Penguins are typically terrestrial creatures, however, the Pudgy Penguin NFT series is not subject to such limitations.
Pudgy holders have received thousands of dollars worth of airdrops from other projects, a strategic partnership with Walmart continues to pay dividends, and with the launch of Abstract Chain (their own L2 roadmap), the atmosphere is perfect, although it wasn’t always this way.
Pudgy Penguins went through some tough times in early 2022, with the reserve price dropping significantly and the same NFT that’s demanding a premium today selling for less than 1ETH in over a month.
Rumors of mismanagement of funds by the founders, quarrels between team members, and broken promises caused trouble, and the situation looked grim, with the community demanding a change in leadership.
Enter Luca Netz, who on January 6, 2022, expressed his willingness on Twitter (now X) to buy Pudgy Penguins for 750 ETH, or about $2.5 million, and by April 2022, everything was official: Netz and his team took over Pudgy Penguins, acquiring the intellectual property rights and the right to receive royalties from secondary sales.
With a background in digital marketing and e-commerce, Luca excels at building consumer product brands, which is exactly what Pudgy Penguins needed.
Today’s story is about how Pudgy Penguins turned things around to become a brand on Walmart shelves, a masterclass in brand building that unfolded right before our eyes.
How Pudgy Penguins took over the world
In a recent Bankless podcast, Luca shared that after taking over the project, he spent time chatting with members on the Pudgy Discord, trying to understand the community’s expectations for the project’s roadmap and what kind of brand they envisioned Pudgy Penguins evolving into.
These members are not just people who have invested in the project, they are ambassadors of the brand, and Luca has the support of the community around him, uniting them to achieve a great mission and lay the foundation for the future, which is key.
There are a lot of lessons learned about how Luca, the team, and the community approach various aspects of brand building.
Clear messaging and positioning
Once aligned with the community, the vision for Pudgy Penguins was set: to make Pudgy Penguins a globally known and loved brand - not just a cryptocurrency.
Luca’s vision is to break down barriers and create it, rather than wait for mass adoption, he hopes to build an inclusive brand that resonates with people in the cryptocurrency industry, while also being loved by children and all demographics, and he sees this as a way to introduce cryptocurrency to families - with a cute penguin character at the center, cultivating a positive, enthusiastic community.
We’ve had a lot of mainstream adoption stories like NBA Top Shot, which brought NFTs to the masses by giving fans a new way to connect with their favorite players, and we also had the spotlight a few years ago when celebrities went wild for Bored Apes.
But Pudgy Penguins is breaking new ground and going a step further, by building a brand with universal appeal, Web3’s first real attempt to take cryptocurrencies and NFTs global.
Product Extensions
In May 2023, Pudgy Penguins expanded its brand into the physical world with the launch of Pudgy Toys, a new line of plush toys, figurines, and other collectibles inspired by the digital series, available through its official website and major e-commerce platforms such as Amazon.
In September 2023, Pudgy Penguins made a groundbreaking move when they were the first to announce a partnership with Walmart, Pudgy Toys were available in 2,000 Walmart stores across the United States, and five months later in April 2024, this number expanded to 3,1,000 stores.
The importance of this moment in establishing Pudgy Penguins as a global brand cannot be underestimated, as the creation of physical toys by Pudgy Penguins will change the world’s mindset towards NFTs.
Until now, we have only thought of NFTs as digital collectibles, which they are, but they can be so much more than that, as evidenced by Pudgys, where not only is the adorable piece of art that everyone treasures, Pudgy Penguin now has added value and real-world utility.
Pudgy Penguins as a brand is not just for the typical crypto bros, there are cute penguin toys for kids, adorable plushies to give to your girlfriend for Valentine’s Day (this is obviously a joke, we know the crypto bros are all single), and figurines that your work buddy or your dad would love to have on their desk, this is a brand for everyone with the cool benefits of web3 and blockchain at its core.
