With a $2.5 million sale, the Pudgy Penguins NFT Collection moves on to the next chapter

The collection of 8,888 digital penguins was sold for 750 ETH to LA-based entrepreneur Luca Netz.

After a long-awaited 750 ETH ($2.5 million) sale, the Pudgy Penguins non-fungible token (NFT) project has a new leader.

According to persons familiar with the arrangement, a consortium led by Pudgy Penguins owner and Los Angeles-based entrepreneur Luca Netz would buy control of the initiative, as well as royalties, from the project's original four co-founders. Along with his associate Cameron Moulène and numerous other stakeholders, Netz will be the new leader of "The Huddle."

The buyers' group will have control of the project, allowing them to issue a token and conduct airdrops to other NFT series holders, among other things.

The agreement comes after the Pudgy Penguins' founding crew was voted off in an acrimonious Discord poll in January. Owners of the adorable flightless digital birds have been waiting for news on the project's uncertain future since then.

"This deal has taken a lot longer than I expected," said Netz, who last spoke with CoinDesk in January, when he and the previous founding team reached a preliminary agreement.

As reports of a transaction completion floated on Friday, Pudgy Penguin trading soared on NFT marketplace OpenSea. After trading swung between 0.7 and 1.4 ETH in recent weeks, the floor price of a Pudgy Penguin rose as high as 2.5 ETH. The cheapest penguin on offer cost 2.2 ETH at the time of publication.

Netz planned to announce the sale's end on social media late Saturday, and in an interview with CoinDesk on Friday, he said the transaction was "100% not an April Fool's joke," which explains why he decided to wait until after April 1 to go public.

"Everything is in place to make this one of the most well-known initiatives of all time," Netz added, declining to elaborate on specific roadmap items but implying at least one retail relationship.

New leadership is in place

The Pudgy Penguins have become one of the most popular NFT collections, with over 49,000 ether in trade volume (about $171 million at today's ether prices) on the NFT marketplace OpenSea since their launch in July 2021.

It was mentioned in a New York Times article about the NFT movement last summer, and it now has superstars like NBA All-Star Steph Curry and rapper Tory Lanez as owners.

"My first NFT buy was penguins," Netz told CoinDesk. He was intrigued to the collection because the digital penguins, who are dressed in anything from wizard hats to bow ties, "emit joy," he adds. Last summer, Netz bought his first penguin for roughly 0.1 ETH.

"When looking at an NFT project, it's a fascinating experience to feel," Netz stated. "The most compelling collections are those that provoke emotion."

The project's initial reception was described by Twitter user JoeyMooose as "so darn cute and everyone loved them." During an emotional Pudgy Penguins Twitter Spaces event, JoeyMooose, who owns a Pudgy Penguin with a green mohawk, developed the collection's popular rallying cry, "I am my penguin and my penguin is me."

Netz, who created a successful drop-shipping firm before dabbling in NFTs, says he'll be in charge of the project's marketing and hopes to make the Pudgy Penguins "a brand that's known both inside and outside of the NFT industry."

"It would be fiscally irresponsible if I didn't do that," Netz said when questioned about a prospective Pudgy Penguin toy.

Wen $PENGU Token?

The long-awaited Pudgy Penguins token was rumored to be announced on Friday, fuelling the penguin purchasing frenzy even more.

"Speculative frenzy is starting to build around NFT floors when there's the anticipation of tokenization, even if it's often just hearsay," claimed Twitter user GiganticRebirth, who owns the rare Ghost Penguin. "With tokenization, the idea that NFTs would function as yield-bearing assets is strengthened."

A move like this would follow in the footsteps of Yuga Labs' Bored Ape Yacht Club, which recently debuted its ApeCoin ($APE) coin.

Netz rejected the rumors, but assured that a token that "respects the law" would be delivered at some point.

On Friday, Netz told CoinDesk, "If [Bored Ape Yacht Club] does it, we will do it." "However, it's not something I want to deal with right now."

Penguin takeover

Pudgy Penguin owners, dubbed "The Huddle" and "Pengus" collectively, have had a rough few months following their initial rocket to stardom.

With multiple "accidental" de-listings on OpenSea and falling sales thus far this year, professional leadership has been desperately needed.

The initial Pudgy Penguins founding team made ambitious promises to the community, including launching a children's book, a token, and a metaverse game focused around the penguin photos, according to several sources. None of the projects were completed in the end.

