The chubby penguin that survived bull and bear markets is making moves again—could this be a sign of an NFT revival?
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The chubby penguin that survived bull and bear markets is making moves again—could this be a sign of an NFT revival?
How can a fat penguin make a comeback?
Navigating Web3 tides with focused insightsBy HuoHuo
As Bitcoin breaks past the $100,000 mark, altcoins led by Ethereum begin to rally, and the NFT sector appears to be showing signs of revival.
On December 6, the floor price of blue-chip NFT project Pudgy Penguins surged over 20% within 24 hours, peaking at 22.2 ETH (currently around 27 ETH), briefly surpassing BAYC (22.1 ETH). Moreover, Pudgy Penguins has consistently ranked among the top three NFT projects by market capitalization since the beginning of this year.
From a floor price slump to just 0.519 ETH in early 2022 due to "internal team conflicts," to now achieving over a 50x increase—what enabled Pudgy Penguins to recover and establish itself as a leading blue-chip NFT? What did its team do differently?
Bull and Bear Cycle Resilience
Prior to November, the NFT market was extremely sluggish. In Q2 2024, NFT sales dropped 45% compared to Q1’s $4.1 billion, totaling approximately $2.28 billion. By Q3 2024, trading volume had halved again to $1.1 billion. However, after a broader crypto market recovery in November, the NFT space saw some rebound—but it paled in comparison to the surge triggered by Pudgy Penguins’ announcement of an upcoming token launch.
As early as February 17 this year, according to Blur data, Pudgy Penguins briefly surpassed Bored Ape Yacht Club (BAYC) in floor price, marking the first time since 2021 that BAYC had been overtaken by another project. Additionally, Pudgy Penguins maintained strong upward momentum throughout Q1, accumulating multiple-fold gains.
On May 12, Pudgy Toys—a product line under Pudgy Penguins—and the newly licensed Lil Pudgys launched at Target, the second-largest retail chain in the U.S., available in their collectibles section. This move transformed digital collectible characters into popular physical products, seamlessly blending the physical and digital worlds for consumers.
On July 10, Pudgy Penguins partnered with Web3 domain provider Unstoppable Domains, enabling users to access Pudgy World using their .pudgy domain names. With this integration, users no longer need traditional Web2 credentials (like Google or Apple accounts) to log into the virtual world. It also allows account access without conventional passwords.
Then on July 16, mini-game Pixelverse announced it would introduce the character “Pudgy” into its game, joining other popular crypto-themed elements like Doge from the Dogecoin community. This integration enables players to embody Pudgy characters within Pixelverse, with the full Pudgy Penguins game set for official release in 2025.
So how did Pudgy Penguins evolve step by step to reach this point?
Rocky Start
Pudgy Penguins is a series of colorful penguin avatars launched in July 2021, symbolizing “love, compassion, and mercy,” with a vision to make the chubby penguin image a beacon of joy and positivity for everyone. The collection consists of 8,888 unique NFTs minted on Ethereum at 0.03 ETH each, selling out in under 20 minutes. Although prices were flat immediately post-mint, they soon rose sharply influenced by the then-popular “animal zoo” trend led by BAYC, increasing up to 100x from mint price.
Early holders began calling themselves “The Huddle” (the team) and “Pengus” (penguin friends), receiving exclusive perks such as special experiences, event invitations, IP licensing opportunities, and more.
Drawing attention during the bull market, Pudgy Penguins attracted high-profile buyers including NBA star Stephen Curry and Reddit co-founder Alexis Ohanian.
However, due to issues within the original founding team, the project faced early setbacks. Former founder Cole Villemain was accused of running scams, misusing funds, and clashing with major holders, causing internal conflict and leading to a sharp decline in popularity shortly after launch.
In December 2021, the operations lead of the original Pudgy Penguins team failed to agree with the rest of the team on salary and responsibilities, and reportedly threatened to “FUD Pudgy Penguins into oblivion” out of dissatisfaction with management.
Then in early January 2022, community members published lengthy critiques accusing the founding team of failing to deliver promised games, hiring developers, and other commitments—raising suspicions of an exit scam.
This sparked widespread anger toward the founding team, culminating in a Discord vote in early 2022 that ousted the founder. At the same time, the floor price plummeted to a historic low of 0.519 ETH.
Angry community demanding change, image source: x.com
In April 2022, a new team led by Los Angeles entrepreneur Luca Schnetzler acquired the project for $2.5 million.
With Luca's acquisition, Pudgy Penguins began its turnaround.
After taking over, Luca swiftly implemented new initiatives, including hiring a new COO, securing verified badges on X and OpenSea, launching official Instagram accounts, and expanding presence across both Web2 and Web3 platforms. Following these launches, Luca’s team remained highly active on Twitter and Instagram, actively participating in various NFT events, such as hosting a Miami-based Pudgy Penguins yacht party, producing community-exclusive plush toys, issuing soulbound tokens (SBTs), launching a dedicated secondary marketplace, and selling branded apparel—all aimed at boosting social media visibility.
It’s clear that after the new team took charge, Pudgy Penguins experienced a spiral price rise over the next year. In May 2023, the project raised $9 million in a round led by 1kx, followed by a steep climb starting in early 2024.
Beyond marketing, what else has the Pudgy Penguins team done to position it as a top-tier PFP NFT brand following CryptoPunks and BAYC?
