NFTeasers #4 | Digital wearables are the SaaS of apparel and Nike is the new kingpin
Scoreboard | Adam Bomb Squad | Gambling Apes | Nike <> RTFKT
Welcome to NFTeasers from the Sunday:Drip Society crew. Each week, we explore the wild world of NFTs, from high conviction buys to hypothetical scenarios/predictions for your favorite projects. Occasionally, we feature upcoming drops and share why we’re bullish/bearish.
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Sunday:Drip members will eventually be eligible for fractional ownership in our DripVault. Current DripVault value is estimated at 2.25ETH (~$9K) on cost basis of .45ETH (~$1.8K).
This should go without saying, but our lawyers would like us to state that all of the content we produce in this newsletter is not financial advice and is for entertainment and informational purposes only. Thank you suits.
Welcome back to NFTeasers. On today’s episode, we’ll break down:
Scoreboard - analysis of our past performance
DripVault Pick - our move for this week: Adam Bomb Squad
High Conviction Bets - Gambling Apes
Hypotheticals - what could happen with the Nike <> RTFKT acquisition
I love writing this section each week because there’s no way to hide poor performance. Here’s how our picks have done:
High Conviction Bets:
Riot Racers Racetrack Land - Bought at 0.22ETH. Current floor 0.29ETH Current gain of 0.07ETH ($280). Feels like price action will continue to slide slowly until the game is released in Jan ‘2022. Anything below .2ETH would be a good entry point.
Galactic Apes - Bought at 0.95ETH. Current floor (apes+monkes) at 0.37ETH. Current loss of 0.58ETH (-$2,320). Feels like price action trending down. May reverse if game comes out on time (by end of year), but not looking good here. I’d stay out of this one.
RTFKT CloneX - Bought at 2.63ETH. Current floor at 4.77ETH. Current gain of 2.14ETH ($8,560). Price action popped heavy on Nike news and has slowly slide back down. Not sure where the level will be but in the short-term, it’s likely lower.
Shiny Feather - Minted at .1ETH. Current mint is still active. Floor is super thin, so we’ll call this one a scratch for now. Not a ton of detail has been shared on how these feathers provide utility, but I wouldn’t doubt Shiny.
Total 3 week “paper” gains: 1.63ETH ($6,520)
Floor Gen 1 - Bought at 0.14ETH. Current floor is 0.34ETH. Current gain of 0.2ETH ($800). Feels like price action holding steady.
Poolsuite Executive Member Pass - Bought at 0.2ETH. Current floor is 0.69ETH. Current gain of 0.49ETH ($1,960). Feels like current price action has found a level and it will hover around here until more news is shared
BYO Pills + Vape + Apostle (bonus) + Land - Bought original pill at .1ETH. Was given Vape for free. Threw in one of my personal avatars so the vault could have a full set. Paid .13ETH (with gas) to mint 1 BYOLand. Total current value of the set in the vault is 1.21ETH. Current gain of .98ETH ($3,920). Feels like price action is up. This team is out-executing most in the space.
Total 3 week “paper” gains: 1.67ETH ($6,680)
Total DripVault value: 2.24ETH ($8,960)
They’re not all going to be winners, but feel like we have a nice mix in here.
Full disclosure, Roman and I have personally funded the plays in the DripVault to this point and will continue to do so until the sundae mint is closer to completion. We believe in the S:D brand and what we’re building so much that we’re willing to fund it personally to ensure our members are getting utility from day 1.
We’re up almost 300% on invested capital in the first 3 weeks. We’ve established a high bar and hope to keep it that way.
This week’s pick for the DripVault is Adam Bomb Squad.
We love Bobby Hundreds and what he is built.
Streetwear and urban fashion are core influences for what we’re building on the physical side of Sunday:Drip. There’s no better streetwear brand attacking the NFT space than The Hundreds.
It’s important to note that this is more than just a price appreciation play…it’s mainly for long-term utility and access.
The Adam Bomb Squad was a 25K piece collection that really serves as a membership pass into The Hundreds universe.
That means, in theory, that by holding one of these bomb NFTs (kaboom), the DripVault will have a first class ticket and access into everything their brand puts out.
We should be able to use that utility to further bolster our vault or as giveaways for our community.
To date, Adam Bomb holders have gotten access to:
Family Style Fest - a food festival in LA with dozens of local restaurants and vendors
The Hundreds x Harry Potter collection - early access to The Hundreds limited release Harry Potter apparel collection
Stapleverse - access into the Allow List raffle for the Stapleverse, Jeff Staple’s debut NFT collection
Each of these demonstrates an example of how membership pass NFTs could pay dividends for you as an individual holder or the DripVault.
