A Deep Dive into the RTFKT economy
A Deep Dive into the RTFKT economy
A data driven analysis of the RTFKT ecosystem covering holder behaviour analysis, creator unlock, forging metrics and the future with Animus IP.
Introduction
RTFKT was founded in early January 2020. The startup began by creating limited edition sneakers & artefacts using game engines and augmented reality whilst building an audience even before they launched a token.
RTFKT's Cybersneakers (Tesla Cybertruck-shaped sneaker) & AI sneakers ( A sneaker which evolved every time someone bid on them) was sold for 30 ETH & 22 ETH respectively, thus setting the standards for being an innovative sneaker brand of the metaverse. As RTFKT quickly gained momentum, it caught the eye of venture firm a16z, and the team quickly went on to raise $8 mn in funding.
Fast forward to December 2021, the startup was acquired for an undisclosed sum with some speculating that it could be as high as $1 billion. But, that didn't stop RTFKT from pushing the limits of what was possible, as they launched their own 3D PFP collection Clone X in partnership with one of the most influential artists in the world- Takashi Murakami. It was initially launched with a supply of 20K with 19.5K already being minted, and 400 mint vials remaining.
By launching Clone X, RTFKT laid the foundation for an entire digital ecosystem to be built which went beyond just sneakers & apparel. RTFKT sits at the intersection of fashion, gaming & augmented reality.
These 3 key components which underpin RTFKT
3D Creator ecosystem
Bridging the digital & physical world.
Gaming.
All three of these are critical to what RTFKT is building, a metaverse where your digital possessions and life will be way more valuable than your physical one, economically and emotionally. But, before we look at the core components, let’s take a qualitative look at the Clone X.
1. Qualitative Analysis of Clone X
Overview
Here’s a high-level overview of the collection :
390K ETH in secondary sales
Highest single-day volume of 12,898 ETH (Nike acquisition day)
~ 9.6K holders
With 5% in royalties on secondary sales, RTFKT has received roughly 15K ETH in royalties from Clone X alone.
1.1 How many addresses are holding a clone?
Over 9.6K unique addresses are holding a Clone, with 85.30% of the wallets holding onto them for more than three months, 17.46% anywhere between one to three months and only 1.24% flipping them in five days.
This is an indication that holders believe in the long-term vision of the project, and are willing to wait. The floor peaked at over 20ETH last April and has now dropped to around 2.8 ETH. Comparing it to popular collections such as Azuki, Doodles and BAYC, we can infer that holders are aligned with the long-term vision of the RTFKT vision of building a luxury brand for the metaverse.
1.2 Does this collection attract blue chip collectors?
As you can see in the above graph, at 30.52% CloneX has a higher proportion of blue-chip collectors than the market average, but slightly below blue-chip collections like Doodles, BAYC, and Azuki. This signals trust by some of the most reputed collectors in the space. Having a high number of blue-chip collectors is often a proxy for trust when looking at on-chain data.
Of the total collection only 3.73% of the Clones are listed, with 0.35% within 15% of the floor and the rest in the 10-30 ETH price range.
With less than 7% listed, it's in line with Azuki whilst higher than BAYC & Doodles, which can be attributed to Yuga labs being around longer. This indicates that holders aren’t thinking about selling and for the small percentage that are, are looking for prices well above the current floor.
Now that, we have looked at the psychology of the collectors, let’s look at how liquid the collection is.
1.3 How liquid is Clone X?
At over 786.06 ETH in volume traded in the past week, Clone X sits significantly below Azuki, BAYC, and Pudgy Penguins in total marketplace volume.
Volume is a function of speculation & hype around a project. Outside of the pod burning event, and forging, there hasn’t been much for holders to look forward to in terms of airdrops or events. Couple this with the recent downturn in the market, which has impacted the volume of Clone X significantly. Despite this the collection boasts almost ~4X the trading volume of the market average.
