The End of NFTs?

Nike-owned NFT startup RTFKT has shut down.

Author

Nicolás Cerdeira
December 12, 2024

In partnership with

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Fail(St)ory

Digital Wearable Hype Gets a Reality Check

Nike-owned digital wearables and non-fungible token (NFT) startup RTFKT has announced it is winding down its operations, another sign of the overall downward trend of the formerly booming NFT and digital collectibles industry.

The decision comes just three years after Nike’s high-profile acquisition of the startup, a move that initially signaled strong corporate interest in the potential of Web3 and metaverse-oriented innovation.

Although RTFKT garnered significant attention and early success, earning a number-nine spot in the top NFT projects by earnings, the startup’s journey highlights the volatile nature of the NFT market and the challenges of maintaining long-term value in the incredibly speculative and rapidly shifting space that is Web3.

What Was RTFKT: Founded in 2020 by Benoit Pagotto, Steven Vasilev, and Chris Le, RTFKT (pronounced “artifact”) specialized in creating digital wearables, especially virtual sneakers, and other digital collectibles tied to blockchain technology. 

The startup quickly gained a cult following by blending high-end digital fashion design with the alluring hype of NFTs, becoming one of the most recognizable names in the digital wearables and NFT spaces. The brand collaborated with well-known designers, such as Takashi Murakami and Jeff Staple, for limited-run virtual releases known as “drops.”

In May 2021, seven months before being acquired by Nike for an undisclosed sum, RTFKT was valued at an impressive $33.3 million. By August of 2022 the company had generated a whopping $185 million in revenue, setting a NFT revenue record for Nike that year.

The Numbers:

  • Founded in 2020

  • Raised $9.42 million from investors

  • Once valued at $33.3 million

  • Acquired by Nike for an undisclosed amount in December 2021

  • Achieved $185 million in revenue by August 2022

  • Ranked 9th among NFT projects by revenue

Reasons for Failure: 

  • Market Saturation and Declining Interest: The NFT space boomed after Mark Zuckerberg’s 2021 metaverse announcement, but has since declined significantly. However, as the hype around the metaverse and digital collectibles has waned, RTFKT has struggled to maintain high levels of interest and profitability. Overall, consumer interest in digital collectibles has decreased as the market has become saturated and speculative bubbles have burst, leaving many NFT projects struggling to justify their high valuations.

  • Web3 Industry Challenges: RTFKT’s offerings were built on a foundation of NFT and blockchain technology, Web3 concepts that are still relatively new and experimental. Broader adoption of these technologies has lagged behind initial predictions, resulting in slower growth and fewer active users than many Web3 startups expected.

  • Economic Pressures: Ongoing macroeconomic uncertainty has played a role in the collapse of speculative markets, including NFTs. With globally rising costs and tightening budgets, fewer consumers are willing to invest at all, let alone in something as nascent and volatile as digital collectibles, further limiting RTFKT’s potential for growth.

Why It Matters: 

  • Emerging tech markets can be highly unpredictable — RTFKT’s rise and fall demonstrates the risks of investing heavily in new technologies that are prone to hype cycles and market volatility.

  • Startups in the Web3 space face unique challenges in creating clear value propositions and achieving mass adoption.

  • Nike’s experience with RTFKT may serve as a lesson to other global corporations considering similar acquisitions, leading them to exercise more caution around highly speculative industries.

  • RTFKT’s wind-down may signal a major cooling-off period for the NFT space as a whole, prompting investors and startups to reevaluate their strategies and focus on initiatives with more potential for sustainable growth, rather than hype-fueled and speculation-driven projects.

Trend

ChatGPT Pro; Worth It?

OpenAI is offering a new tier of access to its generative AI tools, ChatGPT Pro, tailored to professional and enterprise users. For a subscription fee of $200/month, ChatGPT Pro gives users unlimited access to OpenAI’s newest and smartest AI model, OpenAI o1, in addition to the o1-mini, GPT-4o, and Advanced Voice models.

Why It Matters:

  • OpenAI Pro is attempting to democratize access to high-level AI tools for the professional masses, helping enterprise users across industries streamline workflows and boost productivity using generative AI, without the need for deep technical expertise or a massive budget.

  • OpenAI’s new o1 model purportedly reduces errors by approximately 34%, meaning it should perform far better than previous models for enterprise applications.

  • The o1 model is also superior when it comes to highly technical areas, such as math, science, coding, and even case law, reliably generating more accurate and comprehensive responses in these areas.

The Trend: OpenAI’s introduction of ChatGPT Pro reflects a broader trend in the AI industry of AI companies increasingly targeting specialized, professional users who require highly advanced AI capabilities for their workflows.

According to OpenAI, “ChatGPT Pro provides a way for researchers, engineers, and other individuals who use research-grade intelligence daily to accelerate their productivity and be at the cutting edge of advancements in AI.”

This move signals a shift in OpenAI's strategy, aiming to solidify its position as the go-to provider of enterprise-grade generative AI solutions in an increasingly competitive market.

The standout feature of the ChatGPT Pro plan is unlimited access to OpenAI’s new o1 model, the most technical and accurate AI model from the company to date. This will undoubtedly make ChatGPT Pro more appealing to professionals in highly specialized areas, including medical researchers, data scientists, and programmers.

Indeed, OpenAI has even awarded ChatGPT Pro grants to 10 medical researchers across the U.S. as part of an overall effort to “help drive meaningful progress in fields that benefit humanity,” with plans to award grants in other areas of research down the road.

What Does This Mean for the Future of Generative AI?

The launch of ChatGPT pro highlights a critical shift in generative AI’s trajectory — from an experimental emerging technology to an essential professional tool.

By offering fixed-price access to AI tools with enterprise-level capabilities, OpenAI is also making it easier for smaller organizations to compete with larger ones using generative AI, particularly in data-driven fields like research and analytics.

The o1 model’s improvements suggest a move towards AI solutions that are not only smarter, but also provide more predictably reliable outputs, which will be a critical factor for widespread enterprise adoption.

Lastly, as OpenAI doubles down on its professional toolset, it is likely to influence the business decisions of other generative AI solution providers, pushing them to refine their professional offerings to compete and ultimately fueling further innovation.

While not all the tools included with a ChatGPT Pro subscription are brand new, the neat packaging-together of enterprise-level AI solutions is an indicator of how we’re likely to see generative AI continue to evolve to meet increased professional demand across industries.

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Cheers,

Nico