Pudgy Toys has created a new channel for people to be introduced to cryptocurrency. People can now walk into a Walmart store and pick up a Pudgy Toy off the shelf or add it to their shopping cart on Amazon simply because it caught their eye.
This strategic move has proven to be highly effective, with over one million plush toys sold within the first year of retail launch, and to demonstrate the appeal of Pudgy Penguins, the brand recently entered into a partnership with Lotte Group to expand its presence in South Korea and solidify its position as a global phenomenon.
But there’s more — these aren’t just toys, they’re the inspiration for NFT collectibles that come with a fun pass into the world of blockchain, where new toys can come to life in a digital playground called Pudgy World.
Pudgy World is an engaging on-chain experience hosted on zkSync and available to anyone who purchases a Pudgy Toy from Walmart. By scanning a QR code, customers can enter Pudgy World where they can collect digital traits and personalize their Pudgy character.
To further build the best on-chain experience, Pudgy Penguins’ parent company, Igloo Inc., acquired Frame to develop Abstract Chain, a consumer-focused layer 2 blockchain built on Matter Labs’ ZK Stack.
This strategic move aims to leverage the Pudgy Penguins community, culture, and distribution to drive the consumer cryptocurrency revolution, and to fuel this ambitious project, Igloo recently received an $11 million investment led by Peter Thiel’s Founders Fund.
Just like that, through the simple act of purchasing a physical toy, Pudgy Penguins cleverly introduced the general public to cryptocurrency. A small step for Pudgy Penguins, a big step for Web3.
Marketing and content distribution
Pudgy Penguin’s marketing and content is as inclusive as their products, from GIFs that even your grandma would love to share on WhatsApp, to Instagram clips that your friends would want to repost, there is something for everyone, Pudgy Penguins is slowly but surely conquering the hearts of people around the world with their charm, and here is a detailed explanation of how they are doing it.
1）GIF
The Pudgy team worked together to create and share GIFs and memes, and it paid off, with Pudgy Penguin GIFs now a common sight on social media platforms.
Catering to a wide audience, these GIFs range from crypto-specific terms (like “wen”) to universally relatable scenes (like penguins dancing), demonstrating the team’s understanding of crypto culture and broader public interests.
The strategy has been widely successful, with Pudgy Penguins GIFs and stickers on GIPHY having been viewed 15 billion times.
2) Instagram Marketing
Pudgy Penguins kicked off the first year of Instagram marketing in the crypto space, growing organically on Instagram thanks to fun and relatable posts featuring the adorable Pudgy Penguins, where they now have over 1.3 million followers.
Their content is relatable to everyone, and you’ll often find your friends engaging with their posts and videos without even realizing they’re interacting with the NFT brand, which has proven to be very effective.
3) Open communication and transparency
Luca has a YouTube channel where he posts regularly to keep his subscribers updated on the behind-the-scenes efforts of the team developing the Pudgy Penguins.
Additionally, the Discord hosts bi-weekly “Inner Igloo” community calls, which provide a platform for the community to interact with Luca and the team (and vice versa).
All of these initiatives highlight the team’s commitment to transparency and community building, which goes a long way toward maintaining a positive atmosphere in the community.
4) Industry leaders as organic brand ambassadors
Many great cryptocurrency teams often have someone on the leadership team use Pudgy Penguin as a profile picture on social media. Not only do they own the NFT, but they actually carry it with them, anchoring their identity around it. It’s not without reason that a Pudgy owner would say “I am my penguin, and my penguin is me.”
These individuals are effectively ambassadors of Pudgy Penguins, and their adoption of the brand not only validates the project but also elevates Pudgy Penguins to a status symbol in cryptocurrency.
The beauty of it is its authenticity, it’s not something you can recreate with clever marketing, it either happens organically or it doesn’t, and it’s a testament to Pudgy Penguins’ ability to unite people and make them feel like they’re part of something big, embodying the true spirit of web3 as a collective.
It has become an aspirational symbol, owning a Pudgy Penguin means you join a club of the best in the industry, and this sense of belonging strengthens the brand’s cultural influence and storytelling.
