Doodles Deep Dive – Investment Report
Thesis
Doodles fall into the art and collectibles side of the NFT market, the latter is an $11.8 billion market, and the former traded over $50 million in sales volume last month alone. Doodles’ owes a great deal of its gradual growth to its community. Its community treasury, known as the Doodlebank, currently holds over 2,200 ETH (~$5.5 million) and has deployed over 1,300 ETH of capital for many value-enhancing uses.
Anyone holding a Doodle can make and vote on a proposal. The Doodlebank received 420 ETH from the mint and earns 2.5% of all secondary sales on OpenSea. The team has made innovations to increase the value and intrigue surrounding the project, adding to the growth created by the community through the Doodlebank.
The team is committed to an approach of expansion without dilution, that is, adding value to the genesis collection through drops instead of growing the community and diluting the value (i.e., Space Doodles can not sell without selling the original Doodle). For Doodles to retain its blue-chip status, the team must push the community in the right direction to make Doodles a cultural brand synonymous with all forms of media, and the community must hold the team accountable.
Market Size
The total NFT market cap is around $19 billion, with collectibles making up $12 billion. With an expected growth rate of over 35%, the total market expects to grow to $147 billion by 2026.
Indications from previous Doodles drops, namely Space Doodles and Doodlebank proposals, suggest that the team intends to build a game. The total gaming market is worth $198 billion, and the blockchain gaming industry is worth about $18 billion.
Compounding
Doodles have had a long climb to blue-chip status. After minting in October 2021, it did not surpass a 10 ETH floor until January of this year. The price has gradually risen as Doodles makes news with over-the-top Art Basel and SXSW exhibitions, displaying the value they give back to their holders and the grander vision of the team. The 10 “blue-chip” projects constitute over 50% of the total NFT market cap.
Assuming the same growth rate for blue chips as the larger market, these blue chips will be collectively valued at $70 billion by 2026. Keeping Doodles’ current market share, Doodles would be worth just under $3 billion in this scenario.
Assumption
New Doodles CEO and former president of the board of directors at Billboard, Julian Holguin, is successful in his new role. Doodle expands its IP throughout music, gaming, and entertainment. Space Doodles’ stats get used in a game that garners mainstream popularity and success. The Doodles community uses the capital stored in the Doodlebank effectively and efficiently. Blue-chip NFT projects are continued to be viewed as a quality store of value and outperform lesser-known competitors.
The recently announced dooplicator airdropping to holders on May 12 adds value to the ecosystem. The soon-to-be-revealed roadmap delivers quality products that fill niches in the ecosystem. Doodles fulfill its promise of a “path to decentralization” and forms a functioning DAO for the community. There is a successful token airdrop providing large amounts of value to holders.
Risk
- The documentation states, “Doodles are not intended to be an investment” thus, the team is less motivated to raise the floor price of the NFTs.
- NFT blue-chips lose market share to smaller projects. As a blue chip, it will serve Doodles well for these projects to retain their dominance in the NFT market.
- A Doodles roadmap has not been officially released, leaving investors with many unknowns as to the vision and future of the project.
- The new CEO lacks web3 experience. His experience comes from traditional media, meaning he may be unfit to run a web3 company.
- Holders do not own the IP of the underlying artwork; therefore, holders are less incentivized to promote their Doodles and their project. Doodles can be merchandised up to $100,000 through the sale of physical merch or art; any amount beyond that will require a licensing deal from the team. The team is scaled but with poor talent or is mismanaged by the existing team.
