Introduction to Abstract’s Launch
Pudgy Penguins recently introduced their layer-2 network, Abstract, which launched to significant anticipation this week. However, despite the initial buzz and a variety of incentives aimed at attracting new users, the results have been somewhat disappointing.
Initial Activity vs. Liquidity Deficit
On its launch day, Abstract recorded an impressive 711,000 user transactions, a noteworthy achievement for any new platform. However, this exciting figure has been overshadowed by a concerning lack of liquidity. As of now, the total value secured (TVS) stands at a mere $33 million, comprising ether (ETH) and stablecoins. This is a stark contrast to the tens of billions seen across other popular layer 2 networks.
Decline in Total Value Locked (TVL)
The decentralized exchange associated with Abstract, NOXA, reflects a similar trend. Initially boasting a total value locked (TVL) of $515K at launch, NOXA has since seen a significant drop to just $109K, according to data from DefiLlama. This decline raises questions about the platform’s ability to maintain traction in an increasingly competitive space.
A User-Friendly Experience
The launch of Abstract was heralded as a “new era of consumer crypto,” designed with streamlined onboarding processes that allow users to create wallets using only their email addresses. This move was aimed at making the platform more accessible to a broader audience.
Engagement Through XP Points
Users engaging with the Abstract mainnet can earn “xp points,” which serve as a means to level up and unlock various rewards. However, feedback from the community suggests that many users are more interested in flipping NFTs for profit rather than accumulating XP. One supporter on social media lamented about the project’s community engagement, stating that “most people don’t care about xp as much as flipping their NFTs.”
Abstract’s Functionalities
Like many other Ethereum-based layer 2 networks, Abstract offers users the ability to bridge funds from different blockchains, swap tokens on decentralized exchanges, and launch new tokens via zoo.fun, the platform’s version of a token launcher. However, the focus is distinctly different from the traditional DeFi landscape.
A Shift Towards Fun and Viral Products
Luca Netz, CEO of Abstract, aims to pivot the platform away from the conventional DeFi applications that typically attract high liquidity. Instead, he emphasizes the importance of creating products that are “fun” and “viral.” In an 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.”
Market Impact on Pudgy Penguins
Unfortunately, the launch of Abstract has coincided with a downturn in Pudgy Penguins’ native token, PENGU. Over the past 24 hours, the token has dropped by 7.6% and has experienced a staggering 41% decline over the past week.
The NFT Market’s Challenges
The broader NFT market continues to face struggles in recapturing the fervor witnessed during the bull market of 2022. Trading volume on OpenSea, for example, peaked at around $160 million per day three years ago but has since dwindled to an average of approximately $15 million per day in January, despite a notable increase in December spurred by rumors of airdrops.
Conclusion
As Abstract continues to develop, it remains to be seen whether the platform can overcome its initial liquidity challenges and live up to its vision of a more engaging and enjoyable crypto experience. The focus on fun products may attract a different audience, but it also poses risks in a market that heavily favors established DeFi applications.
