*Producer: WeBlock
author: allen que
time: 15/10/2022 *

Note: This case study is for learning and research purposes only, if anyone wants to use it commercially, make sure to contact the author first. Please also be noted that, in addition to the numerical statistics, some of the information in the article is collected through our own channels, or deduced from the information we currently have, so we could not promise its 100% accuracy. In fact, there is still a lot of information gap in Web3 for everyone, so if you find any misleading information in this article, feel free to leave a comment or contact us to edit it. Thanks.

As one of the most recognizable NFT projects, CloneX stands out in this field through its unique avatar, creator culture advocating, and influenced holders. Although this article has no intention to fully interpret this project or do price prediction as you may find those kinds of pieces online many from other authors, what we want to discuss here are some factors that played a vital role in the rise and development of this project.

Team

To begin with, I think the essentials of an NFT project are mainly composed of culture, marketing, brand, and membership, and all these essentials shall be created by people, so the founding team is the most critical factor for the success of any NFT project. Regarding what kind of project is the right one to do, or whether the project fits the current mainstream narrative, the priority of team member consideration shall be higher. Research on the founding team and their backgrounds can also provide an accurate idea of how the project was born different from other NFTs.
Clonex was founded in 2021 by Chris Le, Benoit Pagotto, and Steven Vasiler and it was not built from scratch. This team has been gaining experience in digital arts, fashion, and marketing for several years. Clonex was bred from its mother company RTFKT, which was established by this team in 2020.

First I would argue that this team has a clear division of tasks and cooperation. Chris Le has been drenched in the Gaming industry, Sneaker design, virtual reality, and film production for decades before Clonex, he has a career trace from the gun design of the world-class game CounterStrike to his own sneaker design works, and those works led him professionally recognized by game and fashion industries. So his experience naturally allows him to design the prototypes of CloneX’s avatar and its related items like sneakers and wearables.

while Benoit Pagotto is, according to his LinkedIn description, an esports leader, and luxury brand-building expert, he owns a virtue reality studio. His main work at CloneX is, speculated by us(this speculation was confirmed in their NASDAQ interview later), to brand Chris’ avatar works, including designing the CloneX public impression and enabling the impression with a high-end aesthetic brand culture. there is one more thing that needs to mention, he is also the initiator of the founding team and because of him, the three of them successfully formed a team.

Regarding Steven, there is not much background information on him online, thus I think he is more restrained and low-key among the three. from his short inverterview, we could know that his job is to help Clonex complete the process of virtual to reality, in detail, to make Chris le’s design, such as virtual shoes or related items, into reality real products.So, as we can see, these three members share similar work experience, the same level of aesthetic ability, have cooperated with each other and recognized each other, and have a clear division of work. I think these are what makes Clonex unique from many other NFT projects that have not been able to go for a long road.

Sale Strategy

Like we mentioned above, CloneX was not built from scratch. It was incubated by the Studio RTFKT， and before CloneX, RTFKT has already explored a few digital projects including sneakers, boxes, and fashion-related items. among these projects, its first widely influential work was a sneaker design based on Elon Musk’s new car, which was later promoted by Musk himself. Their works attracted a large number of followers after the promotion.

So when CloneX NFT launches its sales, these followers naturally become their first potential buyers. Besides, CloneX is also very efficient in sales strategy. In general, its strategy leads to two aspects: the first one is to create a multi-level sales structure through price discrimination to ensure that the sales goal is achieved as much as possible.