Speaking of liquidity, it takes 15.8 hours to sell a Clone X, compared to 13.3 hours for BAYC, and 14.5 hours for Azuki. Whilst this is certainly higher than other blue-chip collections, it’s lower than the average time taken by other collections in the pfp category, thus making a case for being a highly liquid collection. Furthermore, the lower sell time for Azuki & Pudgy Penguins compared to Clone X can be attributed to better whale management.
1.4 Did the holder’s profit from this collection?
As you can see the majority of the holders are in the red with the median PnL at -6.15 ETH. We did that by calculating the unrealised value of all the holders by comparing the purchase price against Clone X’s current floor. The downward trend in price can be attributed to multiple missteps in communication around drops & forging.
1.5 Who is the largest holder and what are some grails?
The largest holder among them is Luggisvault with 413 Clones, roughly 2.12% of the entire collection, with the team vault being a close second with 153 clones. The founders Zaptio & ClegX combined have around 143 Clones, whilst highly popular blogger DCBlogger holds 61 Clones.
This is an indication that both the team and collectors are aligned with the long-term vision of RTFKT- building a luxury brand for the metaverse. Alternatively, with such a big holder at its helm, Luggisvault can single-handedly move the floor of the project & also comes with governance risk in the future.
Currently, there are only three clones with Catsune Helmets, and only two Clones with a Golden Samurai helmet, with one of them being listed for over 999 ETH, which is around $1.5 million.
Another interesting grail in the Clone X ecosystem is the TTN trait ( spelt as Titan), which closely resembles characters from the highly popular Japanese anime Attack on Titan, which has a floor of over 50 ETH currently.
The most expensive sale was for CloneX#4594 for $1.25 M. With White Octopus hair( 0.43%) & having the Murakami DNA (0.51%), it’s one of the rarest in the ecosystem.
1.6 How many unique PFP users does Clone X have on Twitter?
The number of unique pfps being used from the Clone X collection has steadily been rising since April 20222, thus indicating a diverse collector base with a higher affinity towards the community.
Another indicator to analyse the community sentiment on Twitter is to look at the number of tweets, a holder has sent using his profile picture. It has been steady across the last twelve months, with sudden spikes in January leading up to the Exodus pod-burning event. The sudden dip is most likely due to no major announcement being made.
Outside of it, celebrities using a collection’s PFP is often an indicator of trust, and authenticity across the ecosystem. Mario Goetze, who scored Germany’s World cup winning goal in 2014, Von Miller, and Serena Williams are some of the most influential people with a Clone X PFP in the broader ecosystem.
Now that we’ve had a qualitative look at Clone X, let’s take at the drops.
1.7 Loot Pods & Space Pods.
Space pods and loot pods were airdropped to all Clone holders, with its initial purpose being a home where you could display your NFTs. Soon, after that RTFKT released a trailer- ‘EXODUS’.
The Exodus is one of the most important events in RTFKT lore, in which all 19722 Clones embark on a mission in their pods to escape annihilation and find a new home. Interestingly enough, the space pods & loot pods were automatically upgraded during the exodus, and in case you wanted an upgrade you had to combine & burn the pods. Burning 2 space pods & 2 loot pods will upgrade it to an exo pod, whilst burning 20 + 20 pods would give you the lux pod. The most luxurious Metaverse home.
The idea behind these pods being these pods will act both as a vehicle and an incubator for animus in the future. The incubation time varies depending on the pod you own.
By introducing varying levels, RTFKT is rewarding its top collectors whilst making it inclusive for new entrants.
Furthermore, since the supply on both EXOPOD & LUXPOD is limited, we’ll see new models forming around pods where players will be able to delegate or rent their pods for incubation, making them a productive asset. The burning mechanism is similar to forging, a feature often seen in AAA games to unlock weapons of higher specs.
Alpha by Jarlen Perez on Twitter Spaces- “Pods equipped with an incubation module can help improve how you can take care of your egg and if you become involved with your animus' growth, better pods will bring you better and sometimes stranger developments.”
1.8 MNLTH
MNTLH was a mysterious black metallic box with geometric patterns etched on its exteriors coupled with a glowing RTFKT logo on the laterals. Similar to a treasure hunt, the Clone X community had to solve quests, leading up to the reveal- Cryptokicks, a skin vial for the sneakers and MNLTH 2.
