Abstract: A New Layer-2 Network by Pudgy Penguins Struggles to Gain Traction
This week marked the rollout of Abstract, the layer-2 network developed by the popular NFT collection, Pudgy Penguins. However, the launch has been met with a somewhat tepid reception, even with the platform introducing a range of incentives aimed at attracting new users.
On its launch day, Abstract recorded a commendable 711,000 user transactions. Yet, this impressive figure has been overshadowed by a notable lack of inflows into the network. As of now, its Total Value Secured (TVS) stands at a mere $33 million in ether (ETH) and stablecoins. This figure pales in comparison to the tens of billions of dollars that have been distributed across other highly anticipated layer-2 networks.
The platform’s native decentralized exchange, NOXA, has seen its Total Value Locked (TVL) drop significantly from $515K on its launch day to approximately $109K, according to data from DefiLlama.
The launch was heralded as ushering in a “new era of consumer crypto”, featuring a simplified onboarding process that allows users to create a wallet using just their email addresses. Users interacting with the Abstract mainnet accumulate “xp points” that can be utilized to “level up” and unlock various rewards. However, an Abstract supporter on social media platform X expressed concern, stating that “most people don’t care about xp as much as flipping their NFTs,” also voicing frustrations regarding the project’s community dynamics.
Functionally, Abstract operates similarly to other Ethereum-based layer-2 networks. Users can bridge funds from different blockchains, swap tokens on decentralized exchanges, and launch new tokens using zoo.fun, Abstract’s own version of a token launcher. However, Abstract’s CEO, Luca Netz, aims to shift the focus away from the traditional, often serious, DeFi applications that usually attract the most liquidity on other platforms. Instead, he emphasizes the importance of creating products that are “fun.”
In a recent interview, Netz 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. Don’t come to Abstract to build those types of products because we want to be really specialized around fun.”
Unfortunately, Abstract’s launch has coincided with a downturn in the market for Pudgy Penguins’ native token, PENGU, which has declined by 7.6% in the last 24 hours and by an alarming 41% over the past week. The broader non-fungible token (NFT) sector is also experiencing challenges, struggling to recapture the euphoric heights seen in 2022 during the latest bull market. For instance, trading volume on OpenSea, despite a significant uptick in December spurred by airdrop rumors, is averaging only $15 million per day in January, a stark contrast to the $160 million per day recorded three years ago.
