NFT God Newsletter - The Daily Alpha 6/9/22

The Daily Alpha 6/9- Happy Thursday! Even in the deepest bear markets with nothing but degen mints happening the NFT space remains wildly entertaining. Let's get into a few interesting stories from the day:

Sartoshi Rugs Twitter

MFers project founder Sartoshi has left his project. Yesterday the mysterious meme lord posted a blog announcing he was leaving the project he founded and transferring the contracts to the community. On top of that he was going to totally delete his online presence, rugging his entire Twitter. Despite completely abandoning the project, he still for some reason will be collecting 25% of royalties. Reactions have been mixed online, mostly approval it seems. I personally don’t see the difference between this and a classic rug. People are arguing because he’s sending the smart contracts to “the community” it’s not a rug. In my mind this is as bad of a rug as Zagabond’s past rugs. He basically took the smart contracts and airdropped them to a Twitter group who had no idea they were about to be put in charge of a multi million dollar company. Then he made it so they get 50% of royalties and him and some of his friends still get the other 50%. This is like the CEO of a company quitting overnight and saying Craig the marketing intern is now the CEO. He used this “community” airdrop as an excuse to peace out, keep collecting his royalty, then go onto whatever he’ll do next, probably another rug pull. Would love to hear from people who disagree with me on why this isn’t a rug and why he should keep getting royalties on a project he’s abandoning.

ETH Merge

Ethereum’s Ropsten Testnet is the first Eth testnet to complete a merge with the new proof of stake network. This is a massive step towards a complete overhaul of Ethereum. This event should set up the ETH merge with proof of stake in the August timeframe. For those not in the know, ethereum is currently “proof of work”, meaning validator nodes need to complete complex equations in order to validate transactions. This consumes a ton of energy and rewards miners with hefty fees. Proof of stake will change the way the Ethereum network does validation, instead relying on holders staking their ETH, requiring far less energy and dramatically reducing gas fees. Bulls argue because so much less ETH is going to miners, there will be significantly less selling pressure. While this makes sense on paper, rarely does the market react in the way everyone is predicting. I’m not changing my thesis on ETH at the moment, I still believe the market presents a ton of risk to enter right now.

GODA Pass Launches

GODA Pass, led by many famous artists including Pharrell and KAWS, has launched to intense hype and volume, currently sitting at a 7 ETH floor. This pass promises the ability for holders to mint future projects from the team behind the pass. While it sounds like an intriguing idea, I have yet to see a mint pass that promises artwork actually end up being profitable. A lot of the time the passes will let you mint art that only the pass holder cares about. The art itself might still be cool, but because its value is that it was a reward to holders, nobody outside the ecosystem really cares. Taking a swipe at this project at 7 ETH is a risky one. While this definitely has some massive names behind it, they’re all web 2 artists. I just don’t see how a bunch of NFT’s from Pharrell will reduce your cost basis all the way down from a full 7 ETH. Passing for now.

Projects I’m Watching: low supply memberships

With the hype behind GODA pass rocking the market, as well as other low supply passes like Admit One and Croquet Club demanding high floors, it’s worth paying attention to this meta. I’ve made investments in this category before, I hold both a POP pass as well as Metarelics. The positive side is that these low supply collections can easily skyrocket their floor price because of their exclusivity. You also typically join very tight knit communities. The downside is that volume is typically really low so getting out can be difficult. Also, I’m not really sure any access pass has truly nailed real valuable utility yet. I do believe NFT’s as a way of joining a social club is the future, so I’m betting compelling use cases will come. In the meantime I’ll be studying these projects to see which ones truly push the category forward.