Investing In The New: Doodle Labs
Mr. Fox breaks down a new project in NFTs, Doodle Labs, and how it progresses the space.
Hello all and welcome back to another email. I sincerely hope everybody is doing well.
Over the last six months, thousands of NFT projects have been created. The overwhelming majority of these projects have absolutely no innovation - they are simply digital avatars with different names and tweaked art. Take away those two characteristics, and over half of the market is identical with each other. Not good.
On the occasions though, where a project has come up with something new, the market has rewarded it. Although they got off to a slow start, Genesis CyberKongz eventually appreciated to their 100 ETH floor as people gravitated to its passive income opportunities. Far off of its all-time highs, Loot (for Adventurers) once rocketed to a near 15 ETH floor in a matter of days from its launch as a result of its ground-up experimentation in NFT world-building. PUNKS Comic - the first NFT comic (building off of CryptoPunks) - did not sell out for over five weeks, yet is now valued at 31x its mint price. Axie Infinity saw the run of a lifetime after it built and switched to its own Ethereum network sidechain - Ronin.
There are other examples too. The point is that in a market where many people spend their time speculating between low-quality, not easily differentiable assets, assets that are different (by doing something new) garner significant attention. Oftentimes these new projects get off to slow starts, as we addressed above, but this is simply because when something is different, its value proposition becomes more difficult for the average investor to assess. That is why these are the projects we should be making small bets on.
Think about it - people are more willing to spend their Ether on a project that has no ceiling (because it has never been tried) than a project that has to do a lot more work to separate itself from the pack of others doing the exact same thing. In a highly speculative market like NFTs, this idea is especially true.
As NFT volume continues to dry up, I have stayed away from minting anything I don’t think has strong potential to be a winner - which is why I’m so excited to introduce Doodle Labs to you today.
As described on their website, Doodle Labs aims to bring established, real-world artists and brands onto the blockchain.
What does that mean?
Doodle Labs will be an art platform that existing, real-world artists and brands can apply to join. If Doodle Labs feels the artist or brand aligns well with their platform, they will allow them to release a collection of their work on the Doodle Labs site. Doodle Labs does all of the work turning the art into NFTs and ensuring that it exists on the blockchain. Essentially, Doodle Labs will act as an umbrella that encompasses all of the different artists and brands it chooses to work with.
What we have in the NFT market right now is a lot of IRL artists who would love to release their work as NFTs, but, for whatever reason (usually due to a lack of technological expertise), haven’t been able to do so.
Doodle Labs presents a solution to this problem. Now, artists can apply to Doodle Labs with their artwork, and, if chosen, Doodle Labs will release their collection as NFTs on the blockchain.
Why is this important?
For one big reason for which we have already discussed - providing a solution for artists who don’t have the coding knowledge to bring their work into the NFT world. We should note that the problem is not limited to technical understanding of NFTs either, though. Many artists simply have no idea where to start when it comes to marketing their pieces, finding their place in a community, and becoming acquainted with the NFT ecosystem in general. Doodle Labs gives them a solution to this problem by providing a platform that handles all of that. By building a site that releases the work of numerous artists, Doodle Labs becomes an aggregator for the NFT market at-large, which in turn provides lots of exposure for the artists who release collections with them.
What else is great about Doodle Labs?
Doodle Labs is technologically proficient, and any project that is backed by high-level technology is one that attracts investors and is more likely to sustain itself over the long-run. They have partnered with Art Blocks, a generative art platform I’ve discussed in the past (you can find that article here) that Doodle Labs will be using as a technological launch pad.
In English?
Art Blocks is powered through on-chain generative minting processes. What that means is when someone mints an NFT in an Art Blocks collection release (the same way Doodle Labs plans to release their collections), that piece is generated on the spot. This process takes a lot of technological effort, and for this reason almost no NFT projects deploy it. What the typical profile picture projects do when they launch, is create all of the avatars beforehand, and then when someone mints, they are given one of those premade avatars at random.
Two points on this:
This is inherently anti-blockchain. This lazy method does little to engage with the blockchain technology that a true NFT project should. On the contrary, the Art Blocks way of on the spot minting (known as ‘generative’), uses the power of the blockchain to its full extent. If you would like more of a technical explanation as to how this process of generative minting works, I encourage you to do more reading on the topic, but I will do my best to explain it in a sentence: NFTs are created through smart contracts, and when you a mint an NFT from a project that uses generative minting processes, what you are essentially doing is triggering the code in that smart contract that is written with the sole purpose of producing a piece of art in that collection. If you feel like this is all going over your head, don’t worry. As a beginner, all you need to know here is that on-chain generative minting is great, and off-chain minting is not. Doodle Labs is on-chain and generative, because Art Blocks has allowed them to use a lot of their code.
