🦉 Proof of Implosion?
"There are not 10,000 people in the world who actually give a shit about NFT art" - an ex Proof Collective holder on the past, present and future of Moonbirds
Hey there 👋,
We have a guest contributor this week that readers of
will likely recognize - from where he writes about building and selling niche websites.We also have a shared interest and experience with NFTs:
He minted a Veefriend - I passed thinking 0.5ETH was too much!
He bought a Mutant Ape for 4ETH - I did too
He bought the Proof Collective - I thought about minting in the reverse auction back in December 2021 but forgot as it was Christmas. I made up for this by minting a Moonbird which I wrote about here, however…
Both of us had a frustrating experience being in Proof / Moonbirds - I’ve been pretty vocal on Twitter since I got a fanny pack for the silver nest reward and quickly floored my bird.
And there will be more frustrated folks as the floor price of Moonbirds has just dropped to under 4ETH:
Below is BowTiedWookie’s take on what went down, the future of Moonbirds and what he’s investing in. Yes, it’s highly critical, but there is also praise.
Our intention in publishing this is to educate; it’s not an attack on the founders/company.
I’ve been a fan of KRO from the Digg days and his Random Shows with Tim Ferriss. I’m still part of the community as an Oddity (it’s my PFP) and even bought another one leading into their Moonbirds Q1 Update (although quickly floored it). I wish the best for all holders.
Cheers!
ps will be getting sponsorship going soon - interested? Here’s the details
Greetings anon, here.
There has been a lot of talk about the Proof Collective over the last two months or so, and while I normally try to sit back and stay out of NFT drama, this is a situation where I feel I can actually add something to the conversation.
To be clear, I’m extremely biased. I bought a Proof Collective pass within the first 30 days of launch and sold 6 weeks ago. I could have paid for a nice house with the drops and pass if I sold at the top.
Sadly, I did not do that.
If you don’t feel like reading, here’s my TLDR:
Moonbirds positioning as the “art collector’s PFP” won’t work, as there are not 10,000 people in the world who actually give a shit about NFT art.
On SuperRare there were 418 monthly active collectors last month (Dune)
If you are considering investing in or selling Proof assets, I think you will find this fairly interesting and informative.
If you are not considering either of these paths, then perhaps this will help you identify red flags with future projects or help you identify some up-and-coming projects that have promise.
If that fails, hopefully you find it a little bit entertaining….
A bit about my crypto/NFT journey…
Around December 2020/January 2021 a domain broker I was friends with sold an NBA Top Shot card for $8K.
He told me about it because I am really into sports cards and he thought I would find it interesting.
To be honest, I thought Top Shot was the stupidest thing I had ever seen. But between that and the doodles Gary Vee was posting on Snapchat I could tell that NFTs had a good shot of blowing up, and that if they did, it would be on ETH.
So I bought 3 ETH for ~$6k and started doing homework on NFTs, specifically what Kevin Rose was collecting. I listened to his podcast Modern Finance religiously and watched the floors of random projects double just because he mentioned them.
I made a rule for myself that I could not invest in any projects until Veefriends came out.
That was the first project I minted.
I was instantly hooked.
Over the summer, I minted about 20 pieces of shit that I made no money on. I passed on Bored Ape Yacht club at .9 ETH because the floor went from .5 to .9 when Kevin first mentioned it on his podcast.
I thought it was overpriced…
By the time Fall rolled around, I was frustrated. I was still in the green because of Veefriends and free mints that came from that, but I hadn’t minted any other good projects (there were a ton).
Around this time, there was a lot of FUD around Yuga (specifically mutants due to increased supply). They had basically said at this point that they were going to make a video game and had already proven they could successfully launch more drops without hurting the BAYC floor (they had also alluded to a token).
When mutants fell under 4ETH, I put all my ETH into a mutant at ~3.8ETH. It went up around 4x over the next 4 months.
While this was going on, Kevin Rose announced he was going to create a 1,000-member private discord group with early access to his podcast.
I’m sure everyone reading this has theories on what moves the NFT market, but back then, Kevin saying something was cool frequently put it in the top 25 for volume on Opensea for several days. Early access to his podcast was a flippers wet dream.
The only problem was I had .3 ETH after the mutant purchase. I was tapped out. So I was left with two choices. Yolo my checking account into more ETH or sell the mutant.
I did both.
The auction for Proof Collective passes happened in late December 2021, and I missed it due to a prior commitment to a chicken wing eating contest (which I lost).
