Did ya miss me the past 2 days? :) Iām in LA this week, so my schedule has been wonky. And Iām glad it is! I donāt think I would have been able to concentrate much with all the chaos going on in crypto as well as the broader markets. The NFT space has not been spared either, particularly with Azuki.
Iāve written about Azuki before. Their sense of mystique and cool, along with their ability to innovate and top tier storytelling catapulted their ascent as a top project in the space.
However, itās only a matter of time before each of these projects hits a hurdle that tests the resilience of the project and its community.
Azukiās hurdle came on Monday. Zagabond, the anonymous founder of Azuki shared a tweet with an accompanying article.
mirror.xyzA Builderās JourneyTL;DR
TLDR of the post was that Zagabond was the brains behind 3 other projects prior to Azuki: Phunks, Tendies, and Zunks. Through each of these projects, Zagabond (Z for efficiency) learned lessons that helped him to eventually create Azuki.
Sounds gravy right? Not quite if you were a holder of one of those projects. For some of the holders, they felt that they were abandoned. There were no promises for a roadmap beyond creating the project, but support from the project creators quickly vanished. For context, these projects were all launched in the span of around a month which exacerbates the concern. Additionally, Z and team still owned the contract, meaning they could still change aspects of the project and earn the royalties from secondary sales for the project with none of it going to the project or community.
Upon learning of this news, the NFT space went nuts. Is Azuki a rug? What else did he do? Is he or the Azuki team going to expand on these details? Why share this news now?
The market was not happy upon learning of this new info as the floor price of an Azuki drop ~40%. Prices stabilized shortly after when it was announced a Twitter Spaces would be scheduled the following morning.
Wait TPan, whatās a ārugā?
Great question! The term rug comes from the saying:
And it happens a lot in in crypto. Whether itās a new coin that promises immense returns or a NFT project that promises a state of the art metaverse only to disappear days later, they are rampant in the space.
This happens in the real world as well, but are categorized as āscamsā. Tinder Swindler anyone? Or have you received robocalls or poorly worded texts telling you that your auto insurance is about to expire, or that you need to log into your bank account for some odd reason?
A lot of well respected individuals chimed in with their opinions and concerns:
So does Web 3.0 = rugging three projects in less than a year ? https://t.co/CzoPiz1Z6G
richerd.eth (ć,ć) @richerd
Tenacious.eth š @TenaciousEth
Lol he pretended to be a woman?? https://t.co/63ltYqRw8e
The NFT space eagerly awaited details that would come the next day.
There were over 15,000 listeners on the Twitter Space hosted by @andr3w, a well regarded influencer in the space. Z shared more details around the article and answered questions around what all of this meant for the Azuki community and the communities of the projects prior to Azuki.
Following the Space, the audience and larger NFT community were left with more questions and were unsatisfied with the explanations provided.
Why did Z release the post at this time anyway? Couldnāt he tell that the Crypto space was already in a frenzy with everything else going on? Why did he sound like he was dodging the questions instead of answering them head on? What was he going to do to make things right?
A flurry of Twitter Spaces popped up afterwards for further discussion. The space continued its feeding frenzy with more theories and speculation.
One in particular was led by @Pauly0x, a prominent member of the Phunks (one of the projects that Z built).
In this Space it was revealed that Pauly0x actually had gathered the personal info of Z and other Azuki team members. He was considering doxxing (revealing personal details) them in order to get attention around the Phunks and what they believe they deserved: community ownership of the projectās contract and the royalties associated with the project. With the threat of being doxxed, Zās hand was forced and he shared his involvement with the pre-Azuki projects in order to control the narrative more effectively.
Though there was a some more clarity, there were still many outstanding questions from the Azuki and broader NFT community. Holders voted with their wallets and the floor price for Azuki sunk further as a result.
Later that evening, Z issued a public apology vowing to do better and highlighting next steps to remediate the situation.
And yesterday night, Z posted more updates on the Azuki Discord around making things right.
This chapter for Azuki isnāt over. Z and the team have taken the first steps to make things right and will need to do more to earn back their reputation. Hereās some takeaways and questions that this situation has brought up for me and the broader space.
Is it ok if the founder promises nothing beyond the creation of the project and leaves? Is it ok if the founder leaves the project but doesnāt hand over the contract and corresponding royalties?
I like ZachXBTās framework of focusing on malicious intent and breaking up rugs as hard (blatant exit scam) and soft (repeated negligence).
Based on that framework, I believe it is fair to consider Phunks, Tendies, and Zunks as soft rugs. Though everything from the project was delivered, the founders just left the community to fend for itself without any additional support and ignored their calls for help until there was the threat of being doxxed.
