What Happened to RTFKT?
The MNLTH 2 debacle, why the community is upset and what we can learn from all this.
RTFKT is still one of the most competent teams in Web3. They’re pushing the envelope of what’s possible (forging, NFC linking, token-gated drops, new forms of social media experiences and brand partnerships).
This doesn’t mean we can’t learn from the mistakes of even the best teams.
Background
So what caused some of the most loyal community members to talk about selling their RTFKT assets and the MNLTH 2 price to go from $2,000 to $300 in less than 24 hours?
MNLTHs are essentially mystery boxes that contain new innovative products by the RTFKT team. MNLTH 1 was initially airdropped to Clone X holders, which contained MNLTH 2 among other items. Despite the free airdrop, the average sale price of MNLTH 1 since release has been ~$17 000, the average sale price of MNLTH 2 ~$5 000.
It all started with the opening of MNLTH 2 (aka RTFKT X Nike Monolith), which was unlocked by RTFKT on December 4th revealing a Lace Engine. While the holders of MNLTH 1 could decide whether to open the mystery box, MNLTH 2 was automatically opened for all revealing the same Lace Engine.
The function of the Lace Engine became evident on December 5th with RTFKT’s announcement of Cryptokicks iRL:
However, tweet 7/8 of the thread caused outrage among the community:
A large portion of the RTFKT holders are non-US residents so this came as a shock to many. For instance, the AR Hoodie was shipped globally. On the other hand, US residents could forge the Lace Engine in return for a 25% (i.e. $100-$300) discount. The RTFKT community didn’t think this was very good value for a MNLTH 2 that once traded at as high as $14,000 (granted it also gives holders access to MNLTH 3).
Why Was the Community Backlash So Strong?
At the core of the backlash are three factors:
Dividing the community (utility for some, royalties from all)
Poor value for non-Clone X assets
Optics
1. Dividing the community
One of the unwritten tenets of Web3/crypto is that location doesn’t matter. You can trade, hold and benefit from crypto/NFTs regardless of where you reside. RTFKT just broke that unwritten “rule”.
Understandably, NFT projects cannot divulge a lot of information due to securities law and the Nike contract.
Historically the RTFKT team hasn’t been the most communicative with its community about its plans, while this is a more centralized way to operate a project, this in and of itself isn't bad. Nevertheless, there are two underlying reasons that escalated the communication outrage:
The Nike third wheel. After Nike’s acquisition of RTFKT in late 2021, and especially after Nike’s own Web3 platform launch last month, there has been some unspoken anxiety as to how this will change the RTFKT-holder relationship now that there’s a third wheel, Nike (a Web2 company that operates a very traditional model). The MNLTH 2 situation, essentially diminished RTFKT’s credibility as a standalone Web3 brand.
Royalties. RTFKT/Nike undoubtedly benefited from the royalties that the non-US trading volume of the MNLTH 2 provided, without disclosing the geographic restrictions beforehand.
Interestingly, the team has a European background and is heavily influenced by Asian culture. Losing the trust of the international community is dangerous in a market where international growth and interest is outpacing that of US.
It’s important for brands to realize that projects live and die by their communities. The NFT community already has to fight the us vs. them battle with the “outside world”. The last thing a project should do is cause a rift within the community.
The short-term PR value in the context of mainstream culture is probably not worth the backlash from the core community.
2. Poor Value for Non-Clone X Assets?
Arguably an even more important issue is the existential crisis for the MNLTH assets going forward. While Clone X is considered to be the cornerstone asset of the ecosystem (just see the airdrop chart below), this creates an awkward dynamic with the rest of the ecosystem.
Due to the NFT bear market, all RTKT assets have decreased in value (average sale price in USD), however, Clone X has been faring relatively well versus the rest of the ecosystem assets.
The best-performing RTKT NFT, Clone X has decreased by 41% in average sale price from the beginning of the year, however, assets like Skin Vials have seen drops as large as 98%. Keep in mind this data is from before the announcement of the iRL shoes.
In comparison, while BAYC prices have dropped in price relatively more than Clone X, the average price changes in the Bored Ape Yacht Club ecosystem are much more evenly distributed.
However, it’s still early for the non-Clone X assets (all of them were released in 2022), Value should start to accrue to these assets once the new MNLTH technologies/experiences start rolling out.
3. Optics
Lastly, the optics of the entire thing were poor:
Holders waited 7 months (an eternity in the NFT market) for the MNLTH 2 to reveal. While the release itself, not to mention the product, was underwhelming compared to MNLTH 1.
Looking back, highlighting the inclusion into Forbes 30 Under 30 list days before the release of the MNTLH, wasn’t a good look. While the RTFKT team certainly deserves to be on the list, the Web3 community was a big part of why they were able to ascend as quickly. Put it this way, if the RTFKT community didn’t exist, who would RTFKT sell to? Who would they test their proof of concepts? Who would they get valuable feedback from? Who would they get the initial marketing push from? The RTFKT community is one of the most involved communities out there, from creating educational content to offering tools. Without the community RTFKT is a small cog in a big machine (Nike), with it, it’s something much more. RTFKT is a collective vision.
The Nike “Web2 influence”: (see above).
The Light at the End of the Tunnel
As mentioned, the RTFKT team is still one of the most capable teams in Web3.
The MNLTH 2 holders will be airdropped MNLTH 3, which is likely to contain something valuable to all. Moreover, there could be future utility for unforged Lace Engines.
The iRL shoes themselves contain exciting new technology like NFC chip authentification and Move to Earn capability (I’ll likely write about these as more info comes out).
In summary:
Don’t divide the community.
Give a reason to hold all NFTs.
Keep in mind the optics.
Resources
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Yeah I read about that. From what I understand it’s not very straightforward and would cost the buyer quite an bit extra. Not to mention insurance, etc.
There was a great thread on Twitter about shipping your RTFKT to 4K? and using 4K to ship internationally