NFT and Mystery Box Economy: A New Direction for Future Development

Pop Mart has been listed on the Hong Kong Stock Exchange with a market value of 460 billion yuan, and the dark market has risen by 103%, with a subscription multiple as high as 356 times. This company, which once delisted from the New Third Board, has now made a strong return to the capital market in the guise of the "mystery box king", with its worth skyrocketing 21 times in just a year and a half.

The financial report shows that Pop Mart's revenue from 2017 to 2019 was 158 million, 514 million, and 1.683 billion yuan respectively, with growth rates of 30%, 226%, and 227%. The net profit increased from 1.56 million yuan in 2017 to 451 million yuan in 2019, growing 289 times in three years. Behind this impressive performance is Pop Mart's successful creation of an "addictive" economic model.

As a representative of new consumption, the trendy toy industry shares similarities with the NFT ecosystem in the crypto space, both belonging to niche subcultures. The successful listing of Pop Mart holds certain reference significance for the NFT track.

The Relationship Between TCG Cards and NFTs

The mystery box model has actually been around for a long time. As early as 1996, Pokémon began issuing TCG cards. By 2019, the Pokémon card series had been released in 77 countries and regions worldwide, with total sales exceeding 27.2 billion cards. In addition, Yu-Gi-Oh! cards set the Guinness World Record for "the best-selling TCG in the world" in 2009, with sales reaching 27.3 billion yen in 2019.

The gaming industry has also widely adopted similar mechanisms. The treasure chests in DOTA2 and the card draw system in Onmyoji utilize randomness to stimulate consumption.

In 2018, the Crypto Kitties application on Ethereum triggered a craze, allowing users to collect and breed unique virtual cats. This innovation sparked the rise of NFT technology. NFTs have the characteristics of uniqueness and indivisibility, making them very suitable for scarce products.

In July of the same year, the blockchain game Gods Unchained started its presale. The game is similar to Hearthstone, but all the cards are tokenized as NFTs and can be freely traded on the blockchain. This game raised nearly 10 million RMB in just half a month of presale, showcasing the immense potential of NFT cards.

Concerns about the Mystery Box Model

Despite the successful IPO of Pop Mart, the physical mystery box model still faces some issues. To stimulate consumption, Pop Mart has launched a large number of "hidden editions", leading some users to view it as a "tax on intelligence". At the same time, the scarcity of hidden editions is entirely determined by the company, lacking transparency, which also raises doubts among some users about their value.

In contrast, the scarcity of NFTs is determined by code, making it more transparent and trustworthy. NFTs can also be permanently stored on the blockchain, avoiding the counterfeiting issues that physical collectibles may face, as well as the risk of centralized digital collectibles disappearing due to server shutdowns.

NFT Enhancing Liquidity and Financial Attributes

Traditional mystery box products often face the problem of insufficient liquidity. However, NFT technology can significantly enhance the liquidity of collectibles. For example, after the launch of the trading market for Gods Unchained, the trading volume of its cards quickly surpassed that of USDT.

In addition, NFTs can enhance the financial attributes of products. Some NFT projects can not only be traded on the secondary market but also participate in financial activities such as mining, governance, and dividends.

IP is the key to NFT development

The success of Pop Mart is largely attributed to its IP management. As of the end of June 2020, the company had 93 IPs, including 12 proprietary IPs, 25 exclusive IPs, and 56 non-exclusive IPs.

For the NFT field, while the technical and financial attributes are certainly important, acquiring user traffic is equally crucial. Some projects have begun to try to introduce well-known IPs, such as the GoPepe series of cards issued on the WAX chain, which has achieved good results.

Challenges Faced by NFTs in Implementation

Despite the broad prospects, the development of NFTs still faces some obstacles:

1. The high gas fees and low speed of the Ethereum network affect user experience.
2. NFT projects on other public chains may face the problem of insufficient user base.
3. The NFT infrastructure is not yet完善, as most wallets do not support the display of NFT assets.
4. The lack of effective copyright protection mechanisms makes it easy for piracy of IP to occur.
5. The management of NFT exchanges is chaotic, lacking a unified industry standard.

In the future, the development of NFTs requires not only the improvement of infrastructure but also the addition of more quality IPs and a variety of application scenarios. Only by solving these issues can NFTs truly achieve large-scale commercial applications.