Overview of Pudgy Penguins token economics, issuance path and ecosystem vision

Author: TPan Source: substack Translation: Shan Ouba, Golden Finance

Last week, during the Art Basel event in Miami, the Pudgy Penguins team announced that they would launch their own token PENGU.

I have to admit that I was a little excited when I saw the news, and even pulled my wife to watch this video on TV (she seemed to like it too...?). This excitement is not only because I own a Pudgy Penguin myself, but also because no other top NFT project has released a similar token since Yuga Labs' Bored Ape Yacht Club launched its APE token in March 2022. Moreover, I have been following and documenting the efforts and achievements of this project as it gradually transforms from a simple digital avatar (PFP) and collectibles to an ecosystem with real value, including their GIF strategy, retail market expansion, and gradual transformation into an airdrop hotspot.

What is unique about the PENGU token

1. Short preparation period

Although rumors about Pudgy Penguins' plan to launch a token have been circulating for many years, the official announcement that PENGU will be officially launched in 2024 was not released until December 5th. As of the time I write this (Dec 10th), the token has not yet been launched, but it will most likely be launched in the next 3 weeks.

Usually, airdrops related to assets or ecosystems have a long preparation period (months or even years), and there will be strong signals heralding the launch of the token, or locking in the airdrop qualification by announcing a snapshot date. However, PENGU did not take such a route.

This triggered a heated reaction in the NFT market:

• The reserve price of Pudgy Penguins rose from about 16 ETH (about $61k) to 23 ETH (about $83k).

• The base price of Lil Pudgies (and its sub-series) increased from about 1.7 ETH (about $6.5k) to 2.5 ETH (about $9k).

Token Positioning

Is PENGU a meme coin, a utility token, or a cultural token?

It seems to be a combination of all three, and may take on more roles in the future. Currently, it is described as the official token of Pudgy Penguins, serving this NFT project positioned as the "face of cryptocurrency."

While calling themselves the “face of cryptocurrency” is a subjective statement, Pudgy Penguins does have solid foundation to back up the claim:

• 34 billion GIF views: Just about everyone has seen a Pudgy Penguins GIF;

• 1.6 million Instagram followers: The content is adorable and relatable;

• 522,000 followers on the main TikTok account, and 1.1 million followers on the Pudgy Kindness account;

• Over 1.5 million Pudgy toys sold worldwide, available at retailers like Walmart, Target, and Amazon.

For those who are not involved in cryptocurrency, PENGU provides a new way for Pudgy Penguins fans to establish a deeper connection with characters, brands and intellectual property (IP), no longer limited to buying toys or interacting with content.

This is consistent with my previous point that "cryptocurrencies are better stocks". Holding PENGU tokens can be seen as becoming an owner or stakeholder of the Pudgy Penguins brand in a new way, just like buying shares in the company has similar meaning.

For some, it’s an investment; for others, it’s a way to express fandom; or both. Plus, as the brand grows, the token’s uses could expand further.

Why Solana?

The decision to initially launch the PENGU token on the Solana chain has sparked some confusion and early criticism. Considering Pudgy Penguins is currently based on Ethereum, and its parent company The Igloo, Inc. plans to launch its own Ethereum Layer 2 blockchain Abstract, why not wait until Abstract is ready?

Here are the thoughts the team shared at Inner Igloo, a biweekly discussion for Pudgy NFT holders:

1. Opening up new user groups: The Solana ecosystem has not yet been exposed to Pudgy Penguins, and this is a great way to cross-promote and attract more PENGU holders;

2. Catering to Solana’s culture: Solana is known for meme coin transactions, and tokens like PENGU are likely to be warmly welcomed;

3. Technical maturity: If the timing permits, PENGU may be launched on Abstract, but the blockchain is not ready yet, and the team believes that the token should not force it to go online in a hurry. In the future, there will be options to bridge PENGU cross-chain to Abstract (and other blockchains).

Token Economics

Pudgy Penguins presents its token economic model in a new and interesting way, rather than the traditional 20-page white paper and pie chart.

This cute style fully reflects the brand characteristics of Pudgy Penguins.

• Total supply: 88,888,888,888 (8.89 billion pieces), paying tribute to the 8,888 NFTs of the original Pudgy Penguins series;

• Claim period: 88 days.

Two of the distribution details stand out:

1. Other Communities:

About 24% of tokens will be allocated to “other communities”, which is comparable to the proportion allocated to the Pudgy holder community (about 26%).

On the surface, this seems unfair to the Pudgy community, but the scope of the distribution explains this decision:

• The Pudgy holder allocation will cover about 15,000 wallets;

• The other community allocation targets about 5 million wallets.

This is in stark contrast to 6th Man Ventures’ analysis of token design and distribution, which found that large-scale airdrops tend to perform poorly compared to airdrops focused on core users.

2. Positioning for mainstream consumers:

Unlike most infrastructure or DeFi tokens, PENGU is more like a cultural token or meme coin. This positioning is highly consistent with Pudgy Penguins’ strategy of targeting the mainstream consumer market.

While the specific list of “other communities” has not yet been announced (it may not be revealed until after the token launch), there are some hints and speculations, such as the two mainstream products Phantom and Moonshot have been replaced with Pudgy Penguins-style avatars.

Both apps released Pudgy-branded content only 8 minutes apart on Saturday morning. Is this a coincidence? I don’t think so.

If Pudgy Penguins wants to be the face of the crypto space, reaching out to the user base of Phantom and Moonshot is undoubtedly a wise move.

Another group of communities that may become recipients of the PENGU airdrop are projects that have provided airdrops or privileges to the Pudgy community. Over the years, dozens of projects and ecosystems have shown goodwill to the Pudgy community, and PENGU may be a way for Pudgy Penguins to give back to them.

In addition, at the Inner Igloo event, Luca mentioned another highlight related to token distribution: consumers who buy Pudgy toys and register Pudgy World by scanning the toys will also receive PENGU. This is another way to bring new audiences onto the chain.

Public Good

The allocation section that interests me the most is “Public Good”, which will receive 4% of the token supply.

At present, for the general public, cryptocurrency and Web3 are still generally regarded as gambling, virtual currency, scams, or things that make people scratch their heads. However, understanding the deeper meaning of cryptocurrency and Web3 requires curiosity, patience, and an open attitude - they are far more than these negative impressions, and there are many positive aspects.

One ​​of them is charity, and Pudgy Penguins is practicing this in its own way.

Take the Pudgy Kindness TikTok account, which has only posted 11 videos but has already amassed 1.1 million followers. The account focuses on different content creators and the stories behind them. For example, creator Bill (from Fishing With “Oh Dad!”)’s channel grew from 1,300 subscribers to 1.5 million after a touching video posted by Pudgy Kindness went viral three weeks ago.

With the introduction of tokens, projects like Pudgy Kindness will be taken to the next level. I am excited to see how it expands in the future.

This kind of effort usually does not get the immediate recognition it deserves because it does not directly increase the token price or "pull up the value of the asset". However, in the long run, it can bring goodwill and has the potential to change the public's perception of cryptocurrency, especially when this effort comes from a "cute fat flightless bird" who is known as the face of cryptocurrency.