Family Style Fest and the Harry Potter collection are two examples of potential giveaways. For the food fest, we could have transfer the access of the NFT to someone in our community that lives locally in LA and wanted to attend.
For the Harry Potter collection, we could buy one of everything and run giveaways with our members.
The Stapleverse is a perfect example of how NFTs can multiply value overtime. The ABS NFT might earn us the right to purchase a limited quantity collection that almost surely will instantly appreciate in value.
I mentioned that The Hundreds have been on the forefront of showcasing what lifestyle brands can do to take advantage of the NFT space. Shopify recently debuted a token-gated integration they built with The Hundreds, creating a seamless experience for lifestyle brands to gate certain collections based on tokens in a wallet.
This is massive. Imagine the potential implications for brands. Tiered launches, special access and member-only collections become integrated into their normal workflow. Quite the move from Shopify as well to partner with such a culturally recognizable brand.
The current floor on the ABS is .21ETH. Again, I wouldn’t expect massive price appreciation on these in the short run, but you’re not really buying it for that. Think of this like a call option on culture and don’t underestimate Bobby.
Gambling Apes is a project that was a set it and forget it bet for me.
Well, it’s time to remember, because something big is coming tonight (12.17.21).
I came across Gambling Apes and was interested as soon as I saw it. Their pitch was simple…build the biggest casino in the metaverse and distribute the majority of profits back to holders.
I figured it was a huge flyer on if this team could actually execute (and I hated they fact that they picked apes because there’s so so so many ape projects in NFTland already), but if they were able to achieve even half of their goals, it was a massive opportunity.
I also assumed it would take a while to build a casino in the metaverse and get the proper licensure to ensure it was legal and above board.
I bought 6 gambling apes (including a few rares) for 1.39ETH total (avg. price of ~.23ETH) about 3 months ago. The community just seemed like the perfect mix of sports gamblers, poker degenerates and fantasy football enthusiasts.
Each week, they held a competition (weekly fantasy football, poker tournament, etc.) that was free to enter but had real cash prizes. I won $2K from a weekly fantasy football competition (s/o Amari Cooper and Deebo Samuel)!
Along the way, they announced their plans to open 2 casinos - the original one in the metaverse and a second that was browser-based. The browser-based casino would allow them to get to market faster, create a second revenue stream and bridge the experience between traditional internet UI and the metaverse. The team bought a sizable estate in Decentraland (one of the leading metaverse players) to build the virtual casino structure and hosted launch parties in Vegas and Miami (this weekend).
Today, my 6 Gambling Apes are worth a minimum of 8.82ETH (~$35,280), likely a lot more given the rarity. Again, paper gains, but if I wanted the $35K tonight, I could almost certainly liquidate.
Most importantly, the browser-based casino, for which the team has a license and killer site, goes live tonight. 70% of all casino profits are paid to holders…in ETH. The first payout is on 1.31.22.
That means that for every gambling ape you own, you’re entitled to 1/7777 of the applicable profits. And this could add up quickly overtime. For example, for every $1M in profit they generate, I’ll personally make $540. This is on top of the appreciation that comes from the underlying ape asset.
I couldn’t be more excited to see how this plays out because it’s one of the first legitimate profit share operations to launch in the web3 world.
The floor for Gambling Apes is 1.47ETH ($5,900). It’s a lot to bite off pre-launch, but my guess is that these will rocket in value if the casino has a big first quarter.
I’d expect some bumps in the road over the next year, but if they’re able to build one of the dominant digital casinos, things could get pretty interesting.
More to come.
If you pay attention to the NFT space, by now you’ve likely heard about Nike’s acquisition of RTFKT.
It’s about as front page news as front page gets in this world.
RTFKT has been the gold standard and a darling of this first wave of web3 collectible companies. Most of the other major attempts to this point have either been solo creators dropping collections and then trying to figure out how to keep a Discord alive or some copy/paste of Bored Ape Yacht Club with a different animal and adjective.
Then there’s RTFKT. They were the first to create a structured org and take a big swing. And they hit. BIG.
This one seemed like destiny from the start. RTFKT’s logo was literally two Nike swooshes on top of each other…
Everything RTFKT put out felt like another tier better than anything else in the space. And for good reason…the creators (Steve (Zaptio), Benoit (Benit0) and Chris (Clegfx)) are wizards, and great talent attracts great talent. They’ve built a super team and dominated the space for the past 2 years.