The highly gamified process over several months generated plenty of hype and secondary sales.
During times of high speculation and hype, royalties are a significant revenue driver for nft projects but fall steeply when the hype dies. This is why brands need to unlock alternate revenue streams during a bear market, mostly by providing or unlocking value elsewhere.
Whilst the MNLTH drop banded the community together, and had them actively search for clues, the team in the background was busy planning their next step. Laying the foundation to activate & empower the creators of the community.
RTFKT did not generate any revenue during their drops, they did manage to bring in a significant number in terms of royalties from secondary sales of Pods and MNLTH.
At a 10% creator fee, RTFKT earned over $30M from MNTLH alone in royalties.
2. Unlocking the creator economy of the metaverse.
RTFKT gave holders full commercial rights and access to 3D files of Clone X. After getting the access, the community created a blender plugin using which holders could create custom poses and animations, and use it to create their content. Creators could showcase their work by tagging RTFKTcreators on Twitter, whilst gaining recognition.
By giving creators commercial rights & 3D files, RTFKT laid the groundwork for decentralised IP creation.
RTFKT took it a step forward by hosting creator challenges and workshops to actively engage the community.
The RTFKT community has over 717 active 3D creators, and 48 verified creators, with a community participation rate of 7.2% This is an indicator of the underlying health of the community, as well as the IP.
Many on-chain communities struggle with onboarding creatives and have a free-riding problem. Where a handful is responsible for driving the growth of the community.
Whilst many communities follow the best practices, they still find it hard to drive meaningful creator participation.
Why is community participation high compared to other on-chain communities?
Ownership of commercial rights.
Holders are part of a sub-culture they believe in.
Active recognition by the community using filtering mechanisms to fuel their growth. ( By being a verified RTFKT creator)
Some of the top creator-led projects in the RTFKT ecosystem are-
Clipz- One of the co-founders of the popular e-sports team FazeClan, actively streams using his Clone X, thus capturing the mindshare of the masses.
INDEPS created an avatar studio where one can customize the look of clones with new outfits. RTFKT is also actively building their own avatar studio for holders which is due to release this January.
NFTJunior- He is a rapper in the metaverse and uses his clone in every single music video.
Clone Girls- It is a Vtuber idol project utilizing Clones in real-time, and they were recently featured at RTFKT’s GEISEI event in Japan.
Aalasady- He is a 3D visual artist who made the highly viral ‘ready, set, pose!’ videos for Clones. Compared to other on-chain communities, RTFKT has a monopoly on 3D artists & storytellers in the space.
An interesting trend emerging in the RTFKT community is the rise of metastars. They’re a new class of artists who solely exist in the metaverse. We’ve seen this with Marshmello in the music industry, and are yet to see a truly metaverse native artist empowered using NFTs.
RTFKT empowered creators by giving them commercial rights, and access to 3D files, whilst creators were able to leverage the RTFKT IP to build their brand.
As a consequence of the interplay of these dynamics, my hypothesis is that the natural progression from here would be to unlock economic opportunity for RTFKT’s creators. Before looking at this, we need to first understand the history between gaming franchises & users, and how it has evolved.
2.1 Activating & Unlocking economic opportunity for Creators
Traditionally, the relationship between media franchises/games was one way, where the former made the content, whilst the users consumed it. One to many. Over the last ten years, the relationship between franchisees and the community has slowly been evolving into an engagement model, where the community has a say in what gets made and is actively involved in the creative process, calibrating content & co-creating.
One of the first companies to truly unlock community ownership & co-creation was Valve, when they first launched the Steam workshop, where creators can submit skins and players could vote on them. Thus, unlocking a whole new class of creators & revenue stream.
Clegfx- before starting RTFKT made custom skins on CS: GO, and is a key indicator of RTFKT’s product direction.
As the RTFKT lore evolves, we’ll see creators being able to design, vote and sell digital fashion to the community. The community will have access to a continuous stream of new content, whilst it unlocks new economic opportunities for creators.
