Letter 5 - Gutter Cats

I just had a look at the picture above and I thought to myself: what on earth has my life become? I’m sitting down to write an in-depth letter on a whirlwind 48 hours surrounding digital cats.. that have formed a gang.. and rule the earth.. in the year 2050… and this is basically my full time job now. Like, wtf.

Moving on. You’re forgiven if you don’t know what the Gutter Cat Gang is because they are very new to the NFT space, although they made one hell of an entrance. Here is how they describe themselves on their website:

The concept is essentially a complete knock-off of the Bored Apes - a bunch of NFTs that can double as avatars as well as serving as some sort of membership to a club or community, with full rights granted to the owner. You might say that they’re… copycats.. (anyone? anyone? Bueller?… heh). This is not necessarily a bad thing . The BAYC clearly have a winning formula, so why not copy them (or to phrase it more kindly: “take inspiration from them”). There is room for more than one successful avatar project in this space. I’ve said it before and I’ll say it again: I think NFT avatars are a multi billion dollar industry, and this is just the beginning.

There is value in being a part of a community, but only if that value is created by the community members and the team behind it. It’s still a bit too early to tell how the cats are going to play out but we can look at everything that has happened since launch (and even pre-launch) and try and make some educated guesses.

Launch drama

Before we dig into what happened in the hour leading up to the scheduled launch - it is worth mentioning that the cats were meant to launch last week but received some community feedback and decided to change some things and pushed the launch. This is a good thing. It means they are willing to listen to their community, and that they were not looking for a quick cash grab.

So what happened with the actual launch? Well, it was scheduled for the 8th of June at 4:20 PM EST. Then roughly 40 minutes before that time they posted this message in their discord:

Chaos ensued. There was a LOT of panic and FUD (fear, uncertainty, doubt). A lot of skeptical and suspicious people, rightly so. The NFT space moves incredibly fast and you have to be quick to come out on top, but navigating the following few minutes was a minefield even for the most seasoned of us. They posted a link to their website where you could purchase and within 5 minutes they sold out all 3,000 cats. There were a LOT of unhappy people. Some completely missed the drop because they were planning for it to be later, and others had failed transactions and large gas costs with no cats. The community wanted answers, and it deserved them.

Shortly after launch the team posted this message:

Okay. A fairly reasonable explanation, but they were well and truly in damage control mode now. How the team handled the next 24 hours was going to make or break the project, as this was just the beginning of the many fires they had to put out. Every minute that the team didn’t address the community was damning, and people were already starting to offload their cats on the secondary market for low prices. In hindsight these turned out to be poor sales and anyone who bought these has done very well - but like I said, it was a minefield at the time, and nobody knew how it was going to play out.

Post launch drama

It took about an hour to get another official response from the team (there were mods in the discord answering some stuff on their behalf, but it was mostly “they’re working on it” which is not the most comforting response). An hour is an eternity in crypto/NFT time. In that hour there was a crazy amount of FUD in the discord chat and on twitter. It appeared as though some cats had two owners - and people wanted to know why. A LOT of people lost money on gas costs, and were allowed to mint at the end of the sale even though the cats were sold out - and people wanted to know why. Issues surrounding the actual contract code came up - the coding was inefficient, and people wanted to know why. The team chose to mint the cats as ERC-1155 tokens instead of ERC-721 tokens, and people wanted to know why.

Two of the biggest names in the NFT twitter scene piped in and added fuel to the fire:

There’s a whole other can of worms I could open and write about crypto twitter / tweets by whales (whales = ppl who spend the most on projects) and the impact they have on markets, but that’s outside the scope of this letter. I’ll just say that neither Pranksy nor Loopifyyy bought any cats.

While all this is happening the secondary market is running at a mile a minute and the cats are in full-on price discovery mode. If memory serves the floor dropped to pretty close to the mint price of 0.07 ETH ($176.68), and some super rare cats got snapped up in the 0.10 ETH range.

An hour into all this we get a message from the devs covering some of the issues:

Pretty good response. It didn’t cover every issue and people were/are still concerned about the ERC-1155 vs ERC-721 issue, but it calmed the market. It showed people that they were still invested in making this project a success and were not running off with our money. The secondary market then saw some extremely bullish action with every cat listed under 0.42 ETH or so getting snapped up over the next hour or two, causing the floor to be rise to ~6x mint price. There were dozens of higher priced sales too. Whales were aping in (cating in? 🤔), and the gutter cats got verified on Opensea and quickly shot to be the #1 trending collection. Everything was coming up GutterCatGang.

A closer look at the cats

Let’s look at some numbers now. One of the most notable/interesting things with GutterCats is that their mint count was significantly lower than any other similar project, and the mint price was also on the low end being at 0.07. I wrote about why I think the market was ripe to jump on the cat bandwagon in this twitter thread but the cliff notes version is that there are a lot of people who feel like they missed out on the BAYC bandwagon and are now priced out of jumping on. Cats were perfectly positioned to create a new community out of these people. Not to mention there are plenty of apes like me who also love the cats.