The second point on this comparison of minting processes is the consideration of the role the minter plays in the creation of the art. If you mint a project that uses off-chain, predetermined minting, all you really did was receive a randomized piece of art from an existing pool. If you mint a project that uses on-chain, generative minting, you are the creator of that piece of art, because you are the one who ran the code (remember the smart contract concept outlined above). This is art creation on top of art creation, and is a process that harnesses the true potential of blockchain technology. By definition, you create art every time you participate in a generative mint.
Alright, Mr. Fox, let’s go back to where we started, how is this new?
Well, where Art Blocks have deployed this concept of generative minting to digital art (to enormous success, one should add), Doodle Labs plans to use it for the creation of digital collectibles. I think the potential for Doodle Labs to succeed is high, because they solve multiple problems we currently have in the digital avatar and collectibles market:
1) Visibility. As with what we opened with today, there are hundreds (if not thousands) of NFT projects in the market right now. The volume of projects has become so much, that I’d be willing to wager that the average NFT trader/investor knows of less than half of what exists out there. It is simply too much to keep track of.
How Doodle Labs solves this: By becoming a platform that encompasses many different projects, Doodle Labs can be a home to different communities and digital avatars while also making them easy to keep track of by including them under their site and OpenSea profile.
2) Up-front risk. When new projects come out, there is a certain level of risk each minter takes in hoping that the developers (who are under no legal obligation to create value) don’t simply walk away when their project sells out.
How Doodle Labs solves this: By putting their brand and name behind each artist that joins their collective, every single investor can be sure that the developers of the projects they’re invested in can be trusted.
3) A Disconnected NFT Community at-large. As a result of the visibility issue, the NFT community is becoming too compartmentalized. Where the Punks and the Apes are easily recognizeable and foster strong communities, everything beneath them has become noise.
How Doodle Labs solves this: By providing an underlying relationship between what will hopefully be in the hundreds of projects on Doodle Labs, a higher semblance of community can be built among projects because it will be this established foundation and base of Doodle Labs as a whole that a project can build their community off of, not the price of their floor.
Ok, got it. What is Doodle Labs doing right now, then?
Doodle Labs just released their Genesis Collection - The Family Mooks. Their early supporters were given roughly 2 000 of the 10 000 mints, and the remaining 8 000 were left for the public sale. The catch: any amount of the supply that was not minted by the end of the public sale was to be removed from the supply forever. Only another roughly 2000 people minted from the public sale, meaning the total supply of the Doodle Labs Genesis Collection - The Family Mooks - will exist under 4 000. Relative to other projects that typically have collections that encompass upwards of 7 000 pieces, this supply is scarce.
What’s more?
Although exact details have not been given, holders of this Genesis Collection will receive utility benefits for the entirety of Doodle Labs’ future. Given how low the supply is of The Family Mooks, I would not put it past Doodle Labs to give these holders higher likelihoods of pre-sale mints for all future collections (this is entirely speculative and not at all an assumption made off of anything Doodle Labs has released on the topic). If not that, I’m positive Doodle Labs will find a way to bring extra value to holders of Mooks.
There’s more.
The Family Mooks drop had absolutely no “hype”. For the long-term success of a project, this is great. It means that anybody who was minting Mooks was not doing so for a quick flip, but because they believed in the future of Doodle Labs as a whole. This is a great holder base and community for the foundation of The Family Mooks and Doodle Labs as a whole.
Ok, Mr. Fox. I’ve got the picture. What are the risks, and how are you playing this?
There are only two major risks I see to the future of Doodle Labs.
1) The developers cannot execute on their vision. This is not a possibility I see likely of playing out. The team has strong backing and a long time horizon, so the likelihood of them bailing or failing seems low.
2) NFT volume dies. If we see a massive crash in the volume of buying in NFTs across the board, an investment in Doodle Labs will see a downturn. Obviously though, this is not a problem exclusive to Doodle Labs. The only major underlying issue I see here is, if a hyper-bear market lasts for long enough, perhaps the Doodle Labs team will be forced into different work. To this point in general, all you have to do is manage your risk properly, and you will be well protected. Never invest more than you can lose.
In terms of how I’m playing Doodle Labs and The Family Mooks - I minted two for myself during the public sale. At the project’s current 0.14 ETH floor, I may look to pick up another.
Overall, I think investing in the new is one of the best ways to invest in NFTs. If you make a loss - it’s a comfortable one because you were willing to back something that has never been done before, and you understand those risks. On the upside, projects that do new things always experience a level of price discovery, and that can be a fun thing to participate in.
That, friends, is all I have for you today. If you have any questions, always feel free to reach out on Twitter @f4ntast1cmrf0x, or via email.
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And down the Rabbit Hole we continue.
Mr. Fox.