able to capture any utility offered (i.e. airdrops, event access, access to Discord servers, etc.) during the loan period as if they still held the NFT.
• Customizable options based on need: Loan options are provided on a sliding scale of LTV and rates based on the borrowers' needs, from Degen (highest LTV, highest interest) to Normal to Farmer (lowest LTV, lowest interest).
• Repay early, pay less: Even if loans have fixed duration, borrowers can repay early and pay interest in a pro-rata fashion; only the interest accrued has to be paid.
• NFT bundling: Multiple NFTs can be bundled into a single loan, while maintaining those features above. This feature is particularly useful if you have multiple lower-value NFTs that, when combined, can support a larger loan.

I have personally used the platform and it is very user-friendly. I really enjoyed the customization options it offers, the "pay per day" program and the ability to retain utility via delegate cash.

To read more about my experience and dig in to the protocol, check out our deep dive ecosystem guide.

🚚 What else is happening in NFTs?

Here is the list of other notable headlines from the day in NFTs:

• Trading volume came in over 15k ETH on Sunday and has seen a steady uptick over the past week; NFTs saw red on the week due to that crytpo run up, with most down 10%-15% on the 7-day
• Bored Apes made a notable comeback over the weekend, with the floor rebounding over 20% from a bottom near 34 ETH up to 40 ETH on OpenSea (now 38); the pump was largely driven by pimpcapital, who is now long over $10M in select PFP collections
• A CryptoPunks book is coming in Fall 2023, set to unveil "untold stories of the collection by tapping the passionate community to contribute to the written record of Punks)
• LooksRare opened its affiliate program on Friday, rewarding those who drive users to their NFT marketplace with fees
• NBA Top Shot introduced a Rookie Leaderboard contest, rewarding collectors (with Three-star Rookie Badge packs) for owning and burning Moments of top NBA rookies, with the contest ending today at 1:00 p.m. ET

🌎 Around Crypto and Web3

A few other Crypto and Web3 headlines that caught my eye:

• The crypto market was down slightly over the weekend after a huge week; BTC -1.35% to $30,250; ETH -2% to $1,878
• IYK launched a new autograph module live at Paris Fashion Week, enabling users to immortalize autographs on their digital items using the blockchain
• Anichess, an Animoca Brands subsidiary, raised $1.5 million for its decentralized chess game's development

🚀 NFT Total Volume

• Azuki (2,720 ETH, 14.8 ETH Floor)
• BAYC (1,877 ETH, 38 ETH Floor)
• Beanz (1,867 ETH, 1.28 ETH)
• MAYC (1,673 ETH, 7.48 ETH)
• DeGods (700 ETH, 9.09 ETH)

📈 NFT Floor Price Increase

• GRIDS by Tristan Rettich (54%, 0.29 ETH Floor)
• Utility Wen (40%, 0.1 ETH)
• Loot (15%, 0.34 ETH)
• CloneX (10%, 1.91 ETH)
• Sproto Gremlins (9%, 0.35 ETH)

🗓 Upcoming NFT Mints and Reveals

Today is a slower start to a very busy week, with the Azuki mint and beginning of Yuga's Forge coming later in the week.

For today, just the standard Memes drop and an Art Blocks Presents mint on the primary radar. That Art Blocks drop is likely the mint of the day, with some very nice outputs and just 200 in supply.

Over on Bitcoin, the Okay Bears are following the hottest trend in NFTs and launching an Ordinals, so that will catch some attention today as well.

If you want more, see the full list of today's drops from Swizzy's daily mint monitor. 

• Memes by 6529 (11:00 a.m. ET); 0.06529 ETH
• Art Blocks Presents: Invisibles (1:00 p.m. ET); Dutch auction
• Okay Bears - Ordinals (TBD); BTC

Enjoy this write-up? Follow along with me on Twitter @tyler_did_it or reach out via email tyler.warner@luckytrader.com.

For all volume and floor price data, see Lucky Trader's Project Rankings page.

For all upcoming mints, see Lucky Trader's NFT Calendar page.