[Dive #93] RTFKT's Phygital Forging

The bar for Phygital just rose again

If you’ve been reading my work for some time, you know I enjoy writing about Fashion in Web3. Probably because there’s a stronger IRL factor with physical goods, my appreciation for sneaker culture as a retired novice sneakerhead, and the general ahead-of-the-curve innovation in this space.

I would link all the articles I’ve done pieces on with fashion in Web3, but let’s focus on RTFKT. For those that are unfamiliar with RTFKT (it’s pronounced ‘artifact’ 😉):

• A dive on RTFKT and its acquisition by Nike

• Commercial Rights with RTFKT 3D files

• RTFKT’s take on POAPs

TLDR: Everything RTFKT does raises the bar.

So, what happened yesterday? I’d recommend watching the video.

RTFKT @RTFKT

Clone X Forging SZN 1 : Next Gen Fashion unlocked by your Avatar 🧬⚒️ Here's all you need to know 🧵👇

🤯

First of all, if you’ve been following the NFT space, there is an art to making announcements. Yuga, Moonbirds, Doodles, RTFKT, and countless others projects and brands in the space have optimized their announcement strategy. From teasing an ‘announcement of an announcement’ to ‘BOOM out of nowhere’ announcements, we’ve seen successful and unsuccessful versions of this across the board.

RTFKT has generally been on point with not only the announcement strategy but also the visual content attached to the announcement, which I will call the Announcement Experience (AX).

This term is inspired by Jesse Walden’s (co-founder of Variant Fund) Ownership Experience (OX) concept, mentioned in his piece on Tokens. Seems like one of the earliest mentions of this concept was back in 2018.

I mean…if companies can make up terms like OX, I can make them up too…right? 😂 For the record, I think the content linked above is great. I’m just saying I’m entering the ‘create your own concept’ game too lol.

Now that I think of it, I’ll do a piece on AX in the future, it’s an interesting concept to dive into and there’s a pretty interesting framework I’m already whipping up in my head. Alright, let’s get back on track.

So what’s going on with the announcement:

• There are 10 Clone X DNA types (Human, Robot, Devil, etc.) and each DNA will unlock access to that respective collection

• The merch includes sneakers, hoodies, shirts, pants, pants, hats, and socks. Some DNAs have special items like jackets and vests.

• There will also be a general Genesis collection which will be available to all Clone X holders.

• Mint goes live on 8/31 (tomorrow), and the mint window will be open for a week. After that, the forging window will be open for a week.

• All items (except for hats and socks) will have a NFC chip which will be linked to the NFT.

• Sneaker NFTs will be minted and forged at a later date (production constraints?)

The announcement comes with a Lookbook. Per usual, anything delivered by RTFKT is visually impressive.

I can’t believe my eyes! NFT merch that isn’t a BLACK HOODIE?! Thank you RTFKT team for providing color diversity and inspiration to the space.

There is much more to understand with what RTFKT is doing here and we’ll find out more in the coming weeks.

However there are 3 themes that RTFKT is bringing from concept to reality in ways I haven’t really seen yet at scale.

Multi-layer token-gating

My first Dive was back in April and it was about BAYC’s token-gated merch drop. I introduced the 5 gates that BAYC employed that made the drop unique:

• Availability Gate: The store is almost always closed. Like, literally the website says ‘The store is closed’ lol. Very BAYC of them.

• Token Gate: What everyone always talks about. Nothing fancy here.

• Currency Gate: You had to use Yuga’s token, $APE , in order to purchase

• Visual Gate: This was my favorite. If you only held a Mutant, you could only see the MAYC merch. If you only held a Bored Ape, you could only see the BAYC merch. I expect to see future token-gated experiences to employ this tactic.

• Quantity Gate: Some of the merch had limited quantities. Standard stuff.

Basically, BAYC did this:

Still proud of this image to date, one of favorites 🥹. I should make some TPan meme Hall of Fame in the future.

However, RTFKT just found another Infinity Stone to add to their respective gauntlet:

The Trait Gate

This isn’t that mindblowing. BFF is employing this with the Perk.shop platform, and Proof has airdropped art to Moonbirds holders of specific traits

Or is it? 🤔 It’s important to recognize that the implementation of NFTs should differ based on the strengths and opportunities of each brand. IMO, few NFT brands have leaned into their strengths, and this is where RTFKT x Nike shine, especially with the trait gate.

If you saw the traits for the lowest listed Clone X at the time of this writing, you’d think it was rare.

If a ‘common’ (as defined by listing price) Clone X has multiple sub-1% traits, I can’t imagine what the rarest traits look like.

But wait a second…what about Nike?

Lol at the cashback plugins I have 😋

2,000+ colorways for ONE SNEAKER SILHOUETTE.

This RTFKT x Nike acquisition is making more sense…

Web2 Nike Colorways = Web3 RTFKT Traits

Prediction: These traits are not arbitrary. Many traits will be forgeable in the future.

So, putting it all together, let’s visualize what’s going on here:

Interesting when you compare the gates between the two.

Now what does it look like from a customer journey POV?