Meanwhile, pricing for other profile image initiatives such as Bored Ape Yacht Club and Cool Cats skyrocketed last fall, leaving many Pudgy Penguins NFT holders unhappy.

Cole Thereum, the co-founder of the Pudgy Penguins, did not respond to many requests for comment via Twitter.

Tensions reached a peak on Christmas Day last year, when a much-anticipated airdrop showed NFTs of fishing rods, which had been misspelled as "rogs" at the time.

"That was the straw that broke the camel's back," said Pudgy Penguins community manager ActuallyAgents on Twitter, adding that many penguin owners were expecting a game at the time of the presentation. "Imagine waking up on Christmas morning to find your granny had given you a PlayStation 2 game, but you didn't have one."

In January, the Twitter user 9x9x9 (who also happens to be the owner of the rare Banana Penguin) posted a thread saying that the Pudgy Penguin creators had depleted the project's treasury of funds and offered to sell the project's shell to him for 888 ETH.

The news generated outrage in the Pengu community, culminating in the disastrous Discord vote that saw the founders voted out. A Pudgy Penguin's floor price has dropped to 0.5 ETH.

At the igloo, there are barbarians

Following the vote, the project descended into chaos, with competing bids, a white knight offer, and a grassroots effort to split the community all taking place on social media.

In early January, a bidding war erupted over the project, with Luca Netz proposing 750 ETH to buy the penguins. Mintable CEO Zach Burks and NFT influencer BeanieMaxi both made public competing bids.

GiganticRebirth, a pseudonymous trader, offered Thereum and the founders 750 ETH in exchange for them to "wait for a more acceptable buyer," a proposition that went unheeded.

Another anonymous trader, Vincent Van Dough, who runs the Three Arrows Capital offshoot Starry Night Capital, announced on Twitter that he would be "wrapping" his 50+ penguins in an effort to stop royalty payments to the original founders and kickstart the formation of a community-owned decentralized autonomous organization (DAO).

A smart contract that wraps an asset and issues a counterpart asset is referred to as "wrapping." Wrapping, according to the logic, would allow a penguin holder to keep the aesthetics of their NFT while cutting ties with the original Pudgy Penguins ERC-721 contract. Wrapped penguins can be returned to their original state at any moment.

During a CoinDesk Discord call, Metadrop co-founder Psyopcop remarked, "We saw this as a perfect chance to design a tool that would offer the community some leverage."

Metadrop is an NFT platform that released the wrapper's code, which has since been adopted by other NFT groups in disarray.

Even for those who did not opt into the wrapper, the threat transformed the smart contract into a game of nuclear politics. "They prefer having it as an alternative," loomdart of Metadrop said. "Just having it provides leverage to the community."

Data from Nansen showed a supply of 560 wrapped penguins, or about 6% of the whole project, as of Saturday afternoon.

"I think Wrapped Penguins is a really unique experiment that allows community members to opt out of the established quo," said Alex Svanevik, the CEO of Nansen and a Pudgy Penguin owner himself. "You might argue that it's a fork of the original NFT collection created by the community."

Van Dough also challenged Mintable's Burks to make a "legit bid" on his rare Shark Penguin, promising to get out of the way and stop the "wrapping" efforts if he did.

JoeyMooose stated at the time, "The vibrations are simply bad right now." "It irritates me that people are treating this like a chess game."

"There's too much drama for me to keep up with," 9x9x9, who has now switched his focus to his OpenDAO project, agreed.

Rare (and costly) penguin collectors frequently wield disproportionate power in the Pudgy community.

Rare penguins (clockwise, from top): 9x9x9’s Banana Penguin (purchased for 100 ETH); Vincent Van Dough’s Shark Penguin (purchased for 69 ETH); GiganticRebirth’s Ghost Penguin (purchased for 100 ETH). (Images from OpenSea)

The ‘Huddle’ moves forward

As the Netz leadership team takes over, the Pudgy Penguins are looking to start a new chapter.

"I'm incredibly enthusiastic and confident in Luca and the team he's assembled," said Twitter user ActuallyAgents, who will continue to be a leader under the new government.

"Aside from their stellar track record in business, the concept of compassion and inclusion he wants to instill in the penguins is exactly what the space requires."

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