I figured they would come back down (around 3 ETH) and decided to wait a week or two to see if I could get a better price.
They promptly doubled.
So I decided to FOMO into several projects I had been watching. I bought a Cryptoadz, Clown Hashmask, and Proof Collective pass within the span of 20 minutes.
The First Few Months of The Proof Collective
Once I was in the group, it was a ton of heavy art talk, which I found surprising.
I had been fully in “utility token” mode and hadn’t even considered that buying pure art as an NFT was actually a good move. Ironically, art is now the one use case I believe NFTs are actually superior.
There was also a ton of “alpha speculation” from other members. VCs, crypto OGs, and real artists were over 50% of the community. Plenty of firepower to move floors if they wanted.
I watched this closely but quickly realized that everyone in the discord had 20x my bankroll, so I could not afford to be nearly as degen as the average Proof Collective member.
For the most part, I just observed.
Then Kevin decided to begin curating art drops for the Proof Collective. The first, Emotes, By Heart You, was a 0.05 ETH mint. I Minted and sold for 1.3 ETH an hour later. Absolutely nuts.
For a few weeks, Emotes was a really hot project, everyone wanted to get in.
Then it got weird.
Projects started reaching out to Kevin, offering free mints to Proof Collective members because they wanted their NFT to be in the same wallet as Proof Collective Passes. It was a status symbol.
To be honest, I don’t really remember most of these, but I made money on 90% of them.
What was clear was that what Kevin was discussing on his podcast and what he was minting had a noticeable impact on the market. To a certain extent, the Proof Collective inherited that from Kevin. They inherited that status because the average user was worth 7 figures+ and was capped at 1,000 people.
Things got really wild when Kevin started getting into photography NFTs.
He got every Proof Collective member on the allow list for Quantum Keys, which were trying to be the “Proof of Photography NFTs.”
They ended up getting to 8 ETH (largely because 80% of Proof holders had them) and then cratered down (sold way too early on that one). But they released a ton of drops over the first two months that anyone paying attention could have easily made a few ETH on.
Moonbirds Launch
No one can question that the Moonbirds launch was incredibly successful, but the motivation always felt off.
Kevin said multiple times he created Proof because he didn’t want to make “another PFP project.” Proof was meant to focus more on the art and technology aspects of NFTs and stay out of the “attention war.” This, quite frankly, is what Kevin is actually good at. Identifying up-and-coming artists and giving his opinion on the newest tech. Getting early access to this was actually worth a lot of money.
When Kevin announced Moonbirds, everyone was on board, but within the discord, it was understood that Kevin wanted to take on the Yuga ecosystem. He had publicly said several times he didn’t agree with YUGA drops being the same for people who minted vs. people who bought yesterday. I also remember him saying the art “wasn’t for him.”
Moonbirds were meant to be “cutting edge” because of the “nesting mechanic,” which would prevent you from selling your NFT when nested, and they would prioritize better drops to nested Moonbrids.
Although this sounds cool and makes sense on the surface, this screwed Proof IMO.
The flippers and traders are the only way Proof makes money. The loyal holders make you $0 aside from free marketing/goodwill.
This is the elephant in the room people haven’t realized with Moonbirds yet (and a lot of other projects). Without sources of revenue outside of secondary sale royalties, the project is borrowing on limited time (to be fair, they have time as they have made an obscene amount of money).
My First Red Flag
The Proof floor reached 100ETH for a few days back in April 2022, before short-term bottoming at 30ETH in November 2022. This was a huge drop yet very few holders seemed to be panicking, and there was still a ton of faith that Kevin would come through on multiple big projects (primarily Highrise, Mythics, & a token to compete with Apecoin).
I was not considering selling, but then Kevin went on the My First Million podcast in early November 2022. A casual listener would say that Kevin did a great job explaining “NFTs for dummies”, and painted a great picture of the Proof ecosystem.
I left it considering selling for the first time.
During the interview, Kevin made the comment that the team was unable to plan anything more than 6 weeks out because of how quickly things change. This is not how “thought leaders” operate innovative companies. It also directly contradicted “long-term plans” for Highrise, Mythics, and the conference, which were all 6+ month projects that were “guaranteed” to happen at the time.
I should have sold on the spot when he said that. Instead, I just started feeling uncomfortable and watched the floor continue to drop.
Proof of Conference
A lot has been said about the conference, so I’ll keep this short.
