Pudgy Penguins’ Abstract Network Debut Underwhelms Despite Targeting ‘New Era of Consumer Crypto’

On its debut, the network processed an impressive 711,000 user transactions, signaling strong initial interest. However, a closer look at the numbers reveals a different story.

Pudgy Penguins, the popular NFT (non-fungible token) collective, has finally launched its much-anticipated Layer-2 network, Abstract. However, despite an initial surge in user transactions, deeper analysis reveals a contrasting narrative.

According to data from L2Beat, The total value secured (TVS) on Abstract over the last seven days stands at a mere $33.37 million, comprising ether (ETH) and stablecoin transactions. This figure falls far short of the massive liquidity inflows observed during the launches of other high-profile Layer-2 solutions.

Furthermore, Abstract's native decentralized exchange, NOXA, is facing liquidity concerns. On-chain data from Defi Llama reveals a sharp decline in NOXA's total value locked (TVL). From an initial $515,000 on launch day, its TVL has plummeted to just $109,231. This drop has overshadowed the platform's ability to retain liquidity, despite the substantial early transaction activity.

Abstract, which is powered by zkSync technology, is designed to provide a seamless and enjoyable Web3 experience for mainstream users. It offers a simplified onboarding process that allows users to create wallets using their email addresses, a stark contrast to the complex procedures typically encountered in the crypto space. This approach is intended to drive mass adoption and onboard a new generation of crypto users. However, the platform's ability to sustain user engagement and drive mainstream adoption remains to be seen.

As part of its strategy to engage users, Abstract has introduced an incentive mechanism that awards "XP points" for interactions with the network, promising to unlock rewards. However, the response to this initiative has been lukewarm, with one Abstract supporter commenting, “Most people don’t care about XP as much as flipping their NFTs.”

The NFT market has seen a significant decline from the 2022 highs. OpenSea's trading volume, which spiked in December amid airdrop speculation, is now averaging $15 million per day in January, a steep drop from $160 million daily three years ago. This trend has impacted interest in blockchain-based reward systems, as users increasingly prioritize immediate financial incentives over long-term engagement schemes.

Despite its struggles, Abstract allows users to bridge funds, swap tokens, and launch new tokens via zoo.fun, a token launchpad that operates similarly to pump.fun. However, these initiatives have not yet been able to generate the liquidity necessary to sustain the network's growth.

CEO Netz Prioritizes ‘Fun’ Over DeFi Applications

Luca Netz, CEO of Pudgy Penguins and the driving force behind Abstract, is steering the project away from traditional DeFi-heavy applications that typically attract liquidity. He stated, “If it’s not fun and viral there’s no reason for you to build on Abstract. I’m optimizing for fun, viral, simple, stupid. If you want to build the next DeFi application, I really recommend you use Berachain or Arbitrum.”

This strategy sets Abstract apart from its competitors, which tend to focus on maximizing DeFi adoption. While Netz's vision aims to cultivate an ecosystem that thrives on entertainment, social engagement, and viral trends, it remains uncertain whether such an approach can sustain long-term user investment.

Penguin Token Declines 40% Amid Lackluster Launch

The market has not responded favorably to Abstract's launch. Pudgy Penguins' native token, PENGU, has dropped by 5.80% in the past 24 hours and is down by 40% over the last seven days. While broader market trends have been weak, some analysts argue that the lack of direct rewards for Pudgy-linked assets on Abstract has accelerated the token’s decline.

On-chain analytics platform Parsec Finance reported that the reaction suggests that [Pudgy Penguins NFTs] were being priced with the expectation of a mainnet [token generation event] with a healthy drop to Pudgy holders, not a prolonged XP/Points program.

This sentiment reflects a common issue in crypto—investors expect immediate value rather than long-term incentives, and when expectations are not met, sell-offs quickly follow.

Pudgy Penguins Gains on CryptoPunks in NFT Market Shift

Despite its network struggles, Pudgy Penguins is making strides in the NFT space. According to Messari, the collection is closing in on CryptoPunks in terms of floor price, a development that could signal a shift in dominance within the NFT market.

The late-2024 surge in Pudgy Penguins' valuation was driven by strategic airdrops and a growing presence in both Web3 and mainstream markets. CryptoPunks, once the gold standard for NFT valuations, has experienced fluctuations but still remains a significant force in the space. This shift highlights the changing dynamics of NFTs, with newer collections challenging long-established names. If Pudgy Penguins continues on that trajectory, it could redefine the pecking order in the digital collectibles market