Dialogue with Puffpaw founder Reffo: Smoking and mining is cool

Written by: Arain, ChainCatcher

Good news for smokers, smoking will soon make money.

To be precise, this is a project to help people quit smoking. Smoking is just a behavior, the goal is to quit smoking, and X-To-Earn is the mechanism.

Puffpaw, a project on Berachain that focuses on "quit smoking and make money", announced on September 5 that it has completed a $6 million seed round of financing. At the same time, as the first DePIN project on Berachain, Puffpaw has received support from the Berachain Foundation.

"We are now developing e-cigarettes and sensor equipment ourselves. At this stage, we have a brand new e-cigarette brand. We explore Web3 to enhance the consumer experience and help people quit smoking. In the future, our sensors will support more e-cigarette brands. Selling e-cigarettes and cartridges is not our ultimate business goal." Puffpaw founder Reffo said in an exclusive interview with ChainCatcher.

Reffo and two other partners are already in the e-cigarette industry. They have their own brands in the United States and have an entire supply chain that covers production, OEM, tobacco, etc. After spending some time in the Web3 industry, Reffo gradually clearly described "making money by smoking" - an e-commerce application scenario that combines e-cigarettes and blockchain, so he started to start this idea at the end of last year.

Currently, Puffpaw has completed the early development of e-cigarettes and hardware, and the team has expanded to 15 people. They will launch the TG mini-game in October and cold-start it in the form of NFT.

Interestingly, Reffo also mentioned that Berachain was chosen because its culture and community consensus are more compatible with the project, and the name of Berachain founder "Smokey" sounds related to cigarettes.

The following is the full text of the conversation:

Making money by smoking? NO, making money by quitting smoking

ChainCatcher: Can you briefly describe your project first - a project about making money by quitting smoking. Reffo: We mainly help users quit smoking through the X-To-Earn mechanism, which mainly involves a hardware. A sensor chip is used between each electronic cigarette and the cartridge, which is associated with the mobile phone app through Bluetooth binding, and the user's smoking behavior is monitored online intelligently. We mainly promote a nicotine-free, all-natural new formula cartridge, so our mechanism is that if you smoke this nicotine-free cartridge, your money-making benefit is the greatest. The more you smoke this cartridge, the more you earn. However, this cartridge has a daily intake limit, because our purpose is not to encourage users to smoke as much as possible. Within the basic upper limit, the more special nicotine-free cartridges you take, the more incentives you will get, but beyond a certain range, the money-making benefit will decrease or even disappear. If you are a heavy smoker, you definitely want something long-term. But if you are not a smoker. For example, Web3.0 users, you will pay attention to the benefits of making money, and you may give e-cigarettes to your friends, so you two can share the benefits together.

ChainCatcher: You mentioned that you produce your own equipment?

Reffo: Yes. My other two partners are already in the e-cigarette industry, and the three of us are college classmates. We went to school together in Pennsylvania. Now, we have our own brand in the United States, with our own supply chain, covering production, OEM, tobacco, etc. For example, one of our partners used to be the global BD director of Small, and later came out to do his own brand. He served clients such as Korean Tobacco KT&G, and OEMs including the world's four largest tobacco companies. Because e-cigarettes have developed very rapidly in recent years, I joined them to develop the US business together and help them run offline. We also made our own brand in the United States. Last year, our global e-cigarette factory output was 76 million.

ChainCatcher: How was the idea of ​​"making money by smoking" triggered?

Reffo: I had this idea in 2021, and this idea came from my participation in many large-scale Web3 offline events and gatherings. I saw many people smoking at the entrance of many conferences, either smoking e-cigarettes or cigarettes. This situation is too common. In other words, the Web3 community and the smoker community are highly overlapped. So many people get together to smoke and chat, and most of them are young people. The deeper reason may be that when doing transactions or development, there is pressure and anxiety that needs to be released, and smoking is one of the ways. What I have seen is that Web3 has a higher smoking rate than ordinary industries. Since I have been in the Web3 industry for a while, I thought about moving e-cigarettes to the chain and making a fun game.

I had this idea, and then I started writing a white paper. As I was writing the white paper and studying the mechanism, I thought that users should not be encouraged to smoke more cigarettes or more e-cigarettes, and the goal should be to quit smoking. But we can't let them quit all at once. Our final decision was to use a mechanism to help everyone gradually quit nicotine. Because smoking is not a hobby, it is an addictive thing. Non-smokers cannot understand the process and pain of a person quitting smoking, which is why there are still 1.3 billion smokers in the world. Instead of doing something unrealistic, it is better to make the process interesting, use incentives to make things more interesting, and combine the advanced machine form of e-cigarettes to replace traditional cigarettes. I think this is an e-commerce application scenario combined with blockchain.

I believe I am not the first person to think of "making money by smoking", but to implement this idea, there needs to be a strong supply chain behind it, with the knowledge of the e-cigarette industry, and superimposed on the operation of Web3 brand and community building. These elements together can truly be implemented and gain the support of users. From the end of last year to the beginning of this year, I felt that I was ready to really start this idea.

