A group of disgruntled Azuki NFT holders recently came together to demand a staggering refund of over $38 million from the project’s team, accusing them of scamming the holders. However, their attempt to seek justice took an unexpected turn when the DAO they formed to coordinate their actions was exploited in a hack, resulting in the loss of tens of thousands of dollars.
The group, known as Azuki DAO, was formed in response to the controversial launch of Azuki Elementals. This new NFT project was a spin-off from the creators of the original and highly regarded Azuki NFT collection. Initially, the launch of Azuki Elementals seemed like a resounding success, with the entire 20,000-piece collection selling out within just 15 minutes, generating a staggering $38 million in revenue for Chiru Labs, the creator of Azuki. However, it wasn’t long before holders started expressing their disappointment and anger, as Azuki Elementals appeared strikingly similar to the original collection.
When Azuki Elementals first went on sale, each piece was priced at 2 ETH, equivalent to approximately $3,800 at the time. However, the value of the project quickly plummeted, with the floor price currently standing at .878 ETH, or just over $1,723 at the time of writing.
In an attempt to fight back against what they saw as a blatant scam, a group of 74 self-proclaimed “diamond Azuki holders” joined forces to establish Azuki DAO. These holders claimed to have collectively invested millions of dollars in the project and sought to coordinate efforts to retaliate against Chiru Labs. Their primary demands were to sue the pseudonymous Azuki founder, Zagabond, and to compel Chiru Labs to refund the $38 million earned from the Azuki Elementals drop back to the Azuki community. However, their actions inadvertently exposed them to further financial loss.
On Monday, just after the group voted overwhelmingly to hire a lawyer to sue Zagabond and demanded the refund from Chiru Labs, two hackers exploited a flaw in the Azuki DAO claiming contract. They managed to steal 35 ETH, equivalent to $68,659 at the time of writing. Azuki DAO confirmed this breach and is working to resolve the vulnerability that led to the hack.
Despite this setback, Azuki DAO remains determined to pursue its goals. The organization has already addressed the vulnerability in the contract and is now consulting with Legal DAO, a Web3 legal collective, to explore legal actions against Zagabond for alleged rug pulling in both the Elementals collection and other previous endeavors. Furthermore, the DAO intends to seek legal advice on how to pressure Chiru Labs into returning the tens of millions of dollars in profits earned from the Azuki Elementals drop. Although Azuki DAO’s members are unsure about the likelihood of recovering these funds, they believe that exerting pressure will compel Chiru Labs to act in their favor.
An Azuki DAO representative expressed confidence, stating, “We will convince them to do the right thing. It’s like forcing them to act positively.”
Decrypt reached out to Chiru Labs for comment on Azuki DAO’s demands but did not receive an immediate response.
However, it’s important to note that not all Azuki holders support Azuki DAO’s actions. Some members of the broader Azuki community have condemned the group, arguing that this relatively small collective of collectors does not represent the wishes of the entire community.
As the situation unfolds, the future of Azuki Elementals and the actions of Azuki DAO remain uncertain. The Azuki community watches closely to see how Chiru Labs and the broader NFT industry respond to these developments.
It is absolutely the projectâs responsibility to create real products that can generate real revenue from outside markets,â Simon Kertonegoro, CEO of NFT gaming studio MyMetaverse, told Blockworks.
PFPs aside, Azuki, according to Kertonegoro, has never shipped any form of product and is instead relying on its intellectual property and new releases to continuously fund its project in perpetuity.
We need to normalize crypto and NFT projects as having real business models. They need to serve the wider market,â he added. Blockworks attempted to contact Zagabond over the allegations but did not receive a response. Azuki community members did not immediately respond to requests for comment.
The proposal, which began Sunday and ends Monday, currently shows 88% of voters in favor of hiring a lawyer.
Elementals controversy
OpenSea: Azuki Elementals Collection
Current Floor Price (July 4, 2023 at 4:05 PM): 1.07 ETH
Many holders and other NFT collectors and creators have taken to social media to complain about the look of the Azuki Elementals, with artwork that is broadly similar to that of the original anime-inspired Azuki PFPs.
Holders of Azuki NFTs and pundits from the broader NFT community have levied much criticism at the Azuki team ever since the controversial launch of its Azuki Elementals collection on June 27.
The Elementals project was first hinted at during an Azuki-branded event hosted in Las Vegas on June 23, with a small allocation of the 20,000 NFTs airdropped to select Azuki holders.
The remaining NFTs became available for purchase at 4 pm on June 27. Existing holders of Azuki NFTs and holders of âBEANZâ â another derivative project â were given a 20-minute presale window.
Azukiâs response
Azuki released its latest universe expansion called Elementals, a 20,000-edition NFT collection. Of the NFTs, the project airdropped 10,000 to attendees at a Las Vegas event. Other 10,000 went to a Dutch auction with specific mint mechanics, such as Azuki holders having a presale window for 10 minutes and a presale window for holders of BEANZ for 10 minutes.
It didnât take long for Azuki to respond to both opponents and supporters of its new collection, though. Less than a day after the Elementals mint had commenced, the brand took to Twitter to address the situation. âThis time, we missed the mark,â Azuki wrote in a thread. âWe hear you â the mint process was hectic, the PFPs feel similar and, even worse, dilutive to Azuki.â
In the thread, Azuki went on to explain the grand vision of Elementals, saying the collection was meant to âwelcome new members into the communityâ while also expanding the Azuki universe and enabling the creation of âa new type of anime thatâs already under production.â
Even with the brand admitting its mistakes, the Azuki messaging ended on a positive note, with the brand stating, âWe know that we lost a piece of trust today, but nothing gets us more motivated to make things right.â And to the surprise of collectors, Azuki shared an image of a green bean alongside a cryptic message, setting the stage for potentially another surprise collection to come.
The launch led to an uproar whereby the Azuki holders complained about technical issues and the artwork resembling the original collection.
Azuki later admitted that it âmissed the mark,â saying that even though the Elementalsâ goal is to grow the Garden and bring in new members, their ambitious goals caused the new collection to bring much community on the tangible differences with the Azuki collection.
Although details have yet to be revealed surrounding the âgreen bean,â considering that beans have long symbolized radical change within the Azuki ecosystem, it wouldnât be a long shot to say that something significant could be on the horizon. So far, collectors have speculated about a range of potential happenings, including airdrops, complex âevolutionâ mechanics, and of course, yet another PFP collection.
Popular Collections
Azuki starts with a collection of 10,000 avatars that give you membership access to The Garden: a corner of the internet where artists, builders, and web3 enthusiasts meet to create a decentralized future. Azuki holders receive access to exclusive drops, experiences, and more. Visit azuki.com for more details.
BEANZ are a small species that sprouts from the dirt in the garden. They make for a great sidekick to an Azuki, although some like to kick it alone. They’re earnestly driven by the desire to help. However, certain BEANZ feel a calling to pave their own path…
Azuki Elementals are a collection of 20,000 characters within the four domains of the Garden.
Garden
Azuki is a brand.
A new kind of brand that we build together.
A brand for the metaverse. By the community.
A collection of 10,000 avatars that give you membership access to The Garden. It starts with exclusive streetwear collabs, NFT drops, live events, and much more that will be revealed over time. Community ownership in Azuki allows for a new genre of media which the world has yet to explore. An Azuki is your identity in the metaverse â let’s build together.
The Garden is a corner of the internet where art, community, and culture fuse to create magic. The lines between the physical and digital worlds are blurring and the rules are being rewritten.
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