Azuki and AnimeChain Ecosystem

December 30, 2024

Azuki consists of a collection of 10,000 anime-inspired generative avatars, each uniquely designed through a combination of various traits. The project was launched by Chiru Labs, a Los Angeles-based startup founded by a group of anonymous creators.

Azuki's ecosystem is built around a community-centric model known as The Garden, which serves as a hub for the NFT holders. Members gain access to exclusive drops, events, and collaborative projects that bridge the gap between digital and physical experiences.

Team

@ZAGABOND takes the role of PR director in the project – he distributes and popularizes the collection. Previously, he served as a PR manager at Google, after which he was involved in the creation of a decentralized financial service.
@2pmflow s amateur rapper, ex-Google/Y-Combinator.
@locationtba is ex-Facebook software engineer.
@hoshiboyzen. He is twice alumnus of the Y Combinator incubator.
Arnold Tsang @steamboy33 is 39-year-old lead artist. Prior to Azuki, he served as art director for Activision Blizzard’s hit Overwatch shooter for 12 years.

Best-Selling NFT Collection Story

The team created ERC721A for its sale on January 12, 2022. The goal of this standart is to provide a fully compliant implementation of ERC721 with significant gas savings for minting multiple NFTs in a single transaction.

The NFT collection was launched on January 12, 2022, through a Dutch auction format. The initial mint price was set at 1 ETH (approximately $3,400 at the time), with the price intended to decrease every 20 minutes until it reached 0.15 ETH. However, the entire collection sold out in just three minutes, generating around 8,700 ETH (over $29 million) from the public sale alone. A subsequent private sale added approximately $2 million to the project's revenue shortly thereafter.

Most Expensive Azuki NFTs

In the four weeks ended February 11, Azukis did nearly $300 million in transaction volume surpassing well-established collections such as CryptoPunks and Bored Ape Yacht Club. Chiru Labs makes a 5% royalty on every Azuki NFT resale–meaning it has pocketed an additional $15 million in royalties, on top of the initial offering.

In February 2022, was initiated an experiment in decentralized governance by fractionalizing one of its NFTs (Azuki #40, nicknamed Bobu) into governance tokens. This allowed holders to participate in decision-making processes regarding future developments within the ecosystem

Azuki NFT holders were given mysterious boxes in the form of NFTs through an airdrop on April 1, 2022. Later, it was revealed in May that these boxes were part of the company's new collection called BEANZ. These BEANZ characters were designed to complement the original avatars and foster deeper engagement among holders.

On May 11, 2022, Zagabond spoke about his previous ventures in the cryptocurrency space. It turns out that Zagabond has previously been involved in projects such as CryptoPhunks, Tendies, and CryptoZunks. Surprisingly, all three projects were launched within 8 months and faced significant setbacks, ultimately leading to failure. Adding to the frustration was feedback from Zagabond's former colleagues, who claimed that the projects he initiated were not just unsuccessful, but potentially involving fraud. As a consequence, many owners decided to sell their rare items at a loss. This caused widespread rejection of the collection, resulting in a 50% drop in their value. Eventually, Zagabond publicly apologized on Twitter and continued to actively participate in brand building. The collection has been partially restored, thanks in large part to the continued support of a dedicated community.

On October 18, 2022, the team released a new product called PBT (Physical Backed Token) to create a connection between the real world and the blockchain. The PBT will use a BEAN chip, a cryptographic chip that attaches an object to the PBT for authentication and proof of ownership, can generate asymmetric key pairs, provide decentralized authentication, and track ownership of physical objects.

Azuki's first incarnation of PBT has been unveiled in the form of nine gold NFT skateboards. These limited edition 24-karat gold plated skateboards are custom designed and precision crafted. Each one features an intricately detailed gold dragon, as well as one of nine unique emblems from the ecosystem. Notably, NFT holders can trade them in for a gold-coated physical skateboard. On October 21, 2022, Azuki auctioned off eight NFT skateboards for record amounts. In fact, all eight skateboards broke the record for the most expensive skateboard ever sold. While the lowest bid was 200 ETH (about $261,0000), the highest bid reached 309 ETH (about $404,000).

On January 13, 2023 announced the release of its own Hilumia metaverse. It's a map where you can list the different brands (Garden) built in the past, present and future.