They wanted to do a conference specifically because Ryan Carson was “COO” and had experience running big conferences. Other than being a glorified discord mod (actually way more important than people care to admit he was extremely good at it) he didn’t really do anything. Having him run the conference was a great way to build the brand.
The problem was when he left, they were still committed to having a conference and scheduled it to be within 2 weeks of Veecon, which was already established as “the NFT conference.”
By setting a date within 2 weeks of Veecon, they made a lot of people choose one or the other.
They also picked one of the most expensive locations possible by having it in LA. This isn’t the kind of move someone makes when they are trying to “grow the pie”; it’s something you do when you are competing for limited market share. I know a lot of people in this space, and 90% of the people I know had to choose between the two conferences because the dates were so close to each other (and featuring a lot of the same speakers).
Royalty Circumvention, Nesting & Proof as a Loss Leader
Royaly circumvention by Blur, Looks Rare, and now Opensea has probably been the biggest development of the NFT landscape in the second half of 2022 / 2023.
Most projects make the majority, if not all, of their revenue from secondary sales. This has killed the revenue of a lot of projects and made the market much more efficient.
On discord, Kevin said the Proof Collective “did not hold up their end of the bargain”, because the majority of Proof Collective Pass sales were not paying royalties. Because of this, he said the Proof Collective would end at the end of 2024 because the collective was a “loss leader” for proof.
I won’t get into all the arguments of why this is good or bad (or speculate that the majority of Proof’s expenses were billed to the Collective instead of split with Moonbirds). What is important here is that the reason all the Proof sales were circumventing royalties was that flippers were trading the same 30 passes on Blur.
Basically, no one was selling the passes, and everyone was committed to the project despite the floor falling 75%. But Moonbirds were “designed” to reward the long-term holders and punish the flippers…
Guess what happened next?
Everyone went bat shit, Collective Pases tanked (all sales avoiding royalties now), and Kevin and Justin recorded a 2023 Q1 Update where they backtracked on everything they had stated over the last month.
They also eliminated the nesting mechanic and rewards functionality of Moonbirds because they realized this massively reduces sales. In other words, Moonbirds are now just another PFP, and they removed their biggest differentiator specifically to make the project more appealing for flippers…
When Kevin said the collective “did not hold up their end of the bargain and were a loss leader for the company,” I fired up my ledger and sold.
Moonbirds level of success was bigger than Kevin. It was largely due to the collective, which had literally dozens of members with their own Web 3 followings.
Investing in Other NFT Projects
This is not confirmed, but several web3 angel investors I know have seen cap sheets of several NFT companies that Proof has invested in, despite saying they were not investing in other NFT projects. Again this is speculation, but I heard this from people I trust.
Being called a loss leader for a company making angel-style bets in random projects is a gigantic red flag IMO.
Mythics, Oddities & a Dillutive Ecosystem
Kevin and Justin have a pattern of planting a flag in the ground they won’t budge on, watching the floor tank as a result of their stubbornness, and then rolling over.
This first happened with Oddities, which was supposed to be a pure art drop. When a bunch of people who bought Oddities were upset when no utility was attached, Kevin and Justin decided to provide utility via a burn mechanic to mint Mythics. The ultimate master plan was that the Collective (Elders), Moonbirds, Mythics & Oddities were meant to challenge Yuga’s ecosystem. You have 30,000+ NFTs there (not including Grails and other art drops).
It takes a ton of demand to rationalize that type of supply.
Proof was cool because it was exclusive. The art drops worked because there was a limited supply, and getting into Proof was aspirational for a lot of art collectors.
That doesn’t work with 30,000+ “members.”
The Art Collectors PFP
A big reason OGs have been selling Proof Passes and Moonbirds is because Kevin and Justin did not have a good answer for “what is the north star for Proof or Moonbirds?” In their 2023 Q1 update earlier this month, they finally gave an answer:
Moonbirds are “The Art Collector’s PFP.”
Basically, the “utility” of Moonbirds is now the same as Proof Passes. Curated art drops from new and respected artists. For a 1,000-person group of Crypto rich degens, this is great. There is scarcity and real demand due to the sheer bankroll of the people in the group.
The problem is when you go from 1,000 to 11,000 (not to mention a 10,000 combo of Oddities and Mythics) that scarcity goes away.
There are not 10,000 people in the world who actually give a shit about NFT art. So that leaves you with people buying Moonbirds speculatively looking to sell the drops, not a community that actually cares about art.
When this happens, the OGs leave and you have more sellers than buyers.