Some of the key advantages of using this model are-
Community influences what content to make, release, and thus had a higher success rate compared to a centralised approach.
Unlocking economic opportunity for creators where they receive a percentage of the sale, thus resulting in high-quality content & a thriving marketplace.
Developers are freed from the burden of the “content treadmill” problem, and in the case of RTFKT will give rise to “user-generated fashion”.
That’s not all. By empowering & unlocking economic opportunity for creators RTFKT is laying the foundation for a thriving decentralised on-chain economy.
As we spend more of our time online, our digital identity will eventually start superseding our irl identity. Digital fashion is a critical part of how we express our values, interests and individuality online, and RTFKT is at the forefront of enabling it.
But, digital fashion was only the first step to enabling the team’s true vision, merging the digital and physical world.
3. Bridging the digital & physical world
With Cryptokicks, RTFKT gave us a glimpse of what was possible when we combine the physical & digital worlds. In early September, RTFKT launched a collection of hoodies, sneakers and other limited edition accessories for holders based on their Clone's DNA. Upon purchase, minters received an NFT, which was redeemable(forging) for a physical item.
An interesting and underrated aspect of combining NFTs & NFCs is they're creating a frictionless experience for collectors in terms of authentication, provenance and scarcity.
Today, the total value of counterfeit goods in the world is estimated to be over $500 Bn/yr, more than the GDP of entire nations like Belgium. This can significantly reduce fraud, help in proving authenticity, and is a big boon for collectors. Over time NFCs will also be used to activate new experiences, access events and much more.
But, first, let’s take a look at the key metrics of RTFKT Forging SZN 1-
3.1Forging SZN1
RTFKT Clone X Forging SZN 1 introduced an exclusive range of apparel items meticulously crafted by RTFKT exclusively for Clone X NFT holders. Each NFT in this collection serves as a dual-purpose asset, functioning as both a digital wearable item and a claimable physical item. With a total of 10 distinct collections of apparel items, each representing unique Clone X NFT DNAs/Traits.
Over the course of seven days, a grand total of 3496 wallet holding Clones participated in forging SZN 1, spending an average of over 1.747 ETH ($2899) across multiple product categories including sneakers, t-shirts and hoodies.
Of all the items sold, sneakers accounted for over 64% of SZN 1's revenue, understandable considering the high ticket size of the product. Hoodies and T-shirts brought in over $1 mn, whilst products such as socks, pants brought in the rest. A reflection of the holder's tastes, and interests.
The forging event for Nike Airforce 1 sneaker with rarities based on the DNA of the Clone began in the last week of April and will lasted till the 8th of May. Interestingly enough, not all sneakers were forged- which can be attributed to waiting period of more than 6 months, and delay in product shipments in the past. But, that didn’t stop celebrities from flaunting a pair- Lebron, Mario Goetze and DJ Khalid were all spotted wearing a pair of Nike Air Force 1 Genesis, which will eventually lead to mainstream appeal.
3.2 RTFKT X RIMOWA
After SZN1, RTFKT and RIMOWA-the iconic suitcase brand by Luis Vuitton came together to launch a limited edition Original Cabin Luggage, with only 888 pieces available. Coupled with it were 2222 space workerbot NFTs, the wander smith's trusted assistant within the RTFKT X RIMOWA ecosystem.
The mint generated over $5.1 mn in revenue for RTFKT, and compared to other mints in the RTFKT ecosystem, an interesting point here is it took over 3 hours and 20 minutes for the entire collection to sell out.
Of the total number of minters, only 33.11 % of the suitcase minters held a clone, whilst the number for workerbots was even lower at 8.39%, perhaps an indication of lower interest as compared to sneakers and apparel among holders.
The RIMOWA mint bought in over 3000 ( 73% new minters) new users onto the RTFKT ecosystem. Interestingly, over 45% of the mint came from wallets with an average age greater than 1 year, with over 100 transactions.
As of the worker bots, there’s very little information about it right now, but speculation is rife that they’ll play a role in the animus incubation process.