The project's official Twitter account was hacked on January 28, 2023, and hackers tweeted a scam link offering subscribers to “claim land” in the Garden. Although the mint was fake, the links directed unaware users to a “drainer” contract that tricked them into authorizing a transaction that swiped assets from their wallets. A total of $750,000 USD, 11 NFT and over 3.9 ETH were stolen.

In April 2023, Chiru Labs announced a partnership with IPX, the parent company of Line Friends. Line Friends is a world of lovable characters that originally appeared as stickers in the popular messaging app Line. The partnership will first include a Beanz and Line Friends collaboration, with merchandise and IRL activations coming soon. Announcing a partnership with IPX, a brand that has worked with Starbucks, Netflix, and BTS, is a huge step for Azuki. Not only is it an opportunity to connect with the global community, but it also extends the company's intellectual property into both the Web3 and Web2 worlds.

On June 27, 2023 the Elementals minting event was held. The minting process was divided into two phases, with NFT holders from the original Azuki collection getting the opportunity to mint first, followed by holders from Beanz.

On July 2, 2023 was created a proposal for reclaim the 20000ETH from Zagabond:

Azuki Dao hires a lawyer and files a lawsuit against Zagabond for rugging multiple projects.

Azuki Dao retrieves a refund of 20,000E from the team and allocates it to the Dao to promote the growth of the entire Azuki community and provide rewards and incentives for artists, content creators, and builders.

Azuki Dao provides financial support to 20000E Dao. The fund will be used to help us organize a research Team for the Lawsuit.

On March 27 the brand announced its collaboration with Arbitrum and the Weeb3 Foundation to develop AnimeChain, a dedicated blockchain ecosystem for anime. This initiative aims to create a decentralized platform that enhances fan engagement and empowers creators within the anime industry. The vision for AnimeChain includes integrating various aspects of anime production, games, and merchandise into a cohesive on-chain experience

In April 2024 Azuki brings web3 to the anime industry, starting with the anthology Enter The Garden.

In September 2024, Anime.com was unveiled, Azuki's new mascots Ayame and Deki debuted, and a private AnimeChain testnet was launched.

Azuki Elementals

While Azuki managed to cater to different segments of users, they missed a few points - the lack of animals, dark characters, and age representation in the IP. Some of the most popular anime characters are animals, such as Gamakichi and Pakkun from Naruto.

Characters like Orochimaru, who embody darker, more hedonistic traits, play an important role in the depth and complexity of the narrative. The original collection could have benefited from the inclusion of characters with these darker, more nuanced characteristics.

Azuki corrected these omissions with Azuki Elementals, which successfully addressed these shortcomings and grossed $40 million dollars as a result.

The lack of a limit on individual minting allowed one user to purchase 332 elementals during the pre-sale, which prevented many Beanz owners from participating. Consequently, many expressed frustration at not being able to obtain an Elemental.

In addition, the release of Elementals was criticized due to the striking resemblance to the original Azuki collection. This led to concerns about dilution of the Azuki brand and speculation about the properties and value of the new NFTs.

Bobu

Bobu is an experiment in decentralized character IP management.

Azuki #40 (Bobu) was placed in the fraction vault (fractional.art). ERC-1155 tokens were created in this vault so that all Bobu fraction owners in the community could participate in the collective governance over Bobu, a key character in the Azuki universe.

By factionaliizing Bobu, Azuki was able to lower the entry barrier for anyone interested in co-creating the Azukiverse. Anyone can post a proposal on Bobu's governanceforum, raise funds, and launch a product utilizing Bobu's IP.

As of this writing, 19 proposals on the Bobu governance forum have reached quorum - including one in which Bobu was send into space. The treasury balance is 415 ETH.

Despite the small size of the treasury, the quality of the products created by the community has been exceptional, unlike the APE DAO where holders play protocol politics to extract as much value as possible but have little to show for it. Bobu Kidz Books, Cold Nitro Brew and Plushies by Eranthe are some of the best projects to emerge from the experiment.

The success of decentralized character IP governance can be attributed to the Bobu Committee, which carefully vets proposals and helps spread the word.

Total supply is 50,000 tokens. Now it's about 11,878 owners in total.