Fortunately, Z is making things right by refunding mint proceeds and royalties, while also handing over the contracts to their respective communities. This removes the rug aspect of those projects.
No harm no foul, right? If a tree falls in the forest and no one is there, does it still make a sound? Itās unlikely that Z wouldāve created this post to be transparent about his project history if there wasnāt the threat of being doxxed. Would the threat of doxxing come up at all if Azuki wasnāt as successful as it was?
This oneās difficult. What Z did wasnāt right, but it also wasnāt illegal. Everyone has skeletons in the closet, but at what point do you let them out? On the flip side, Z has nothing else to hide and though Azukiās reputation has been damaged, they can now focus on building and pushing the company forward.
On the line of not right but not illegal, I believe there were additional concerns with the 0xMandy persona. Multiple people in the space called out that impersonating or at minimum suggesting to be a female in the space not only gave off the wrong impression with certain interactions, but also hurts an already underrepresented community in the space.
Zās response to the 0xMandy issue is below. Essentially, there were different team personas that had contributions by various team members. 0xMandyās interactions were primarily handled by Liz, who is a female.
I donāt think weāll ever know who really handled what with the Zunks project. However the language is specific but vague enough to suggest that not all interactions from the 0xMandy account were conducted by a female. There may have been interactions where suggesting that the persona was a female led to specific results.
This doesnāt sit well with me. This shouldnāt sit well with anyone.
The last tweet from 0xMandy is a retweet from Samuel Cardillo from the RTFKT team.
Whoās Samuel Cardillo? Heās the CTO of RTFKT (now part of Nike). Had he known who 0xMandy really was, wouldāve he have tweeted that? Would he has helped the Zunks project? Clearly the work that the Zunks team did was brilliant. But is how they went about it right?
That said, being anonymous is important and a legitimate matter of safety for some. In this case however, it seems that anonymity was used to the teamās advantage.
The space, the projects, the people involved, their experience, their actual age. Overall it is young. There is so much innovation, but at other times, there is a lot of immaturity and gray areas from a moral and decency standpoint Itās a Wild West, itās a Gold Rush. And when these situations happen, the gloves are off, there are no rules, especially if you donāt get caught.
However, the space is growing up. And Azuki has gone through a serious wake up call in that regard.
No one except Z and his core team will really know what happened behind closed doors. However, this is my hypothesis:
Phunks, Tendies, and Zunks were a means to an end. Z, with his talent and grand vision needed the funds to create Azuki. With the bull market at the time, he was able to spin up some quick derivative projects to raise the money to fulfill the vision.
Would some people be hurt along the way? Maybe, but it was a necessary tradeoff at the time for something that would push the space as a whole forward in a net positive way.
In Zās post he positioned those 3 projects as learnings and a journey for him to explore āstory productā further. He probably did learn and was able to refine how to build āstory productā more effectively. But IMO, thatās besides the point. He was able to get funding quickly, do some quick MVP testing, and ultimately create the building blocks for what would eventually become Azuki.
Am I right? Who knows. Was he right? Probably not, but if I were in his shoes I wouldnāt be surprised if I did the same thing for what I believed was a greater cause.
I believe this is one of the core themes surrounding the Azuki situation. Sure, itās less flashy than āZAGABOND: RUG PULLER EXTRAORDINAIREā or āAZUKI TEAM MASQUERADES AS FEMALEā but I think itās one that applies beyond Web3 or work. We have to think about tradeoffs in our everyday lives, and some of those tradeoffs might hurt others, directly or indirectly.
This situation reminds me of two other examples, one fictional and one real.
Thanos from Marvel and The Avengers franchise. Thanos was a supervillain whose goal was to bring stability by wiping out half the universe. He believed overpopulation would inevitably use up the universe's entire supply of resources and perish.
Thanos was a mass murderer, no doubt about it. But from his POV did the ends justify the means? Absolutely.
The (in)famous Elon Musk. Thereās no doubt that he is one of the most brilliant businessmen and minds of our generation and has pushed society forward with his companies. But is he a saint? Absolutely not. Is he a good person? I guess itās more complex than that. Do the ends justify the means? Probably? Maybe? Depends?
So did the ends justify the means for Z and Azuki? Only time will tell, and considering efforts are being made to remediate the impacted communities, Iām leaning towards yes. But what if they were never caught? Iām not so sure in that case. But would it matter if they werenāt caught and no one knew the real story? Ahhhhhhhh!
Didnāt think Iād get this deep, huh? (I didnāt either lol)
The space will continue to grapple with the above themes, questions, and concepts, and I believe similar situations will continue to pop up. Iām not sure there is a black and white answer to many of these topics, but rather shades of grey. Although this has been a blemish for Azuki and the NFT space, I hope it will make the general space stronger and set higher expectations for each other.
TPan