ChainCatcher: The goal of the game is to reduce nicotine intake. So after users successfully quit nicotine, will it lead to a reduction in the consumption of cartridges?

Reffo: There is no data or research on the market that shows that smoking e-cigarettes is due to addiction. Some are, and some are not. The existing data is inaccurate and has no reference value. What we know is that it is not just because nicotine addicts use e-cigarettes as comfort. Many people just need to take a few puffs when they are anxious. Sucking is a stress response of humans, which has existed since infancy. This is the same as some people biting their nails when they are nervous.

Only if we really help others quit nicotine, we may have this part of the data, that is, how many people will continue to smoke e-cigarettes after quitting nicotine, or not.

What we can be sure of now is that the existing mechanism ensures that any user will be incentivized for the first 150 puffs within 24 hours, but there will be no incentive to achieve this goal every day. At that time, it was simply consuming e-liquid, and when the e-liquid ran out, you needed to buy cartridges, and the cartridges needed to be exchanged with Tokens. From the perspective of income, the first puff of a day is the most profitable, and the more you smoke, the less profitable it is, and you start to lose money after 150 puffs.

Thoughts on the sustainable business model of DePIN for quitting smoking

ChainCatcher: When did you start working on Web3? What was your background before that? Reffo: I entered the Web3 industry at the beginning of the pandemic in 2020. From last year to the year before last, I was working on a SocialFi project, which was not very successful, so I left and met two of my college classmates. They knew what I was doing, and I also knew what they were doing. In July last year, the three of us started working together. My strengths are marketing and branding, while the two of them are responsible for supply chain, production and logistics. ChainCatcher: What opportunity prompted you to choose to join the Web3 industry? Why did you consider joining this industry? Reffo: I have many friends who are VC and PE, including myself who was a VC for a short period of time. Most of my work experience is in real estate investment and development, and more of my work focuses on research. Between 2020 and 2021, some of my VC friends resigned and went all in on Web3, and they had some influence on me. In April 2020, the epidemic in the United States suddenly became severe, which made it difficult for me to go out to work. Based on my pessimistic view of the future of the industry, I resolutely decided to leave my industry and resign to stay at home. Influenced by my friends around me, I started playing NFT at home and entered this industry as an ordinary consumer or player.

ChainCatcher:  Why did we choose the DePIN track to start a business?

Reffo: This is a coincidence. If you look for opportunities in this track because an opportunity is hot, it is a misunderstanding. This is an investment logic, not the logic of entrepreneurs looking for opportunities. We are in the e-cigarette industry and have industry resources. I know that the concept of "making money by smoking" will definitely be popular. So if I want to start a new project, I will naturally do it according to my own advantages and background. Now I accidentally became a DePIN project.

Many other DePIN projects are doing infrastructure or content related to data computing and AI. They are hard-core technologies. They are physical infrastructure. But what we do is a decentralized consumer network, which is an Internet infrastructure. For example, our users have NFC on their e-cigarettes. You can add friends by touching two cigarettes. You can see the information of another person on the mobile phone APP. We will encourage users to add friends through "collision" and encourage them to add friends to each other to build a consumer community. I think we, as a DePIN project, have broadened the definition of DePIN.

ChainCatcher: DePIN projects can usually foresee future income, usually by selling equipment. In addition to selling cigarette cartridges, what other sustainable business models do we have? Reffo: Our project will adopt the form of NFT. 10,000 NFTs will be issued in the initial stage. When players get NFTs, they will get a free e-cigarette and three cartridges. After players get the physical products, they enter the game and need to complete specific behaviors to consume "cartridges" every day. After consumption, they need to buy new cartridges. Tokens are required to buy cartridges, and players need to keep buying to keep participating in the game. In addition, early holders will receive additional benefits. As the user scale expands, we will enter the traditional market, such as offline. The sales scale of this part of offline will be very large, and the daily sales volume may reach hundreds of thousands to millions. For this part of the sales, we will encourage everyone to trade with tokens and provide discounts. In the later stage, there will be a data strategy. As the number of platform users increases, the value generated by data will increase. Our potential users are 1.3 billion smokers worldwide, and they are the most typical sub-healthy people. Our new e-cigarettes can record user behavior data. Our platform will collect a large amount of user data, including smoking habits, and eventually form user portraits of sub-healthy smokers and consumers. These data are not only used for consumer insights, but also for health data, especially in respiratory health.

Now, the e-cigarette industry cannot be sold online, which makes it impossible for brands to directly contact end users and data. Therefore, the research and development of e-cigarettes on the market has a lag period of about one year, and the reference significance of consumer data based on research and development is relatively limited. Our platform directly attracts a large number of users and forms a traffic advantage by incentivizing users to upload data. User data is controlled by users and can be disclosed to third parties to realize data monetization, and users can also obtain income from it.

