Pixelmon, a crypto project that gained notoriety as the “worst NFT project ever,” is making a comeback by venturing into fractionalized nonfungible tokens (NFTs). The project, which was initially launched in February 2021, received backlash after raising $70 million in Ether and revealing 68 “questionable” NFT characters, including the infamous “Kevin” character. However, in May 2022, Giulio Xiloyannis took over as CEO and decided to revamp the project. The only NFT that remains unchanged is Kevin, which Xiloyannis considers a symbol of crypto’s resilience.
Xiloyannis explains that fractionalized NFT IP may sound complex, but it’s actually quite simple. He compares it to the concept of owning a Pikachu NFT minted by Nintendo in the 90s, where the owner would receive royalties whenever Pikachu’s likeness is used. Similarly, Pixelmon NFT holders will be entitled to royalties when their monsters’ likeness is used outside of the game. The royalties will be paid in the form of the MON token. Unlike other NFT-based games, Pixelmon will be completely free to play, which Xiloyannis believes will drive adoption.
While Xiloyannis believes in the fractionalized IP model, he acknowledges the potential risks. One risk is that holders may not be adequately reimbursed if the game fails to gain traction. Another concern is the subjective nature of fractionalized IP ownership, where certain characters may receive more attention and generate more revenue than others. Xiloyannis notes that the infamous Kevin character could become highly sought-after due to speculation on its popularity. However, picking the right monster could be akin to buying an unpopular Pokemon NFT before the game launches.
The decentralized governance structure of the Pixelmon company is another potential risk. The company relies on its community of holders to vet licensing agreements, believing that giving early fans control is better for the longevity of the IP. The Mon Protocol community has grown significantly, with over 1.12 million wallets in March 2023.
Pixelmon has garnered optimism from various crypto firms, including a $100 million fund launched by Immutable, which allocated a significant portion of the capital to Pixelmon. In February 2021, Pixelmon also raised $8 million in a seed investment round. The game’s “Battle Arena” element is set to launch later this year, followed by the “Hunting Grounds” segment in 2025.