One metric I use to determine the strength of a project is the % of unique holders, or the average NFTs per holder. I did this for the apes, and I have updated the table and chart to include current numbers & the addition of the cats. It’s worth noting that I suspect the cat unique owner percentage is higher than the apes, but the data has not updated properly on Opensea so I can’t verify that claim just yet.

We also do need to look at the # of unique owners, as there is strength in pure numbers too. Here, the cats aren’t looking so hot - but that’s a fact of design based on the low total mint count. Even if every cat had a different owner, there’d still be fewer owners than there are BAYC owners. It’s also worth remembering that the project is two days old compared to the others that have been around from a bit to a lot longer.

The cats are always going to be a smaller community compared to most of the other projects. This might hurt their growth potential a little bit as it means fewer voices on twitter, fewer worldwide connections, less capital to buy up the metaverse, etc. But everyone loves an underdog story, so maybe the Davids will upstage the current Goliaths and prove all the haters wrong. A narrative is already forming around cats vs apes. I think healthy competition is a good thing and it shines attention on both projects all in the name of a little fun. I think if the competition gets heated with animosity then it’s a bad thing. Once again: we should be lifting each other up, not squashing each other down. We’re all still so early, and there’s plenty of room at the top. Let’s get there together.

Looking ahead

Roughly 24 hours after launch the team made another post with an extremely detailed response to almost every concern remaining. I’ll post it in full below but the tl;dr version is:

This, to my mind, is about as good as it gets in terms of a thorough and well thought out message to the community. They took their time and there were some people calling for an official statement earlier (I was one of these voices), but at the end of the day (literally), they nailed it.

There is a strong community forming around the cats. Twitter is atwitter with cats following cats, they are hosting twitter spaces, and planning their foray into the metaverse. The team has a nice roadmap ahead: merchandise, physical framed prints to be sent to some owned, and a digital + physical comic book based on the cats. Yes, they basically “stole” all these ideas from other projects. Or, they were inspired by them. Perspective.

The final red flag

You’d think we were all out of the woods and it was onward and upward from here for the cats - but there is one final issue that it would be remiss of me not to address. Apparently two cats were minted with the exact same attributes, cats #378 and #2625:

Given their website states “a collection of 3000 unique Gutter Cat NFTs” - this is fairly damning. I believe their code did not check for duplicate mints because the odds of it happening were incredibly low. Another coding oversight, and another one that in and of itself has no impact on the future, but it doesn’t instill a tonne of confidence. If the devs learn from their mistakes and do better going forward, then no real harm is done. These two cats are probably now the two rarest in the entire collection. But it’s a red flag, and it makes it so that my outlook on the future of the gutter cats is cautiously optimistic.

The floor for buying a cat on the secondary market has been sitting steady at around 0.27 ETH ($681.48) for most of today. It’s still an affordable entry point, especially relative to apes. The highest sale so far has been 3.5 ETH ($8,834) and there have been 32 sales of 2 ETH ($5,048) or more. I’m proud to be part of the #GutterCatGang and am excited to see what the future holds for us.

Disclaimer: I minted 12 cats during the initial launch. I sold four, and am holding the other eight for the time being. I am watching the project closely. The potential is there for cats to follow the footsteps of apes, but it is entirely too early to predict how things will turn out.

What’s on my radar?

This is a new section I’m adding to the end of my newsletters as I’ve been asked by a lot of people how they can know about drops that are coming up. I find out by spending most of my day on twitter and in various discord channels. That isn’t feasible for everyone, so I will try and post about a few of the projects on my radar at the end of my letters. Please always DYOR (do your own research) and do not construe my posting about a project to be me endorsing it. These are just the things I hear about coming up, and may or may not invest in.

Zed Run Genesis Horse Drop - it’s too late to get in on this if you don’t already have a stable, but it’s the biggest drop of the day/week for me. I recommend setting up a stable so you can be in for the next drop if you’re interested.

Million Pieces - From their website: Millionpieces consists of 10,000 individual "pieces" created on the Ethereum Blockchain. Pieces make up over 163 countries and 20 cities. By owning a piece, you can co-create the Millionpieces metaverse with thousands of others by uploading and displaying images within your regions.

Million Dollar Rat - Some sort of raffle/lottery thing with a story behind the NFTs and potential later utility.

Exoplanets: The 4001 project - Cool looking planets and stuff. From their discord: we are planning to make an interactive picture of The 4001 Universe with all the Galaxies inside and a place for each Exoplanet there.

SuperYeti - I wrote some pretty scathing stuff on this project before they launched, which I won’t rehash but you can read about in this tweet thread. I have been following along and they seem to be selling out at a slow and steady pace, and the discord has changed it’s tune with the devs posting some more info. I haven’t done another deep dive into it but it’s on my radar to look into again. I’m still skeptical for all the reasons I tweeted about, but I’m not above having my mind changed and admitting I might have been wrong. TBD.

Star Atlas - This is on the Solana blockchain. The project seems insanely cool and I might dedicate a whole letter to it - I need to do more research myself.

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We’re still early.

Disclaimer: The content covered in this newsletter is not to be considered as investment advice. I’m not a financial adviser. These are only my own opinions and ideas. You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.