The above initiatives are just a few examples of the marketing prowess of the Pudgy Penguins team, who are well versed in all forms of marketing across a variety of platforms, from Twitter to hosting top-notch real-life events.
Summarize
With bold product expansion, creative marketing, a loyal community, and a CEO hell-bent on building Web3’s first breakout brand, Pudgy Penguins has the perfect combination to become a globally recognizable brand.
We are witnessing a story unfolding - a glimpse of how Web3 and blockchain will eventually become accessible to the masses, and it is gaining momentum, with Pudgy Penguins winning the hearts of people everywhere.
Looking ahead, the brand will take a step further by releasing a mobile game in 2025 that will allow players to interact with their Pudgy Penguins in an entirely new way, further deepening the connection between users and the brand.
Pudgy Penguins' involvement in the L2 war has raised questions: the technology acquirer has been "stagnant" for several months, and the CEO expects NFT to return
The well-known NFT project "Pudgy Penguins" has been frequently moving recently, and even appeared in the ETH ETF promotional video of asset management agency VanEck.
In May, Pudgy Penguins announced a partnership with game studio Mythical Games to develop an immersive mobile game to be launched in 2025. In June, Pudgy Penguins announced that it had jointly established a parent company called Igloo with its NFT licensing platform OverpassIP.
Then, more important news came. On July 23, Pudgy Penguins announced that it would create an Ethereum Layer 2 blockchain called "Abstract". This Layer2 is consumer-centric and received 11 million in financing led by Founders Fund of well-known investor Peter Thiel.
Prior to this, Pudgy Penguins had acquired the Web3 creator platform Frame, claiming that it would leverage its blockchain construction technology advantages and utilize its own community and user resources.
Building a consumer-centric L2, or airdrop
The new L2 Abstract is a Layer 2 built using Matter Labs' ZK Stack and EigenLayer's data availability layer EigenDA, making the development process of decentralized applications easier, cheaper and more secure. In addition to building this chain, Pudgy Penguins also plans to establish a developer incubator aimed at helping applications go from 0 to 1.
Abstract's strategic financing round was led by Peter Thiel's Founders Fund, with other investors including Fenbushi Capital, 1kx, Everest Ventures Group and Selini Capital.
Pudgy Penguins will use the funds to establish a new company, Cube Labs, to oversee the development of the Abstract chain and provide contributions and support to it. Michael Lee, former senior vice president of Matter Labs, the developer of Ethereum Layer 2 ZKsync, will serve as CEO of Cube Labs.
Abstract is currently running in the testnet, and the mainnet is scheduled to go online around the end of this year, but the timing of token issuance is still unclear. The Abstract team currently has about 30 members worldwide, and Cube Labs has an office in Miami.
Pudgy Penguins CEO Luca Netz hopes to use Abstract, the Layer2, to "disrupt the situation". Luca Netz is very ambitious and he said he hopes to bring 100 million users to the chain.
According to a recent interview on the YouTube show Milk Road, Luca Netz said that the "consumer crypto revolution" will happen on a single chain, Abstract, and the three pillars to achieve these goals are "Community, Culture and Distribution."
Based on the existing achievements, Pudgy Penguins can do very well. He even emphasized that "Abstract will become the representative noun of Layer 2. It will be the largest Layer 2, not just one of the Layer 2s, or one of thousands of Layer 2s."
It is not surprising that Pudgy Penguins has entered the L2 market. There are also a number of NFT projects in the market that have built their own L2, such as Bored Ape Yacht Club's Apechain and Azuki's AnimeChain.
In fact, from the perspective of technical implementation difficulty, the difficulty and cost of building Layer2 have been reduced. Lugui Tillier, chief business officer of Web3 infrastructure company Lumx Studios, recently wrote that starting and maintaining an L2 is actually very fast and relatively cheap.
Rollup as a Service (RaaS) companies can launch and maintain a rollup in up to six minutes for less than $1,000 per month.