Decentralized Animeverse

Azuki Animeverse

Each IP plays a role in the Azuki animeverse.

Azuki Entry Points

Otaku Culture - The Azuki OG collection reflects the essence of otaku culture and the mentality of collectors, resonating deeply with them. If you browse the official website, you'll notice references to anime in various features.
Cute Character Market - Beanz represents a cute and universally appealing character, much like Hello Kitty, designed to charm and bring people together. They are perfect for getting more women on the blockchain, as there are very few cryptocurrency consumer products geared towards women.
Bobu - Decentralised Character IP Governance.

Azuki had yet to break into the anime industry and prove that the model they were going to build for anime worked. Especially in the area of content.

Content

Enter the Garden - The Waiting Man

For their second anniversary, Azuki have announced their first anthology series in collaboration with Goro Taniguchi, director of Code Geass. The first episode of Enter the Garden features characters licensed by the community, as well as commercials for brands born from the community.

In less than 4 months, the episode racked up over 19 million views on Youtube, helping Azuki expand its IP to a mainstream anime audience.

As the first step towards aligning incentives between creatives and fans, Azuki released the waiting man episode & a limited edition poster signed by Goro Tanguichi himself as an on-chain collectable.

In total, it was minted by 1,374 collectors and earned a total of 12.8 ETH. This is in stark contrast to the way most anime is consumed today - through piracy.

Animechain valie

In the first episode, “Enter The Garden,” owners are given the opportunity to contribute their own Azuki NFT characters to the anime.

Azuki Enter The Garden

Another form of personalization comes courtesy of a dynamic feature in one of Episode 1's scenes where an Azuki collector can see his character on a billboard, creating 10,000 personalized versions of the episode.

The "Waiting Man" also features businesses owned by members of the community. This form of product placement goes beyond traditional advertising by giving builders in the ecosystem a platform to showcase their brands in a contextually rich and narratively relevant way.

Azuki product placement

Mint to Vote is an experiment in monetizing fandom

The second content experiment was the release of “Catch of the Day”, a mini-short film about Mizuki (Elemental #9195), the carefree representative of the Water Domain in the Elementals collection.

Shortly after the release of the first short film, Azuki partnered with thankarb to launch a drawing contest about Mizuki. While artists created artwork using IP, voting to select the winner had a key financial component.

You had to mint to vote.

This again calls into question the relationship between fandom and IP in web 2, as there was no way to monetize fandom.

Mint to Vote

On-chain Anime Collector Economy

The first step towards disrupting the anime industry was distributed ownership of IP assets. The next step should be the inclusion of collectibles in the chain.

Collectibles, unlike everyday goods, gain value through cultural associations and narrative. For deeply invested otakus, it also serves as a form of self expression.

On-chain Anime Collector Economy

Despite the latent demand, there are very channels via which you can purchase the official collectables to signal your fandom. Furthermore, the collector economy is rife with mistrust, and lacks the infrastructure for provenance, authentication & liquidity.
Azuki changed this with PBT.

Physical Backed Token (PBT)

PBT standard offers a range of use cases:

Decentralized item authentication. With PBT, authenticating a physical item is effortless. By scanning an item with your smartphone, you can securely and conveniently verify its authenticity.
Tracking ownership and lineage of physical goods. PBT provides a transparent and immutable record of the ownership history of an item. This feature provides authentic details about past and current owners, allowing brands to use this information to create personalized merchandise experiences for their audiences.
Combining physical and digital experiences. By owning a digital token associated with a physical product, people can unlock exclusive digital experiences. Similarly, owning a physical product can provide access to unique digital content, enhancing the overall experience.

As part of Azuki's story, eight golden skateboards were auctioned off for a total of $2.5 million.

After auctioning of the skateboard, and airdropping TTJ’s, Azuki launched a raffle for Mind of Gus. A limited edition vinyl in collaboration with Hong Kong-based creative director, SK Lam. A total of 530 Mind of Gus were raffled, whilst collectors with “hoarder” emblem were allowed to claim one per profile, thus rewarding top collectors in the community.