Therefore, our platform revenue comes not only from the C-end, but also from the B-end, such as pharmaceutical research and development companies, medical device companies, etc.

Our long-term goal is to cultivate brand loyalty through product innovation and user participation, rather than simply relying on token incentives. This is different from the model of traditional e-cigarette brands relying on offline channels and brand loyalty cultivation. In addition, I would like to add that we are different from pure X-To-Earn games, because we have products, which are still e-cigarettes. We are cultivating a new brand ourselves, which can allow users to repurchase and generate income, and rely on physical equipment behind it.

ChainCatcher: Why did you choose Berachain to go online first?

Reffo: We are an X-to-earn project. At that time, we considered Base, Solana, or a new Layer1 public chain that has not been launched. We did not choose Base because we felt that consumers on it were not so interested in games, and the distribution area was mainly in the United States, which was not very compatible with us. There are too many DePIN projects on Solana, and we did not consider it. We chose Berachain because its culture and community consensus match ours, and the name of the founder Smokey sounds related to cigarettes. Berachain also has NFT, which has a layer of religious belief in it. This kind of radical cultural community matches the X-to-earn game. In addition, this public chain community is very active and has a strong community consensus. In the process of dealing with their ecology, I found that they are very supportive of the concept of our project, so we finally decided to go to Berachain.

Start the project with e-cigarette NFT, give priority to the development of the Korean market

ChainCatcher: You can only play your game with the e-cigarette equipment you developed yourself. How to get your e-cigarette equipment?

Reffo: We sell early NFTs on the official website, conduct a round of sales through NFT, and then mainly conduct them in the APP. No direct sales will be made on the official website. Because the consumption scenarios of users using e-cigarettes are mostly outdoors, our sales and Internet monitoring will be based on our APP. At present, we are giving priority to entering the markets of leading countries such as South Korea, because there are many smokers in South Korea and the market potential is huge. We have cooperated with local e-cigarette brands in South Korea to directly send products to South Korea, fill them with oil in South Korea and then ship them directly to our end users, bypassing offline channel dealers, so as to compete with traditional brands in terms of price and cost and provide more cost-effective products.

Our hardware products are produced by ourselves to ensure the quality. Our products have been unveiled in offline activities such as ETHCC and KBW, and the response is good. There is no commission from middlemen, and consumers feel that their performance and experience are better than most products on the market.

ChainCatcher: Will you start from the Korean market first?

Reffo: Yes, we will even open an offline flagship store in Seoul. This flagship store is not an ordinary offline e-cigarette store, but mainly a consumer experience store, so that consumers can feel what is the difference between us and other traditional e-cigarette brands and let them feel it for themselves. This also includes the X-To-Earn gameplay. We mainly hope that through Korea and this flagship store, we can quickly radiate the entire Asian market. In the future, we will also open offline experience stores in other places.

ChainCatcher: It took you five months to grow from 22 participants in the weekly community conference call to 166 participants. Can you share your growth secrets?

Reffo: Our project began to be promoted to the outside world in April this year. We have been doing community AMA almost every week, and only missed one week during KBW. As long as you actively communicate with the community and do not work behind closed doors, as long as you do well, everyone will see you. In summary, you should work hard to build the community.

ChainCatcher: How big is the team now? Reffo: The team now has 15 people, mainly focusing on brand building, operation and BD, because we have completed the early hardware R&D and production, and our two partners have enough experience and deep industry background, so there are not too many people in this area. ChainCatcher: Can you reveal the rhythm of the next few important events? Reffo: We will launch our TG mini-game in early October, and we will pre-sell our first batch of 10,000 Genesis NFTs (we call them Puff Passes) and Genesis cartridges in mid-to-late October, which basically matches the launch time of the Berachain mainnet. After the sale is completed, we will send 10,000 e-cigarettes to users to let them enter the game.

Entering the game means that the contract deployment and APP listing are also completed, and these major actions occur almost at the same time. We will ensure that users can play the game when they receive the e-cigarette.

The game is divided into several quarters to advance: the second season of the game will be updated in the first quarter of next year, and our data platform and vape2earn products that are dedicated to the Japanese and Korean markets for heating without burning (similar to IQOS) will also be launched. Our players will expand as we push forward quarterly. After the third season of our game, that is, after the expansion of these three nodes, we will start to layout the offline market in the middle of next year, and truly enter the traditional world and compete with ordinary e-cigarette brands.

In addition, we are also making a sensor, which can be connected to any ordinary e-cigarette on the market through the TYPE C interface, even a disposable e-cigarette, and then collect user data. In other words, at this point, we have become a sensor company, selling sensors, and no longer doing the e-cigarette business. This has broadened our user range and countries. Our real goal is to build the Puffpaw platform, which can reshape the entire industry chain on the one hand, and help users accumulate and monetize their consumption data and health data on the other hand, so as to provide users with more rewards in the long term, rather than just the profit incentives brought by the early vape2earn.