Silicon Valley Bank & ETH Conversions
It came out this week that Proof had roughly 30% of its assets in Silicon Valley Bank. Hard to really blame them for this, but it is just another red flag. At this point, the best thing about Proof is the bankroll. If they lose 30% of their money, things get ugly.
The DAO / Lunar Society
Although no longer legally a DAO, the “Lunar Society” essentially functions as a way to fund projects to spread awareness of the Moonbirds brand. My opinion is that DAOs are pretty stupid and have little to no value, especially when there are 20,000 potential members (Moonbirds & Mythics).
Of all the proposals I have listened to the only one actually seems useful to the Proof ecosystem is pudding.xyz. The rest of the proposals seem to be CPG companies that will have a Moonbird in the logo and offer some sort of discount to holders.
This doesn’t make the companies bad, but the upside in Moonbirds’ creatine is limited IMO.
NFTs are Not Equity
When I first invested in Veefriends, Gary Vee made a comment that he wanted his community to have equity and upside in what he was working on.
When I first heard this, I viewed owning a Veefriend or Proof pass as having equity in the company.
This is false. The VCs own equity. The NFT owners are the customer base.
Not understanding how this really worked cost me a lot of money over the last 18 months.
99% of the time owning an NFT means you are a customer, not an investor.
Gary Vee & Kevin Rose
Say what you will about influencers in the NFT space, but Kevin Rose & Gary Vee have been an integral part of the development of the NFT market.
This includes their ability to bring awareness to the space, both personally spending millions supporting artists, their own projects, and events that brought the traditional art world into NFTs.
Regardless of what happens going forward, they both have been great for the space.
What has been so interesting is how they have played off each other.
Gary got into crypto punks because of Kevin. Kevin created the conference and a “utility-focused PFP” because of Gary. Although they are friends it seems like these two are frequently making moves based on what the other is doing. Especially with art they are buying.
Things To Be Bullish on About Proof
Reading through this it’s obvious I’m down on Proof. I sold all my Proof assets and spent 2,000+ words criticizing them.
Despite this, I think buying a Moonbird or Proof pass could be a good fit for some people if you meet the following requirements.
You love NFT art. This is a no brainer, you will get a bunch of cool, albeit mostly illiquid drops (but if you actually love art you don’t want to sell)
You are building a Web 3 company. Despite current revenue issues, Proof has a lot of money. If you are building something useful (like Pudding) there is a good chance you can get funding if you have a Moonbird. This is free money for your project, and it's likely Proof acquires some of the projects they fund.
Real NFT investors & degens with money to blow. If you have a lot of money and want to buy a lot of NFTs, I’d just buy a Proof pass and a Moonbird. They have a whole team dedicated to research, and they actually respond to questions. This doesn’t make sense if you want to invest 2 ETH, but if you want to deploy 50 ETH into NFTs there is still alpha to be had if you stay engaged and pay attention.
What I’m Investing In
Once I sold my Proof assets, I sold some ETH just to take some money off the table and bought T-bills.
I haven’t bought any additional NFTs, but here is a rundown of what I am watching / excited about right now.
Art on Tezos. Tezos is a side chain with a bunch of really cool art. ETH is still expensive, and a bunch of artists are experimenting on other chains because it's cheaper. Once they build up a small following, they move to ETH. I think it's likely that the next Xcopy’s genesis project is not on ETH. Crypto could go down 90% tomorrow, and people would still be buying and selling art on Tezos just because they like it. A lot of the art is less than $100 right now. It has the feel of Crypto punks and Curio cards before Jpeg summer started. For the most part financial motivation is not why people are there.
Code-based utility NFTs. This is very niche but very important. Most utility NFTs reflect the market’s sentiment of the founder. This is why Proof has been so volatile and why projects like DeGods have held up so well despite not really doing anything other than Frank being active in the discord. Code-based NFTs give you access to do something via code and don’t require a babysitter to pacify the torches and pitchforks in the discord. A good example of this is Jpeg cards. By staking the card you can bid on NFTs that go into auction. Actual utility that doesn’t require constant communication. As more of this kind of stuff is built out I will be buying. Lots of opportunities for gaming applications.
Websites and online businesses. Although I am pretty involved in NFTs/crypto most of my time is spent buying and building websites. You can read more about that on my Substack:
Thanks again to
(the newsletter king) for giving me the opportunity to write this.Happy to answer any additional questions in the comments.
If you want to keep up with what I am doing, you can follow me on Twitter.
BowTiedWookie
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.