Azuki in partnership with Line Corporation launched a figurine, which features Jay, the character of Beanz, wearing a hoodie in the shape of BROWN, a bear who is the star of “BROWN and Friends,” a celebrated collection from IPX—formerly known as Line Friends. The figurine quickly sold out & exclusive collector profile equips were launched for the holders. The sale was open to everybody, thus helping them expand into new audiences outside of crypto twitter.

IP Generated Products

Azuki set the basis for Anime 2.0 with IP and PBT. But the true sign of a successful IP is when fans start creating art, writing fan fiction online, and cosplaying at events. For fans, it's a sign of personal investment - they deeply value the franchise and consider it part of their identity.

Builders can use IP to instantly establish trust with consumers, while IP will serve a global audience from day one with bi-directional value streams. This is the new anime economy.

Some of the leading projects utilizing Azuki IP to create products and services include:

Bobu Kidz Books by Niq

Bobu Kidz leveraged the Bobu IP to launch their own trilogy series for kids. The team raised $15,000 from the Bobu treasury to handle the costs associated with production and distribution.

The 'Blooming Trilogy' takes young readers aged 4-9 on an unforgettable journey through Hilumia's mystical garden. Across three beautifully illustrated books— 'Creativity Blooms,' 'Empathy Blooms,' and 'Responsibility Blooms'—children meet Zara, Romeo, Kappa, Pearl, and Bao, experiencing adventures that teach vital life lessons.

Kigu Inc by Dewku

Kigu Inc launched their own oversized cat Kigurumi hoodie by leveraging the Azuki IP. The hoodie is very soft, comes in three sizes and has a premium polyester outer layer with a sherpa lining.

Demcrab Plushie

Demcrab started as a meme, and was quickly turned into a plushie by the community. The production and distribution of the product was handled by Ocean Park, a web 3 brand focused on IP utilisation. All this in a span of couple of weeks. This is decentralised IP creation at it’s finest.

Meme on CT (Capture Mindshare) →Launch Product → Distribute

Most on-chain communities struggle with onboarding creatives and have a free-riding problem. Where a handful are responsible for driving the growth of the community. Azuki is different, as there are over 175+ creatives leveraging the IP to build products & services, all with zero token incentives.

Why is community participation high compared to other on-chain communities?

Holders are part of a sub culture they believe in
Empowering builders through the Garden Caretaker Program.
Social recognition using equips in the collector profile.

Animechain Economy

In early March, Azuki announced Animechain in partnership with Arbitrum.

Arbitrum's stylus allows developers to write smart contracts in Rust, C, and C++, and is also compatible with EVM. In this way, Animechain will be able to attract a larger pool of developers to create new contracts.

Today, there are over 100 EVM-based blockchains, but over 95% of them struggle to retain liquidity and users once incentives are removed.

The blockchain economy requires cultural capital to thrive, and Azuki has plenty of it. More than 175 builders use Azuki IP to create products and services, with a 4.5% engagement rate and no incentives. This is a strong indicator of the health of the blockchain economy, as well as the underlying IP that brings the community together.

As part of the web 2 IP expansion, Azuki launched anime.com, where users could register via email and receive free stickers.

There was no gas, no signature requests, no initial phrases, no extensions, and most importantly, no mention of cryptocurrency anywhere. The complexities associated with the introduction of cryptocurrency were completely abstracted.

As Azuki expands to new audiences, and becomes the defacto distribution level for new and upcoming anime IPs in the crypto economy, there will be a huge demand for blockchain, and the value will increase for anime coinage, all working under the hood.

Value Accrual in Anime IP

PFPs today are passive assets. NFT IP will soon move from passive assets to productive assets. Whilst NFT IP unlocks access & utility, investors are looking for new ways to turn their passive investments into cashflow generating assets. Which means monetising the IP.

ERC-20 is fungible and you can easy earn yield, trade etc. It’s different when you’re investing in culture, as jpegs are non-fungible & often illiquid.

Since NFT IP is about capturing & tokenising mindshare, Akashi's thesis is grails & people who build meaningful experiences ( using Gen AI) that leverage the IP will see new forms of value accrual.

We’ll see collectives forming around character IP & actively governing the treasury. Bobu the Bean Farmer is one example. As grails become inaccessible & expensive, we’ll see more collectives pooling funds & actively managing the character IP, coming up with multiple storylines, brand partnerships and more.This is what it means to have true ownership in an IP.