3.3 RTFKT Footballverse
RTFKT together with its parent company Nike dropped a football jersey during the World Cup. It's no surprise considering the fact Nike has a history of celebrating athletes.
Compared to other RTFKT drops, the mint was primarily targeted at onboarding new users onto the RTFKT ecosystem.
RTFKT unlike other pfp communities have close tie-ups with athletes through their parent company Nike. Some of them already endorse RTFKT including Germany’s World Cup-winning goalscorer Mario Goetze, Serena Williams, and Von Miller among others. To put things in context, the final of the FIFA World Cup 2022 was watched by over 1.4 billion people, and viewership is only set to increase in the coming years.
We might see similar drops during key sporting events as a part of onboarding new entrants onto the ecosystem in the future.
With that being said, RTFKT has revolutionized the utilization of NFTs by introducing captivating customer experiences through the incorporation of immersive lore, drops, and gamification.
4. Animus: The next big IP
Project Animus is RTFKT’s next IP, and are unique creatures with special powers & capacities, helping Clones in their journey. All Clone holders were dropped an animus egg, with the rest of the supply ( limited to 40K) being available through a public sale later this year. The egg can be paired with a clone, and incubated through a pod to reveal. The incubation period varies depending on the pod you own.
Animus was first introduced via a trial, where a Clone appears to be walking with what seems like a Koda from Otherside.
Coming to the numbers, the floor has massively dipped from altering between 0.7 & 0.8 ETH to 0.5 ETH in the last three months. But, the number of animus eggs listed has gone down from 0.9% to 0.5%, after the GEISEI event by RTFKT in Japan, which gave us a sneak peak of how they’ll look.
At 3.63% ( 586 eggs) of the supply, nakamotosatoshi.eth is the largest animus eggs holder, with luggisvault being a close second with 2.55% of the supply. Whilst Luggisvault had 413 Clones, which let him claim the eggs, nakamotosatoshi.eth swept the floor across multiple transactions at an average price of 0.8 ETH.
How does the animus fit into the RTFKT lore?
We know for a fact that the team is working on a game, has indicated possible move 2 earn mechanics, and has past experience in AR. Couple this with the fact, they’ll be doing a public sale in 2023, holders are most likely to get a Pokemon go style game with their assets on-chain. The launch of Apple Vision Pro could one of the major catalysts here. This is pure speculation at this moment, as there’s no concrete information available right now.
As the vision of an open & interoperable metaverse shapes, we will likely see World of Warcraft-style pet battles emerge, except instead of pets you use your Animus. Players will be able to compete against each other using their respective Animus, either in one-on-one duels or as part of larger team battles. These battles can be strategic, requiring players to make tactical decisions and utilize their Animus abilities effectively to outmanoeuvre their opponents and achieve victory. Furthermore, this can give rise to new trends like formation of trait-specific guilds, raid guilds and more.
Today PFPs are culturally insignificant and have a long way to go before they are able to capture mindshare & build sustainable sources of revenue. With the new Animus IP, RTFKT will be able to-
Expand their product offerings to new demographics, starting from infants to all the way to adults.
Creating popular & relatable characters to capture mindshare.
Explore possible revenue share mechanisms with collectors.
Now, that we’ve touched upon the possibilities of Animus IP, let’s take look at what we can build on top of RTFKT.
What can we build on top of RTFKT?
RTFKT is an emerging IP in the metaverse, and there’s a lot of value that can be unlocked by building on top of RTFKT. Creators & businesses can leverage RTFKT’s digital distribution channels, whilst helping RTFKT expand their IP to serve a new audience. We’ve already seen this happening in the BAYC & Azuki ecosystem. With that being said, it is important to understand your audience before leveraging the IP. In the case of RTFKT, ideally, the best communities & brands can be built around fashion, gaming, anime and fitness.
