Pudgy Penguins NFTs Infighting Turns Ugly as Crypto Mania Cools

Bloomberg — The infighting is getting ugly among the Pudgy Penguins virtual community as one of the most successful non-fungible token projects gets swept up in the collapse in crypto prices.

Community dissatisfaction with the speed at which the founding team was developing the project come to a head in recent days with owners of the virtual collectibles seeking their ouster. That’s a far cry from July, when the cherubic-like cartoon creatures became an overnight sensation and were snapped up by buyers worldwide.

Pudgy’s Discord channel, which has more than 19,000 members, is overflowing with expletive-laden rants and messages ranging from “I don’t want the drama” to #savethepenguins. Twitter is rife with gossip and rallying cries.

Overall daily NFT sales peaked in late August, at $411.5 million, according to data tracker NonFungible. Daily sales have since slumped to around $57 million with the crypto market losing about 40% of its market value since reaching a record high in early November.

What started the Pudgy owners’ rebelling was an egg. The team behind the Penguins sent NFT holders free eggs, containing a surprise and expected to hatch on Christmas. Everyone held their breath, but what they got was a fishing rod, misspelled as “rog,” said Juan Angelus, who owns two Pudgy Penguins and is an active member of the community.

“No one likes the rogs,” Angelus said. What he calls “the rog situation” came soon after another disappointment: The team behind Pudgy Penguins issued new NFTs, called Lil Pudgys. The team running the project didn’t return requests for comment, but had said on Twitter it would provide updates shortly.

Adding salt to the wound, a rival project, Bored Ape Yacht Club, has become an online sensation. While BAYC struck a deal with high-profile startup Animoca Brands to create a game, Pudgy Penguin’s founders promised to create a game using the “rogs” and the penguins, but provided few progress updates.

“The founders are very young, they are all college students,” Angelus said. “The community revolted. We essentially voted them off the island.”

Despite many community members’ apparent wishes, whether the project’s founders will actually leave and how is still unclear. Anonymous Pudgy Penguins holder 9x9x9 has posted that he’d held talks to buy the project, and declined.

“It’s just I do not want to encourage bad actor in the space by giving them more money,” 9x9x9 said in a Twitter message to Bloomberg. The founders recently got an offer of 750 Ether, or about $2.4 million.

As the project’s future remains uncertain, some penguin owners are “wrapping” their birds in protest, so that the effort’s team won’t get royalties on their future NFT sales. There are heated discussions about creating a decentralized autonomous corporation to handle Pudgy Penguins -- with visions of licensing the characters to to the likes of Walt Disney Co.

In the meantime, the rebellion has pushed up prices and sales of Pudgy Penguin NFTs, which have languished in recent months. The average Pudgy daily price was about $4,662, compared with a peak of about $26,100 in August, according to NonFungible. After peaking at nearly $100,000 in mid-December, the daily average asset sale value of Bored Apes is about $81,000.

But for some collectors, hope springs eternal. Maddie Springs said she bought her first Pudgy Penguin -- featuring a red background and a lei-- for about $7,500 on Thursday.

“I’ve seen a lot of drama,” she said. “I think they are going to come out of this, I think it’s going be a good investment.”