Azuki, a prominent blue-chip project in the NFT bear market, recently unveiled a new series called Azuki Elementals. This launch piqued the interest of numerous investors, and the captivating animated promotional video, which ran for over a minute, surpassed all expectations.
However, it remains puzzling how such a well-regarded blue-chip project like this suddenly plummeted to its lowest point, as depicted in the image below.
Overview
Azuki, alternatively spelled as adzuki, translates to red mung bean in English and is widely popular in numerous Japanese desserts as a sweet component. But how did this bean transform into art?
Azuki is a collection of non-fungible tokens (NFTs) created by Chiru Labs, a Los Angeles-based startup founded by a team of artists and technologists. Each Azuki NFT serves as a digital avatar, granting its holder membership access to an exclusive online club called The Garden.
The unique art style of Azuki quickly propelled it to success. Within just four months of its launch, the collection ranked among the top NFT collections in sales volume, joining established names like Bored Ape Yacht Club and CryptoPunks. However, Azuki’s meteoric rise has also raised concerns, particularly regarding the founder’s history of leaving projects unfinished.
Azuki Elementals: Where it all went wrong
The Azuki Elementals represent the third installment in the rapidly expanding Azuki universe, following the initial Azuki collection and the Beanz series. The launch of Azuki Elementals proved to be one of the most highly anticipated NFT drops in recent memory, with 10,000 Ethereum profile pictures (PFPs) selling out in approximately 15 minutes and generating a staggering $38 million worth of ETH for Chiru Labs. During the initial mint, Azuki Elementals NFTs were sold for 2 ETH (around $3,800) each, while an additional 10,000 NFTs were airdropped at no cost to the holders of the original Azuki NFTs.
The Fall
However, the enthusiasm seems to be dwindling as some holders are now selling Elementals at a lower price than the original mint value due to concerns over the artwork. A number of holders, NFT enthusiasts, and creators have voiced their dissatisfaction with the Azuki Elementals’ design on social media, pointing out the striking resemblance to the original anime-inspired Azuki PFPs.
Upon closer examination, both collections exhibit similar attributes, such as facial features, angles, and overall style, leading some critics to label the Elementals as a less expensive counterpart to the main collection. These close similarities might have prompted holders to unload both the primary Azuki collection and Elementals, resulting in a decline in their market value below the initial mint prices.
But a team member debunked this issue as a technical issue that will be fixed soon. With a good look at the NFTScan data, you could also spot that they are no longer identical.
The Ripple effect
Based on NFTScan data spanning a month, on June 27th, 2023, the launch date of the NFT, 1,947 traders purchased the NFT, only for 1,609 of them to sell it later.
This led to the floor price of the NFT plummeting to 1.17 ETH at the time of writing, with the lowest recorded price in the last 24 hours being 0.96 ETH. Consequently, the NFT lost approximately 48% of its initial value, considering that it had a minting price of 2 ETH.
Aftermath
A group of Azuki NFT holders established the Azuki DAO with the aim of seeking a $38 million refund from Chiru Labs, the creators behind the contentious Azuki Elementals project.
However, the DAO fell victim to an exploit by two hackers who managed to abscond with 35 ETH, leading to a financial loss of $68,659. Undeterred by this obstacle, Azuki DAO is currently working with legal counsel to initiate legal proceedings against Zagabond, the enigmatic founder of Azuki, and to pressure Chiru Labs into returning the profits generated from the Azuki Elementals launch. Notably, some Azuki holders have voiced their disapproval of Azuki DAO’s actions, arguing that they do not accurately reflect the desires of the wider community.
Conclusion
The Azuki Elemental project serves as a cautionary tale in the rapidly evolving NFT space. Despite its initial success and hype, the project faced significant backlash due to concerns over the artwork’s similarity to the original Azuki PFPs, leading to a sharp decline in market value. The subsequent formation of the Azuki DAO and its pursuit of legal action against Chiru Labs further highlights the complexities and potential pitfalls that can arise in the world of NFTs. As the industry continues to grow and evolve, both creators and investors must remain vigilant and adaptable to navigate the challenges and opportunities that lie ahead.
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