However, he also pointed out that the current development of L2 faces many challenges. The first is that market liquidity is fragmented, and users need to constantly switch wallets and bridge assets. Second, the instability and unpredictability of L2 transaction costs are very unfavorable for the development of various applications. In addition, these new chains will lead to further fragmentation of the market.
Of course, this problem is partially solved by the same L2 that provides CDK. Polygon, Optimism, and ZkSync are building a liquidity aggregation layer to make thousands of application chains and industry chains look like a whole. "Thousands of application chains and industry chains are coming, and they will be critical to financially sustainable on-chain development."
In order to better realize technical development, Pudgy Penguins has recently acquired the on-chain creator economy platform Frame. In December last year, Frame announced on the X platform that it had completed a new round of financing, but the specific amount was not disclosed. In January this year, Frame released an airdrop query link, but then fell into a stagnation for several months.
The previous Frame chain had a solution for mandatory royalties and native ERC-6551 support, which could create a smart contract account for each ERC721 type NFT. The account has all the functions of an Ethereum account, making the NFTs bound to the account composable.
According to the latest official tweet, Frame stated that if the user was previously a Frame airdrop claimant, the relevant rewards will be confirmed in Abstract's incentive system.
Involved in the L2 battle caused controversy, CEO looks forward to the return of NFT
Pudgy Penguins’ current advantage is that it understands the community and users, and is able to achieve good commercial monetization. For example, Pudgy Penguins’ NFT-based physical plush toys have achieved significant success in offline markets such as Walmart.
With retail sales of $13 million to $14 million and 1.2 million units sold as of early July, these physical toys are one of the foundations of their company’s economic success.
However, against the backdrop of sluggish market performance for many NFT projects, Pudgy Penguins’ L2 plan has sparked community ridicule, with Goose Wayne (GOFX) commenting, “But why? Is the promotional material really just ‘we fork an L2, hype the release, and then distribute tokens through a massive airdrop’? There are already more than 50 L2s, why can’t Arb/OP/Base solve any of the problems Pudgy Penguins is currently experiencing?”
However, some users expressed support. For example, Steve said that Luca Netz showed "main character energy" and he believed that his team and the Pudgy Penguins community were his competitive advantage, so he didn't want to bring this magic to another L2, so he went ahead and acquired his own company.
In fact, regarding the recent market performance of NFT, CEO Luca Netz also has his own reflections and prospects: "I actually think that if you look at the NFT field today, the execution speed of top projects is unprecedented in the history of NFT, and this mechanism is still effective... The crypto market is a financially driven market, and anything that provides huge returns from a financial perspective will experience ups and downs. Despite the volatility, it will not disappear completely, so I think NFT will return."
He said that if you understand the advantages of digital collections and compare them with physical collections, another bullish reason will emerge. The current market value of the collectibles market is about 450 billion US dollars, and the market value of the NFT market, that is, digital collectibles, accounts for only 1% of it, which means that the ratio of physical collectibles to digital collectibles is 99 to 1, and digital collectibles have many advantages over physical collectibles.
“It’s clear that the current 99 to 1 market cap ratio doesn’t reflect the true strength of digital collectibles. I think it should be closer to a 50/50 ratio, which shows that there is still a lot of room for digital collectibles to grow.”
He further noted that digital collectibles are in high demand, especially in Asia and China, and the growth potential is very strong from a consumer product perspective.
“It’s clear that NFTs are here to stay. The world is moving towards a digital future. Digital ownership is obvious to anyone who understands the internet and the direction our society is heading. NFTs are at the heart and backbone of this transformation. People want to collect, desire items of value, and pursue status symbols. I think the worst is over.”
It now seems that although Pudgy Penguins's move to build Layer2 has received some ridicule, the new trend has also brought certain stimulation to NFT and the broader market. We will pay close attention to the subsequent trends.
#PudgyPenguins #layer-2 #MatterLabs #zkSync
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