the total amount of CloneX NFT is 20K, the founding team chooses the number 20K may be based on several indexes: the number of their fans, the number of other well-sale NFT projects during the same time, and the sale price of each. As displayed on the official website, over 55% of the total amount was prepared for Presale, the Presale price was 0.05ETH (around 200USD) and it was only available for the user who owns previous RTFKT digital items. The public sale occupies 42% percent and the sale price was 3ETH through Dutch auction, even later it changed to 2ETH as a fixed price for everyone, it still has 40x of the Presale price, so the price difference between the two 2rounds has a huge gap here to form price discrimination. the timeline selected the presale as the first and the public sale as the second. Price discrimination combines timelines framework have played a big role here: On the one hand, it stimulated presale users to make purchases because such people believe that 40 times of the price gap will make their purchase stays at very low risk, and they will also feel that they have obtained special discounted products and gain a sense of privilege. It is worth mentioning that, apart from the above, the presale user also generated a positive-feedback mind from the privilege: they could join the presale because they have held RTFKY’s previous artworks, so they would think this project will continuously offer the rights later for new NFT drop to their long-term holders, which will further increase their loyalty to the project; On the other hand, these pre-sale users will spontaneously participate in the NFT sales work under the thoughts that they feel that they have obtained superior policies, so they will form a force to advocate their social network friends to participate in the second round of Public Sales.

This led to another question that whether the presale user could conduct an influenced sales work to the public communities. For this question, the Clonex team considered a user filter here. The user portraits of people who can meet the conditions to participate in the presale are basically those who have certain experiences in the digital field and have a certain influence on the digital community. they also have a certain degree of loyalty to the RTFKT project. So we can define these people as CloneX's Seed users. Following this, the number of seed users determines whether this NFT can be recognized by public users in the second round of public sales.

But I don’t think this strategy alone will accomplish the goal of PublicSale, for the number of 8367 Avatar NFTs with a total amount of 16,734ETH( around 70Million USD), this lead to the second aspect: Commercial Artist Collaboration and Blind Box Mechanism.

Unlike many community-driven strategies for public sale, CloneX team decided to set its brand impression quite commercialization and institutionalized by collaborating with the influenced artist in the fashion/luxury industry, working with Takashi Murakami is one of them. this man is the most successful commercial artists in the world today, his co-branded items are related to many well-known luxury brands like Dior, Louis Vuitton, Maserati, etc, these co-branding items made his reputation world wild in the fashion industry. CloneX's successful cooperation with him will have the following effects on new users. First, users will have enough sense of trust in the brand, because Murakami’s joining will increase CloneX's credibility in value evaluation. Second It is scarcity and collection motivation, the works of commercial artists are usually valued, mainly because of scarcity (limitation) and collection value (value-added investment), and the third is social motivation, by purchasing and collecting the works of well-known commercial artists, individuals can improve their credibility and uniqueness in social networks.

We also don’t forget that the Bind Box mechanism is an equally important thing that is used to stimulate users’ buying desire and speculative minds during public sale. If the user wants to acquire the CloneX NFT of the Takashi Murakami version through public sale, they could not purchase it but randomly acquire it through a red bottle called MintVial.

MintVial acted as a blind box, when you get this red bottle, you could burn it through CloneX's official website and the random number system will assign you a type & number of avatars through ChainLink technology, and for a certain chance, you could get a Murakami version. This small red box (blind box) increases the user's speculative minds, attracting users to buy it multiple times in order to increase the chance of acquiring the rare Murakami ones. At the same time, the red box itself could also be traded in the secondary market as an NFT if you didnt burn it. Due to its speculative nature, Its secondary market price turned higher than the public sale price, which indirectly pushes up the price of CloneX in the secondary market again. At the same time, it also acted as a price adjustment mechanism to decrease the selling pressure when the economic model starts to go down, making the price return to its value more smoothly.

Operations and Community structure

A successful public sale would give NFT project sufficient funds and positive reputations for its starting stage, however, operations and community structure will be the key factors for the long-term sustainability and development. they also plays a critical role to support the NFT price during secondary markets. Speaking of operations, I think CloneX mainly includes two important events, and we can see that these two events have appeared in various forms for a long time in the operation: Collaboration and Airdrop. The founding team has repeatedly focused on those two events because they directly affect some key indicators in the long-term development, including price support in the secondary market, user participation& activity, new users’ loyalty, and the evolution& scalability of narrative.

The first major cooperation after the public sale was the acquisition by Nike. this acquisition brought the price of CloneX NFT rose rapidly by 200% in secondary markets, and the daily trading volume increased by 5 times, along the fact that the number of NFT holdings of a single address is more dispersed. Another point that many people do not clearly perceive is that this cooperation has allowed CloneX and the entire RTFKT narrative to evolve and become more extensible. Clonex has stratched out from an avatar and virtual sneaker culture to a collection of full-body wearable digital equipment and digital spaces in line with Nike's culture and its brand.

