When a popular NFT project launches a token, expectations run high. Given the disastrous launch of a token by Doodles just last week, the reception for such efforts might be decidedly muted. The token’s value has had a hard time retaining its dramatic rise. Most of us are no longer wondering if this is merely a blip or something more systemic. FakeBollinger.com is dedicated to studying precisely why so many NFT projects have failed in the token dominated space. We’re going to dive into what this means for their future.

DOOD's Rocky Start: By the Numbers

The early performance of DOOD has been nothing short of dismal. Just a few days after its introduction, the capitalisation jumped above $100 million, but then fell like a stone to about $60 million. This sharp decline puts significant pressure on the sustainability of the token, as well as the motivation behind launching the token in the first place. According to CoinGecko, the floor price of Doodles NFTs dropped by nearly 60% immediately following the airdrop. This dramatic reversal continues the trend of drama around the problematic project. This can be indicative of a lack of confidence in the token’s utility. Or they’re simply not convinced that it can bring meaningful value to the original NFT collection.

Beyond these issues, the airdrop itself arguably missed the mark, with various crypto commentators—including those sympathetic to the initiative—bemoaning the airdrop as “underwhelming.” This sentiment went a long way to catalyze these immediate sell-offs and add more downward pressure on price. At the moment, DOOD price is sitting at about $0.0076955, which is a long way away from that lofty $0.2 target by 2025. Despite this enormous long-term potential, the early returns are quite alarming. This is an urgent matter that the team must address in order to restore investors’ confidence.

It goes without saying that market conditions are in the background at all times. Outside of the project itself, the larger crypto market is always a major factor in the success or failure of any token launch. Despite all of this, DOOD’s results are downright fascinating. It begs the question about what exactly is driving the Doodles ecosystem.

Doodles vs. Pudgy Penguins: A Tale of Two Token Launches

To understand the situation with DOOD, it's helpful to compare it to another recent NFT token launch: Pudgy Penguins' PENGU. Though both projects have carved out their own niches in the symbolic NFT space, their tokenomics strategies and methods of community allocation vary widely.

One key difference lies in community allocation. Of the total DOOD supply, Doodles has reserved a spicy 68% of the total DOOD supply towards community and community growth initiatives. By contrast, Pudgy Penguins set aside only 9% of PENGU tokens for their community. This applies to owners of Pudgy Penguins, Lil Pudgys and Pudgy Rods NFTs. Pudgy Penguins set aside 4% of the token supply to support public good initiatives. The opposite is true for Doodles, where it is unclear how much is even allocated for. For example, Pudgy Penguins airdropped roughly 23.5% of all PENGU’s supply — or approximately 20.9 billion tokens — to NFT holders. Sadly, we don’t have the same information for Doodles.

Another huge change is how much gets allocated to the company in general. Doodles reserved an excessively large 48% of DOOD tokens for the company itself. Pudgy Penguins’ parent company, Igloo Inc., was allocated 11.48% of the total supply of PENGU token. For the community, this shift in funding priorities could manifest itself in a number of ways. Others might see a big company allocation as a negative.

Both DOOD and PENGU were released on Solana, making this example a demonstration of the increasing occurrence of Ethereum-native NFTs moving to other blockchains. Doodles has plans to take DOOD to Base, an Ethereum L2. Whether DOOD can recover and reach its potential remains to be seen, but the comparison with PENGU highlights the importance of careful planning and execution in the token launch process.

Lessons for NFT Projects Considering a Token Launch

Doodles and Pudgy Penguins are two completely opposite stories. Their journeys offer key insights for NFT projects preparing to release their own tokens. Here are some key takeaways:

  • Community Engagement is Paramount:

    Successful NFT projects thrive on strong communities. Building a dedicated and engaged community before, during, and after the token launch is crucial. This involves actively communicating with members, soliciting feedback, and creating opportunities for participation. Community members are the backbone of any NFT project.

  • Tokenomics Matter:

    The tokenomics – the token's supply, distribution, and utility – must be carefully designed and aligned with the project's goals. A well-designed tokenomic model can incentivize holding, promote community participation, and drive long-term value. A poorly designed model can lead to speculation, volatility, and ultimately, failure.

  • Transparency and Communication are Key:

    Open and honest communication with the community is essential for building trust and credibility. Projects should be transparent about their goals, challenges, and progress. Regularly updating the community and addressing concerns can help maintain confidence and prevent negative sentiment.

  • Unique Value Proposition:

    Both Doodles and Pudgy Penguins have unique value propositions that set them apart. Doodles emphasizes art and creativity, while Pudgy Penguins takes a playful approach. What makes your project stand out?

  • Be Prepared for Volatility:

    The NFT market is notoriously volatile. Projects must be prepared to navigate market fluctuations and adapt to changing conditions. This requires a long-term vision, a strong team, and a willingness to adjust strategies as needed.

  • Community Engagement Strategies:

    • Give community members the chance to participate in trivia games.
    • Encourage creative challenges within the community.
    • Foster friendly competition to boost engagement.
    • Use NFTs as 'thank yous' within a community.
    • Allow original creators to earn residuals from NFT sales.

The DOOD launch serves as a cautionary tale, highlighting the challenges and potential pitfalls of launching a token in the NFT space. By learning from these experiences and focusing on community engagement, sustainable tokenomics, and transparent communication, NFT projects can increase their chances of a successful token launch and long-term growth.