I’m not going to use this section to talk about the deal and what it could mean for the space, etc. Roman wrote a solid think piece about why the deal matters more than people think here and we riffed for 30 minutes about the pros/cons for all parties involved (RTFKT team, Nike, CloneX holders, fans, etc.) at the beginning of this podcast episode. [Not to pump our own bags but I think we did a decent job!]
What I want to do is walk through a hypothetical of what this deal could mean and what we might see.
As always, these are just my ideas and opinions. I have no inside information, but do write with a slightly optimistic slant (because I’m currently holding 4 CloneX’s).
Hypothetical - A dream world for CloneX holders
As far as I’m concerned, Nike has to knock this out of the park.
Although they’re one of the most powerful brands in the universe, the web3 world takes no prisoners when moves aren’t made with purpose and in the best interest of the end user.
Nike execs likely see this space as a hugeeeeee opportunity. What’s the only thing better than selling your physical goods digitally? Selling your digital goods digitally.
Because digital goods have zero variable costs. You pay a design team to create them once and then you sell them as many times as you want, with no additional costs to you. NFT wearables are like the SaaS of apparel, except better, because you don’t have to worry about churn, you don’t need a salesforce and every time they resell, you make a kicker.
I hope David Sacks reads this sentence ^ and pivots all of Craft Ventures into buying NFT wearables companies.
Jokes aside (I know Sacks isn’t this savvy), Nike can make a digital hoodie, sell 200,000 of them for $5 each, generate $1M in revenue with $5K in costs and have 99% profit margins. Then, every time those hoodies resell, they’ll make 10% on the market price, not the sales price. And surprise, digital goods tend to appreciate in value when they’re scarce, never have wear & tear and always fit right. BING BONG.
And for those SaaS founders out there in their feelings, I know the models aren’t exactly the same. The power of SaaS is in the recurring revenue and these digital wearables will typically be one-time drops. However, the secondary sale royalties, while less consistent, can act as somewhat of a proxy for recurring revenue.
Also, if a digital wearables collection evolves into a more staple product and new supply is launched annually, then they shift closer to a “recurring revenue” model, even though secondary royalties will go down because of lower scarcity.
It’s not an exact comparison, but the provocative headline got you to read and that’s what matters, right?
So why hasn’t Nike and the rest of the world already been doing this?
For one, the mass market isn’t metaverse-ready. Hell, the metaverse platforms aren’t even metaverse-ready.
But eventually, they will be. And the only thing that could have gotten in Nike’s way to seize that opportunity was a new generation of buyers/users that doesn’t idolize their brand like the rest of us. Not saying this is true, but it could be.
By buying RTFKT, Nike’s not only bought insurance on that risk, but also, brought the best talent at this game, in-house.
Now here’s where it gets interesting.
6,500 people just spent between $300 and $12,000 to buy what was thought to be RTFKT’s magnum opus collection, CloneX.
When the Nike acquisition was announced just a day after the release, things got a little wild. The price for clones on the secondary market doubled in 10 minutes because of the allure of what Nike could bring.
But what if Nike ignores CloneX holders and focuses on bigger and better things with the RTFKT talent?
In this hypothetical, they don’t. I think Nike knew about this project all along. This deal was likely being negotiated 6 months ago with the crescendo moment around the CloneX release. I’d be surprised if Nike doesn’t have a ton of things planned to crush this and cement themselves as a tier one web3/NFT player.
And if they are able to execute as I think they should, Nike will create custom lines of sneakers and wearables that all clones get for free.
But what if they take it a step further?
What if Nike drops the individual lines of CloneX apparel to the public but then gives a profit share back to the holders that own the clones that wear those items?
What if holding a CloneX entitles you to free digital Nike wearables forever?
What if every metaverse play Nike makes incorporates a carve-out with special privileges and access for CloneX holders?
It’s possible that Nike treats CloneX as the shiny new toy for the next 6 months and then moves onto another project, rendering CloneX an extremely well-made collectible with decreasing utility?
But, I doubt it.
Nike just bought themselves a Bored Ape competitor and if I were them, I’d throw the kitchen sink at showcasing just how much utility these clones could have.
Imagine a token restricted Nikeverse (cringe) in Decentraland that only clones could get into?
In the words of the great literary genius Quavo…
You get the bag and fumble it
I get the bag and flip it and tumble it
Don’t fumble this bag Nike.
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Legal Disclaimer: No information shared in NFTeasers is financial advice. All content is for entertainment and informational purposes only. Wavy Labs, LLC is not a registered investment, legal, or tax advisor or a broker/dealer.