Airdrop also makes the price of CloneX fluctuate regularly. the advantage of this approach is that it not only activates its NFT holders, stimulating them to keep paying attention and participating in the community, but also continuously arouses the interest of new NFT explorers and expands the number of CloneX holders. It’s worth mentioning that the airdrop difference between CloneX and other NFT is that the former one airdrops both the digital item and physical item at the same time. We can't predict whether this approach will satisfy all their users or not, because it requires the establishment of a relatively complete global logistics system, especially in the current global epidemic situation, but what is certain is that the advocacy and marketing of this kind of physical airdrop, has indeed aroused a lot of user interest in participating, which we can know from the chat topics of its discord channel. In addition to its own airdrops, CloneX holders are also invited to the public sale of other popular NFT projects at a discount. So we can see many different types of airdrops, but their essence and function are similar.

Speaking of Community, CloneX has made it clear that it has a large number of members across different channels such as TikTok, Instagram, and discord. but as we take a closer look, we have found its main user has participated in discord and Instagram. TikTok as a medium didn’t have an obvious impact on the development of CloneX as their data suggests so far. Regarding discord, CloneX has established a multi-level and complete channel group, covering many aspects from new member groups, general chat, NFTholder, OTC , multi-languages, and creators, among them I think the most distinguished part is the creator group.

during the creator channel, there is a complete set of work for creators. like tutorials, material, commissions, ideas exchange, and work sharing. We can analyze the significant impact of the creator channel on the CloneX community from two aspects: firstly, the Creator spirit is the core culture of CloneX, and it is different from traditional digital art. Clonex wants to create a democratic and free creation system by developing and serving the grassroots creators, letting these creators build artwork based on CloneX’s culture and fully own the interests of their works as the same time, so that these creators can play to their best ability, and they have also become ambassadors for CloneX in the process of creation, this cultural strategy has given them a whole new way of promoting themselves. Secondly, by providing the resources most needed by creators, including tutorials, related materials, and the brand influence of the project, CloneX has also built its own training base for backup talents. During the process of cooperating with creators, excellent creators can be selected to recruit into the Clonex team and provide talents for the long-term development.

It is worth noting that from the perspective of data and community performance, CloneX has not yet achieved the goal that it wants to become a cultural center for creators. We found that during the period of market volatility, the creator channel did not have much new progress， most activities stay at Holder & general chatting, people are more interested in an airdrop, new mint, brand collaboration, price, trade, and casual chatting. the reason behind this is that NFT is still at its early stage, as most users currently focus on price and speculation instead of learning and building, while CloneX hasn't found the a way to optimise its mechanics to work with real creators.

Aspects worth discussing

While reviewing the overall project, I found something worth exploring. The first is that Clonex implements a rule that separates copyright from ownership. Ordinary CloneX NFT can be used for commercial purposes of no more than 1M USD, and the Murakami version cannot be used for any commercial purposes, even if the user owns ownership of the NFT. In my opinion, this rule is against the core spirit of Web3, in which users completely own the right to their digital assets under any circumstances. I think in future development, CloneX should leave all rights of the NFT to its holders, otherwise, it would be like another wolf with goat’s skin, its essence has not changed. Another one I think is worth debating is the Creator review mechanism.

In the long run, I think the creator censorship mechanism is inconsistent with the creator culture of freedom, democracy, and equality which advocated by CloneX. I have to admit that in the early days, this censorship mechanism can indeed find the creators accurately, but it indirectly stifles the creativity and possibility of creators, including providing obstacles for a wider range of ideas. I think there shall be a more decentralized and diverse way, which is definitely a challenge.

End

This Case study is mainly used to discuss the rise and development model of CloneX. This model may not be suitable for other NFT projects. any attempt to deliberately imitating does not guarantee the same outcome, there are other factors including timing, concurrent competitors, and a certain amount of luck. However, understanding and mastering the key elements of its model will provide us with a model reference when understanding NFT or creating your new one.