Let’s take a look at some of the projects that can be built on top of RTFKT-
Fashion brands- Designers can leverage the RTFKT IP by selling digital-only NFTs of their designers, and based on interest can set up an offline hub for manufacturing. Since you’re starting with NFTs which can be traded on the secondary, there’s a higher tolerance for longer wait times. Johny Kicks is one of the top creators in the RTFKT ecosystem who makes custom sneakers.
Gaming guilds- With the upcoming launch of Animus, we’ll see an explosion of trait-based guilds ready to battle it out in the metaverse. Similar to Axies, we’re likely going to see new users priced out. There’s a massive value that can be created by building, operating and launching gaming guilds. YGG initially started out as a sub-dao of Axie Infinity before it became a full-fledged guild.
Vtuber management- Anycolor is a publicly traded Japanese Vtuber management company founded by 26-year-old Riku Tazumi, who is now one of the youngest billionaires with a reported net worth of $1.1 billion. With RTFKT giving you access to 3D files and commercial rights there’s plenty of opportunity waiting to be unlocked for anyone who’s interested in creating a Metaverse native idol group, anime and more. An example being Clone X girls idol group which was mentioned earlier.
These are just the tip of the iceberg. There’s also a massive opportunity for anyone building supporting infrastructure for the ecosystem- creator tools, inventory management and more. In the next 5 years, we’ll see new brands & creators emerging from the RTFKT ecosystem that will expand the IP to new audiences.
The Risks & Challenges
As with most pfp communities, RTFKT had its fair share of challenges considering how nascent the space is. Let’s take a look at some of the biggest challenges-
Centralised Risk
RTFKT despite being a decentralised community is owned by Nike. Tomorrow if Nike decides to stop supporting the project, there’s very little that can be done outside of the community banding together to revive it. At the same time, having a mainstream brand such as Nike as the parent company will definitely enable RTFKT to experiment & ship faster.
Communication
One of the major challenges compared to other pfp communities is RTFKT ships silently. They’ve also had multiple missteps when it came to addressing shipping issues, and drops. This significantly impacted the community, and the sentiment was bearish during the latter half of 2022. Furthermore, the huge number of drops in the RTFKT ecosystem makes it even more challenging for someone who’s looking to understand more about the ecosystem.
Execution risk
The vision for RTFKT is grand. The team is building an IP at the intersection of fashion, augmented reality, crypto and gaming. This is exciting & challenging at the same, as it comes with huge execution risk considering how nascent the space is and there’s no playbook available to learn from.
How can RTFKT leverage Nike?
Nike is one of the global leaders in the athleisure & sports apparel market with a market capitalisation of over $194 Bn, with 600+ factory partners and over 170 stores globally. RTFKT can significantly leverage Nike’s manufacturing & distribution to expand its IP & become a culturally significant brand on its own.
Imagine Nike stores selling Animus plushies or digital trading cards. One of the key moats of the project is, RTFKT is uniquely positioned to manufacture, and distribute its products via Nike’s offline distribution network across the globe.
Moreover, the incorporation of .SWOOSH IDs for Clone X holders appears to enhance the brand's association with Nike as the company explores novel avenues and immersive encounters to cater to its ever-changing consumer demographic. The initiative reveals that .SWOOSH releases will consist of Nike-authorized digital wearables that are compatible with Clone X, allowing holders to use them with their Clones. The distinction here is RTFKT is building a luxury brand for the metaverse, whereas .SWOOSH is a mass market product.
Emerging trends from the RTFKT economy
As the RTFKT lore into a full-fledged universe, it’ll give rise to the following trends that will shape our not-so-distant future-
The rise of Metastars in the entertainment industry & formation of decentralised communities around them.
Our digital identity will supersede our real-world identity, and we’ll see significant growth in user-generated fashion & the rise of a new class of creators in the metaverse.
Animus IP will unlock the collector economy letting you own, flex and trade like the Pokemon. We’ll also see new financial & infrastructural primitives being built around the new IP.
Conclusion
RTFKT is building the future, now. The ambition is grand without being constrained by traditional mindsets. An experiment at the intersection of gaming, fashion and augmented reality. In the next five years, we’ll see the IP mature and diversify across various product categories whilst capturing the mindshare of the masses.