Takeaways

• Token-gating can be simple. Token-gating can also be complex. It’s up to the brand to determine the complexity to maximize value for the consumer and the brand.

• If you are thinking about token-gating, which gates do you want to employ? Which gates does your product/brand have advantages in deploying vs. others?

Phygital Authentication

One underappreciated aspect of RTFKT’s announcement was this:

NFC = Near-field communication. It’s the technology that enables ‘tap to pay’ with your phone or credit card.

Why does this matter with RTFKT? I have to give credit to jakey in the RTFKT Discord server yesterday. They helped some of my questions about how the forging event worked and made me realize the importance of the NFC component.

Specifically this part:

Why does this matter especially for RTFKT, and ultimately Nike?

Counterfeit culture is rampant in luxury goods and high-end sneaker culture. Why pay thousands of dollars for a pair of rare sneakers when you can purchase a fake pair for $100 with no one noticing?

On top of that, the fakes are so good these days that they are sneaking past respected secondary platforms like StockX.

Source

Back when I had money (aka: before NFTs), I once spent $700 on a rare pair of sneakers. When they arrived, I spent several hours researching whether they were actually real or not. Painful.

The Clone X NFC integration provides an additional layer of confidence that the merch and sneakers are authentic, as they will be connected to the NFT that minted the token.

Another example: Back in 2018, Supreme had a collaboration with Rimowa for a special edition suitcase. These cost over $4,000 today.

Where there is smoke in the form of hype product, there is fire in the form of counterfeit goods. And counterfeit products were aplenty, to the point where this video went viral among hypebeast circles.

Honestly, it’s amazing lol.

Now, I don’t think this is going to solve the counterfeit problem overnight, nor are people going to run around hovering their phones over people’s clothes. (TBH maybe they will. I can see Tiktok accounts being made from this content lol)

However, it’s clear to me that the following is happening.

NFC tech —> Verifiability —> Social pressure to buy authentic goods —> Demand for counterfeit goods decreases —> Demand for authentic goods increases —> Price of authentic goods increases —> Seller captures increased value from secondary sales royalty

Similar to how Pearson will be capturing an additional revenue stream from second-hand textbook sales through NFTs, Nike can do the same.

Prediction: Nike will be rolling out its own proprietary authentication platform with NFT technology and start capturing a % secondary market sales volume.

Holy shit, I need to start putting my money where my mouth is and buy Nike stock lol. How did I not see this coming?

The Data Play

This is a theme I’ve been gathering from many other e-comm players. Web3 and NFTs provide a lot of benefits to brands, but it’s disproportionately valuable for physical brands because they’re able add another dimension to creating a personalized experience.

Specifically with the RTFKT Forging event, imagine all the things they can do:

• Understand holder behavior with the forging event

  • What holders mint what collections and pieces

  • If ETH liquidity is limited, what do they prioritize minting (aka what do they prefer to buy?)

• If holders attend IRL events, what RTFKT merch do they wear? (verified through scanning and geo-location data)

• If holder attend multiple IRL events, do they wear the same merch? Do they switch it up? Preferences are identified

  • You can even identify matching styles. Eg: Holder 2948 always wears the Devil Hoodie with the Devil Pants. Maybe they would buy multiple pairs of the Devil Pants in the future.

• You can compare and contrast geographical data. If Clone X Angel holders went to an event in Europe vs. USA, how does their merch pairing styles compare and contrast?

• Identify personas: Who actually wears their merch? Who puts their merch in a closet forever? RTFKT naturally understands the ‘rock one stock one’ mindset and this can be tracked because “each Clone holder can mint up to 2 of each item from DNA collections”

  • What if 2 of the same t-shirt tied to the same NFT were verified to be attending the same RTFKT event? That would mean those two attendees have a prior relationship.

RTFKT @RTFKT

1 to Rock and one to Stock Each Clone Holder can mint up to 2 of *each* Item from DNA Collections 🧬+ Murakami Drip 🌸 e.g. 2 caps, and 2 hoodies from the Robot collection

• If these NFC readers are enabled at Nike retail stores, Nike can acquire additional data points around holders purchase behavior off-chain. This is the holy grail of on-chain x off-chain data that the retail industry wants.

TBH, this is getting a little creepy, but this is the reality that is coming faster than we think.

Prediction: RTFKT merch with NFC tech will enable an additional dimension to Nike’s data play, which will create an opportunity for a hyper-personalized retail experience.

In Conclusion

Nike has been and still is top dog in the retail sportswear and lifestyle category. The RTFKT acquisition seems to be one of the smartest moves in the space and is already paying dividends IMO.

The announcement isn’t perfect however. People have voiced concerns about the cash grab nature of what’s going on. And those points are fair, why not give holders a free set of merch and give them the option to purchase the second set?

Source

I’m turning the other cheek for now, but as leaders in the space I do hope RTFKT sets a better example of rewarding early holders and give back to the broader community. Give your community an inch, and they’ll give you back a mile.

My goodness, this piece went hard. Time to eat a veryyyyy late lunch :)

See you tomorrow.