Growth Journey
From April 2022 to early 2024, Pudgy Penguins built momentum through brand development, IP expansion, and integrated online-offline marketing strategies—each element reinforcing the others and laying the foundation for its current success.
1) Focus on IP Marketing to Boost Visibility
In April 2021, Yuga Labs launched BAYC, leveraging the bull market and consistent airdrops to attract many holders and strengthen community cohesion. However, seeing its later stagnation, Luca learned that relying solely on airdrops isn’t sustainable in bear markets. For long-term viability, NFT projects must build sustainable revenue streams.
Drawing from Web2 experience, Luca recognized the immense potential of intellectual property (IP). For example, Pokémon generated nearly $100 billion in revenue over 24 years starting from 1996. Inspired, he shifted focus to building Pudgy Penguins into a globally recognized Web3 brand.
Source: createandlearn.net
Prior to acquisition, the initial team had already developed a relatively rich ecosystem around the Pudgy Penguins NFT series. Luca believed that effective IP marketing would become one of Pudgy Penguins' core competitive advantages going forward.
Pudgy Penguins adopted targeted strategies across social media and physical product sales to communicate its brand values and offerings to target audiences.
First, leveraging social media channels for exposure and awareness. Pudgy Penguins has over 17,300 related GIFs on the dynamic GIF search engine Giphy, amassing over 24.3 billion views. On Instagram, Pudgy Penguins has 1.6 million followers, with individual posts regularly receiving tens of thousands of likes. On TikTok, it has nearly 520,000 followers and over 16.6 million total likes, with its pinned video reaching nearly 17.7 million views.
Pudgy Penguins TikTok account
From May to July 2024, Pudgy Penguins launched the #SaveThePenguins challenge, using AR filters on TikTok and Instagram to raise awareness about penguin conservation and fund environmental organizations.
The brand also participated in numerous online campaigns and offline events, such as Art Basel Miami and cross-industry collaborations.
In 2022, Pudgy Penguins partnered with Green Kids Club to publish children's books; in 2023, collaborated with Hologram Labs and Retail Monster to launch 3D models and penguin toys; in May 2023, Luca released physical toys based on the IP called Pudgy Toys.
On December 11, 2023, Pudgy Penguins unveiled its gaming platform Pudgy World, featuring branded hero characters like Pudgy and Peaches to enhance player immersion.
2) IP Licensing to Strengthen Community Cohesion
To deliver value to the community, Luca strengthened ties with NFT holders by sharing commercial success and benefits, fostering closer relationships and a shared win-win ethos between Pudgy Penguins and its holders. He stated that Pudgy Penguins aims to become the first franchise IP in Web3, launching the IP licensing platform OverpassIP to promote NFT authorization and real-world applications.
Pudgy Penguins offers two licensing models: physical merchandise production based on holder-owned images with profit sharing, or monetization via social media exposure to boost brand recognition.
3) Physical Merchandise for Revenue Generation
Main sources of IP revenue include merchandise sales, games, and film box office, with merchandise and games being key monetization drivers.
Yuga Labs focused on game development and partnered with physical brands for merchandising. In 2023, Azuki introduced the PBT protocol and a collaboration with Ambush, exploring paths combining physical goods with digital experiences.
Luca chose the IP merchandise route, dedicating efforts to IP licensing and product planning since acquiring Pudgy Penguins, launching items like plush dolls, stuffed animals, decorative pins, etc. Reports indicate that over 750,000 physical toys were sold within seven months, now available in 3,100 Walmart stores across the U.S.
On May 13, Luca announced that sales of Pudgy Penguin plush toys had surpassed one million units in the past 12 months.
Furthermore, the Pudgy Penguins brand has expanded beyond NFTs, filing trademarks in areas including printed comic books, collectible trading cards, jelly sweets, seasonal foods, board games, hoodies, hats, virtual goods, and multimedia content.
Rumors suggest the team plans to launch two arcade games and the Pudgie World game, with Pudgie World supported by zkSync.
Controversies and Risks
Throughout its development, Pudgy Penguins has faced certain controversies. Aside from the earlier unfulfilled promises by the founding team that eroded community trust, two additional concerns stand out:
1) Centralization Concerns
While NFT projects often promote decentralized governance, the leadership transition of Pudgy Penguins was seen as driven by a small group, somewhat contradicting decentralization principles. Some community members have questioned the new leadership’s management style and expressed concern about the project’s future trajectory.
2) Speculative Nature of NFTs
Like other NFTs, Pudgy Penguins exhibits extreme price volatility. Critics argue the project relies more on market hype than intrinsic value creation. The audience for physical toys doesn’t fully align with Web3 IP users, which may limit further growth in Web3. Additionally, some users report difficulty profiting from their NFTs in the secondary market.
Conclusion
Pudgy Penguins aims to become the world’s first great Web3 IP company—the first globally recognized brand and IP in the NFT space. Currently, it still has a way to go before realizing this ambitious vision.
Leveraging favorable circumstances, Luca has enabled Pudgy Penguins to achieve relative success during this crypto winter through a dual-layer strategy centered on IP. Yet, amid fading NFT narratives, whether Pudgy Penguins can reinvigorate the industry and sustain long-term growth remains to be seen.
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