Are Web3 Brands Entering a New Era of Consolidation?

BY Arthur Parkhouse

October 20, 2023

In the ever-evolving and volatile landscape of digital assets, it’s an interesting time to observe the Web3 brands from the bull market’s peak to the bear’s depths, revealing invaluable lessons and stark realities of the space.

Analyzing the different outcomes of once-promising Web3 platforms helps us understand the bigger picture. Some platforms struggled due to changing market conditions, while others succeeded by forming strategic partnerships. Currently, the Web3 space is seeing a trend of companies merging or being acquired in the face of adversity.

Bear Market Casualties

If we’ve learned anything from observing Web3 brands during the bull market’s peak to the bear’s depths, anything can happen, and there is truly no such thing as too big to fail.

This has been proved time and time again, with one such example being that of Nifty’s, which, despite having partnerships and releasing collectibles with some of the biggest IP franchises, including Looney Toons, The Matrix, and Game of Thrones, announced its closure in early August.

The platform, backed by names like Mark Cuban, Joe Lubin, Coinbase Ventures, and Dapper Labs, raised over $10 million at its launch in 2021 and was poised to be a serious player in the digital collectibles space thanks to its significant IP. However, as the bear market continued, the group botched its Game of Thrones drop and failed to deliver on promises — it eventually joined the Web3 brand graveyard, stating, “Unfortunately, despite our best efforts, the investment opportunities we were working on didn’t pan out, and we now find ourselves at the end of our runway.”

“Unfortunately, despite our best efforts, the investment opportunities we were working on didn’t pan out, and we now find ourselves at the end of our runway.”


Another Web3-based collectibles brand, Recur, also launched in 2021 and boasting strong IP like Hello Kitty and Nickelodeon, met a similar fate. Despite once being valued at $333 million in late 2021 after a $50 million Series A funding round, the platform could not survive the decrease in sector participation and cited “crypto winter” as its reason for shutting down.

Additional examples include that of Versum, the Tezos NFT marketplace that also shut down, largely due to a decline in interest and sluggish trading volumes.

From major players with millions of dollars in backing to nuanced platforms inside of an already niche space, the list of casualties in the Web3 brand graveyard is long — however, despite recent coverage from mainstream media, NFTs and their associated brands don’t seem to be completely worthless, as consolidation and new trends take place.

Consolidation Through Acquisition

While a much shorter list compared to the hundreds of Web3 brands that have come and gone, many of those still around appear to be here largely due to consolidation as a byproduct of acquisition.

The most well-known example of this was the 2022 acquisition of Larva Labs’ CryptoPunks and Meebits IP by Yuga Labs, the parent company of Bored Ape Yacht Club. As Larva Labs’ John Watkinson told us in our “Punks As Told By CryptoPunks” docuseries, he and co-founder Matt Hall felt “stuck” with the “whole brand management thing that [we] were not cut out for.”

Other notable examples include Gutter Labs’ recent acquisition by a community member and the case of 0N1 Force, which was acquired by a consortium of investors led by firm Old Fashion Research (OFR), former Binance execs, and Yield Guild Games.

Based on its current performance, 0N1 Force seems to be thriving, with recent Web3-based partnerships including names like Gala Music and broader gaming partnerships with names like Fortnite.

Additional examples include Gutter Labs, Pixelmon, Wicked Craniums, and, in a sense, Cool Cats.

For Pixelmon, since its acquisition and change in leadership last year, new ownership has been evolving the IP into what investors and collectors had hoped for since the beginning and, in some cases, aiming to exceed those expectations.

To get more details, we spoke with its CEO Giulio Xiloyannis, who shared that “since the LiquidX acquisition, the community has received new art for the entire collection, going from poor, pixelated art to super high poly animated art, which I firmly believe is the best art in monster NFTs.”

“As [NFT projects] grow into more complex companies, different skill sets may be needed to keep executing and scaling from the first community of OGs to the wider so-called mass adoption space.”

Giulio Xiloyannis

Additionally, he shared that Pixelmon has provided more than 1,000 expense-paid trips to its events worldwide, including Singapore, Seoul, Bali, and Istanbul, coupled with initiatives to build local community chapters in the areas. Pixelmon also recently launched a hypercasual videogame, “Kevin The Adventurer,” which requires no NFT ownership and is free to play.

Xiloyannis added, “The above is merely the Web3 benefits; in addition to that, the most important benefit, I believe, is the new buyer’s (LiquidX) decision to share the IP value with the holders, effectively fractionalizing the IP of each character and embedding the ownership right of it in the character NFTs.”

He explained that each NFT now represents a claim of IP ownership over the character with perpetual royalty rights over the revenue it generates for the company.

“The space stands to greatly benefit from acquisitions, in my view, when those acquisitions are targeted at assets with large communities and strong project plans but teams that could be a little green on the execution side,” he said. “A lot of the NFT projects are born from passion and creativity that are amazing sparks for innovation, but as they grow into more complex companies, different skill sets may be needed to keep executing and scaling from the first community of OGs to the wider so-called mass adoption space.”

