The biggest NFT cash grab of the year

GM

Nice to see you on our first Thursday edition, this feels weird and cool.

We have quite the newsletter today: Hot takes, Venn diagrams, Green Eggs and Ham references.

enjoy ✨

This week's update:

  • The biggest cash grab of the year?

  • The first premium Starbucks NFT

  • All the latest rankings

More info on the Mint/Watch lists here. 

THE BIGGEST CASH GRAB OF THE YEAR?

Context:

On Monday Yuga Labs announced Twelvefold, a new collection of 300 pieces of generative art launching on Bitcoin later this week.

Twelvefold is completely unrelated to the rest of the Yuga portfolio and marks their first major drop on any chain outside of Ethereum.

The collection, which Yuga says explores the relationship between time, mathematics, and variability, will be sold via auction and is expected to be the largest Bitcoin NFT launch to date.

Our Take:

I wasn’t planning on covering this. First off, it’s launching on Bitcoin, and loyal readers know we only cover Ethereum (for now).

Second… well let’s face it, this is one of those times where you and I just step aside and watch crypto whales throw ungodly amounts of magic internet money around to get crowned king of the hill for a day.

At the end of it all Yuga will make tens of millions of dollars, a few collectors will get a shiny new toy, and we’ll once again show how efficiently NFTs can turn attention into (alot of) money.

It’s a spectacle – in this case one that excludes 99.99% of participants.

But there was something that irked me about this whole situation, specifically the community’s instinctual reaction to call this a cash grab. And since this is likely to be one of, if not the largest NFT drop of the year, that would make it the biggest cash grab of the year.

Basically I disagree, or at least partly. And look, it doesn't feel right “defending” a billion dollar company making more in one drop than nearly all indie creators in the space combined. It’d be much easier to just say Yuga Bad and make it out in time for Thursday night Karaoke.

But these cash grab accusations have now become the go-to rallying cry for any NFT drop that doesn’t have obvious lifelong utility or an overly ambitious roadmap.

I’m simply using Yuga as a way to illustrate why this behavior is silly, especially since I think we’ll see many more brands do the same in the coming years and these criticisms are being used against creators of all sizes.

So here’s the rant.

We’re heading into a world where we’ll buy and sell tokenized versions of nearly every consumer product you have IRL. Toys, art, movie tickets, video games, fashion, and so on.

Today these products are all released by companies focused on making money. We typically don’t call them cash grabs because we think it’s a fair trade. I give Nike $150, they give me some sneakers that make me look 20% cooler - everyone wins.

Sometimes the brand is a creator that people follow for completely different reasons. Consider how George Clooney, an actor, turned Casamigos into a billion dollar company. Or Rihanna with Fenty, or Conor Mcregor and Proper Twelve. As far as I can tell, there's nothing malicious about doing something outside of your usual domain.

Do they sometimes “cash in” on the current wave? Sure, this Lego Harry Potter set is a good example. Riding new attention cycles is one of the most tried and true forms of marketing. You may not like it, but many other people do and are more than willing to pay for it.

And so we have all sorts of brands selling all sorts of things. And generally we don’t call these cash grabs, unless you mean to say that any revenue generating product is a cash grab (in which case you must be fun at parties).

But when it comes to NFTs, suddenly our standards change. Every mint is now a commitment to provide eternal value to anyone who bought in. Any deviation from that path, any other product you release, any attempt whatsoever to make money again in your life gives you the unforgivable and irreversible label of Grifter. Ash Robin has a funny video on this.

On top of that there’s extra scrutiny on “non-utility” projects because unfortunately many NFT collectors view charging for art as a grift to begin with.

The whole vibe is weird. All it does is pressure creators into playing it safe by sticking to a narrow lane. This is the opposite of what we should want.

I want brands to take more chances and tackle different genres with their own spin. I just want more NFTs in general – I want to mint them on a train, I want to mint them on a plane.

To be clear, I’m against brands that give false promises of any kind, as well as corporate web2 companies that put minimal effort into understanding web3 and then end up mismanaging expectations or setting collectors up to fail.

Outside of that, let creators cook.

STARBUCKS NFTs ARE COMING

Context:

Starbucks first entered web3 in December when they launched Starbucks Odyssey, an NFT-based extension to their already successful loyalty program.

While Odyssey has so far only involved free airdrops, this week Starbucks announced their first ever premium NFT sale, set to launch March 9.

Each NFT in the collection will come with a unique piece of art tied to something from the company’s “past, present and future”.

What we know:

  1. Price is $100 (~0.06 eth)

  2. Supply is 2,000 NFTs

  3. Max 2 NFTs per person

  4. You must be in the current beta to mint

  5. Future utility unknown outside of 1,500 “bonus points”

Our Take:

People don’t realize how big the Starbucks loyalty program is. They had 29 million loyalty members at the end 2022, and the rewards program accounts for over 50% of sales.

It’s often considered to be one of the most generous loyalty programs in the world, and people get straight up mad when they make any changes to it.

So the fact that they’re integrating this with web3, which is a fairly controversial technology to put it mildly, is a big deal.

All signs point to them taking Odyssey seriously. Their app is polished, their rollout is slow but deliberate, and they’re thinking through the user experience without relying on the same low-effort gimmicks we’ve grown accustomed to seeing.

Very refreshing given NFTs are slowly becoming a place where major brand reputations go to die a fiery death.

And collectors are starting to pay attention. As of today Starbucks NFTs have received $180,000 in volume, with some individual NFTs selling for as much as $1,900 despite being claimed for free less than 90 days ago.

You can check this post to learn more about how people actually get these “Stamps”, and also to see someone sell an $80 Stamp that has since 20x’d (oops).

This next drop represents a big change. Instead of giving people free NFTs as rewards, they’re now selling NFTs directly. It’s an experiment for sure, one that many brands are probably watching as a potential proof-of-concept.

But is it worth buying? Imagine a Venn diagram where one circle is “you like coffee” and another circle is “you like NFTs”. If you happen to fall in the middle of those two circles then yeah this might be the one you’ve been waiting for.

But what if you don’t care about the coffee? Still worth it?

If you ask the person who bought that Starbucks NFT for $1,900, they might say something like:

Well if Starbucks manages to convert even 5% of their existing rewards members, it’d be enough to make this one of the largest NFT ecosystems in the space.

That's fundamentals. Don’t overthink it bro.

Ok Warren Buffet, that’s true. But there’s more to it than reach, there’s also intention. At the end of the day this is a loyalty program designed to get people to buy more coffee. It’s not about making a small group of speculators rich. That might mean making decisions that don’t optimize for floor price growth — a wild idea, I know.

We haven’t seen a web3 loyalty program like this before. There are no comparisons to what Starbucks is trying to do here, and the truth is even Starbucks doesn’t know what’s about to happen. So make sure you understand what you're getting into.

Then again, a simpler analysis would be to say:

  1. The only other limited Starbucks NFT trades for $1,900 with 5k supply

  2. $1,900 > $100 mint

Maybe don’t overthink it bro?

By the way, Dunkin’ Donuts are you just gonna let them do that to you? Stop asking stupid philosophical questions and airdrop us a munchkin.

Added to: Mint List Rank #6 ✨

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