He added, “This is where consolidation around more experienced operational leadership teams can benefit both the founders of the target company and the OG community of that company/project.”

As for the Wicked Craniums (WC), the music-focused PFP brand that saw more than $4 million in secondary volume in the summer of 2021 — it has since been acquired, but in a sense, that feels more like an internal handover. The company that acquired the brand, Black Chip Inc., was founded by one of WC’s first hires and BAYC holders, “Caruso.”

In a message to holders, he explained the importance of the acquisition and the next steps, writing, “Wicked Craniums never had real marketing. We thought focusing on utility and hard work would take care of itself…we were wrong. We’ve turned our biggest weakness into arguably our biggest strength with power moves like adding Steve Levy and the Shareability partnership.”

He added, “While their largest accounts include Google and YouTube, they are crypto natives and are as fascinated as us by what the blockchain can offer.” As a result of this, Wicked Craniums aims to optimize its storytelling, increase consumer engagement, foster brand loyalty, and ultimately drive revenue growth.

While Cool Cats has not precisely been acquired, it is undergoing a bit of consolidation. This could have been observed as early as October 2022 when the PFP brand first took funding from Animoca Brands, the group behind The Sandbox. This consolidation of sorts has since been further exemplified by the strategic partnership with FUTURVERSE, the stepping down of their CEO Stephen Teglas, and the appointment of the brand’s artist/founder Colin Egan, aka Clon, to fill the role.

One of the most recent and potentially more bullish examples of consolidation through acquisition is that of BFF by Boss Beauties. With both brands so closely aligned, BFF shared that it is confident the acquisition, which it views as more of a partnership, will only further enhance its mission to “educate, connect, and empower women in Web3.”

“Web3’s projected market value is expected to be $10 trillion in the next five years as it continues to grow, but, unfortunately, women and girls are already being left behind in such a young industry.”

Lisa Mayer

Upon the announcement of this acquisition on Oct. 2, we spoke with Boss Beauties co-founder and CEO Lisa Mayer, who shared, “Web3’s projected market value is expected to be $10 trillion in the next five years as it continues to grow, but, unfortunately, women and girls are already being left behind in such a young industry.”

“If we want the next generation, especially women and girls, to be successful in learning about new technologies as they evolve, they will need access to trusted and diverse educational resources,” she said. “That’s exactly what Boss Beauties will be able to provide by acquiring such an amazing brand and community as BFF.”

Is There a Future?

With the rapid shifts in space, it’s not uncommon for participants to question the future. While consolidation can be a two-edged sword, posing threats of reduced competition and monopolistic exploitation, a bright side comes with it.

If executed properly, consolidation could bring efficiency and economies of scale, market stability, and a reduction of price wars, as well as fortification against downturns like the extended bear market we currently find ourselves in.

Interestingly enough, the NFT market still stands poised to make a comeback; however, it would require a shift from the current speculative concept of an investment or tradable asset, which appears to be taking place slowly.

Data from Statista reveals the NFT market is expected to reach $3.2 billion by 2027, rising from $1.6 billion in 2023. Additionally, it shows that the number of NFT users is expected to hit 19.31 million by 2027, with user penetration expected to hit a rate of 0.2 percent by the same date.

While this might seem unlikely now, our best guess is that it will occur due to a market crossover. Examples of this range from Vee Friends and Pudgy Penguins utilizing their IP to release IRL-based toys, offerings, and events to groups like Transient Labs releasing on-chain systems for TradArt authentication and brands like Avant Arte releasing hybrid works that also aim to meet the real-world need for authentication.

In an op-ed for nft now earlier this year, Duncan Cock Foster, the co-founder of Nifty Gateway, put how we achieve a future for the NFT space more plainly.

“Speculators prevent the space from fulfilling its potential,” he shared. “A majority-speculator NFT market is a local maximum for NFTs. It is a trap the NFT space is caught in. Because most market participants are speculators, the people creating the industry’s future — marketplaces, creators, and investors — are incentivized to create products that appeal to speculators. But speculators are a unique type of customer. Products built for speculators won’t appeal to any other type of customer. In fact, they’ll probably actively drive away the customers that are most important for the future of NFTs.”

To see the NFT industry and its brands grow, he explained that it’s essential to break out of this local maximum and instead focus on a new customer type — a shift that is slowly but surely beginning to take shape.

Although it may come across as cliche, two significant forces still thrive at the core of the Web3 space, the first being community or, more critically put, brand association and the second being the goal to “bridge” the technology with the “real world.” These two aspects continue to provide value to their associated brands and the space.

There’s no denying that the bear market poses an existential threat to many Web3 projects. However, based on the data, trends, and expert opinions we’ve seen above, a glimmer of hope shines through the veil of the current conditions, indicating an evolutionary period and a potentially bright future for those who can survive.

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