Key Takeaways

• RTFKT is a metaverse-inspired fashion powerhouse. Most notably known as the creator of the highly sought-after 20,000 Clone X collection in collaboration with world-renowned Japanese artist Takashi Murakami.
• Clone holders are entitled to receive multiple generous airdrops from RTFKT since launch, greatly enriching their holdings.
• RTFKT is at the forefront of the digital fashion industry thanks to its acquisition by Nike, strong and engaged community, numerous partnerships, and innovative initiatives.
• Due to their rapid growth, some have criticized the brand for neglecting certain secondary collections and for over-monetizing their own community through physical merch.
• The fashion studio serves as an exemplary model for upcoming web3 fashion brands and designers to emulate in their own endeavours, including building a vibrant community and fostering partnerships with industry leaders.

RTFKT At a Glance

The Metaverse has paved a new avenue for fashion to experiment and innovate. It is a source of inspiration for the creation of RTFKT (pronounced as “Artifact”). The company’s core value is well described on the website:

???? We are a creator-led organization. RTFKT uses the latest in game engines, NFT, blockchain authentication and augmented reality, combined with manufacturing expertise to create one-of-a-kind sneakers and digital artifacts.

RTFKT was founded in early 2020 by three veterans, Benoit Pagotto, Steven Valisev and Chris Le, whose experiences intertwined between gaming, fashion and branding. They came together and shared a vision to push the boundaries of fashion to the next level. In less than two years of operation, RTFKT was able to secure a total of $9.5 million in VC funding, including an $8 million seed round from renowned investors such as Andreessen Horowitz, Galaxy Digital, Larry Warsh, and Ledger.

Their Clone X PFPs are among the rarest traits in the collection with Murakami DNA and Artist Edition type.

Initially, the company focused on creating limited virtual sneakers, gradually becoming known as the “Supreme” of the metaverse. Some people might recognize the brand in their early stages thanks to a meme featuring Elon Musk wearing Cybertruck sneakers, which generated buzz and attention among sneaker fanatics on Reddit.

RTFKT's emergence as a digital fashion house came at a time when the industry was embracing the “Phygital” approach, a fusion of physical and digital experiences. By utilizing NFT, brands can bridge the gap between the two worlds and create a new dimension in fashion. RTFKT, as one of the pioneers in this domain, aims to incorporate the idea and branch out by collaborating with industry leaders and rising designers/creators, expanding its visibility and influence in the digital fashion world.

RTFKT's Top NFT Collections: Charting the Project's Success Story

Punks + Fewocious

To kick off their presence in Web3, the brand partnered with CryptoPunks to offer exclusive physical and metaverse drops only for Punks NFT holders, tailoring each sneaker to match the unique design of each Punk. This collaboration is the starting point for the future possibilities yet to be unlocked as the Punk project develops. It was not until the collaboration with artist FEWOCIOUS, a rising 19-year-old crypto artist in the digital space, in March 2021 that really propelled RTFKT into the spotlight. The pair’s NFT sneaker, and digital characters collection were snapped up in a flash, selling for a whopping $3.1 million in under seven minutes.

Jeff Staples

The next major collaboration with Jeff Staples, known for his work with Nike on the popular pigeon-themed Nike Dunks, introduced a new set of virtual sneakers and pigeons that owners can showcase in the Decentraland metaverse game. These unique pigeon-inspired shoe NFTs became the building blocks for one of the most expansive NFT ecosystems in the space (see the Treemap).

Initially, Meta Pigeon NFT holders were unaware of the fortune that lay in store for them. Since purchasing, they have received a series of airdrops from RTFKT. As of writing, the holders have accumulated ~21 ETH (3x Clone @5.4 ETH, 3x Space Pod @.48 ETH, 3x Loot Pod @.33 ETH, 3x Cryptokicks @.22 ETH, 3x Skinvial @.067 ETH, 3x Lace Engine @.02 ETH and 3x MNLTH X @.37 ETH), and the collections would be more significant in value in the bull market.

Clone X

Rising in popularity and on their way to expanding into the metaverse world, RTFKT partnered with the legendary Japanese artist Takashi Murakami for their first NFT avatar project, Clone X. The release of this project, which features 20,000 3D avatars with anime undertones and unique attributes designed by Murakami, has boosted RTFKT to new heights and made this NFT collection the most notable and prominent aspect of the brand. Notably, Clones, with his namesake, are the most sought-after trait of all. There are 10 main traits include Human, Robot, Angel, Demon, Reptile, Undead, Murakami and Alien.

The NFT PFP collection was initially introduced through a presale, with the creators stating their intention to "make this project as affordable as possible." During this presale, 11,133 Clones were distributed at the cost of 0.5 ETH each, 500 NFTs for the team, and the remaining were open for public sale. At its peak in April 2022, the floor price reached an all-time high at ~24 ETH. Currently, the total sales volume sits at ~250,000 ETH, equivalent to $350 million.

Clone X is ranked 6th in terms of sales volume with the current floor price at 5.25 ETH on OpenSea.

The Versatile Utility of Clone X NFTs

Owning a Clone enables holders to receive one of the most generous airdrops in the NFT PFP space, as visualized in the treemap above. The specifics of each item (so far) are as follows:

The Clone can be used as a discount on both digital and physical products and served as a pass for invite-only events, providing private access to exclusive experiences and merch.

Holders also have access to various 3D files based on their Clones’ attributes, allowing them to personalize their NFTs and use them in numerous creative projects. This initiative expects to see the emergence of aspiring 3D artists, Clone Vtubers, fashion models and video game makers. You can check out examples of community-based YouTubes dedicated to RTFKT education such as Clone X Maxi's and RTFKTNews.

In August 2022, RTFKT kicked off the Clone X Forging SZN 1 that allowed holders to redeem digital and physical items ranging from caps, jackets, pants, socks and sneakers. The apparel available was determined by each Clone X DNA with a variety of gear for all 10 types. Each Clone X holder can mint up to two items from their NFT's DNA and receive either a free item from the Genesis X collection or a corresponding t-shirt. Notably, Human Clone with Murakami Drip holders can mint up to 31 premium wearables (and it came with gas fees).

Clone X Forging SZN 1 (Source: Twitter & Lookbook)

While Murakami Drip traits have certain privileges, Clones WITH Murakami Drip traits do not come with a commercial license. In contrast, the rest of the traits can be commercialized up to $1,000,000.

Why RTFKT Leads the Way

Community Building

A metaverse brand's success is closely tied to the strength of its community. A passionate and engaged community can provide valuable feedback, drive participation and usage, and help to spread the word about the brand. This also holds true for community building for an NFT project because it helps to create a sense of ownership and belonging among the project users.

During the MNLTH pre-reveal, RTFKT challenged NFT holders with a series of quizzes, and they joined forces to solve them and uncover secrets within the iron box, strengthening member excitement and engagement. Also, the MNLTH X rectification is an exemplary demonstration of RTFKT's dedication to incorporating community feedback and enhancing the user experience.

In May 2022, RTFKT hosted an unforgettable in-person event in New York City, bringing together a diverse group of creatives and thought leaders from various fields, including artists, fashionistas, rappers, and Web3 enthusiasts. Attendees had the privilege of mingling and networking with notable figures such as Kane West, Kaikai Kiki & Murakami, and even the Mayor of New York City. The event generated such excitement that it sparked a series of follow-up meetups in various locations across the US and around the world, including England, France, Korea, and Taiwan.

Since its inception, RTFKT has effectively created a vibrant online community on various social media platforms, attracting a substantial following. These platforms, including Twitter (400k followers), Discord (250k members), and Instagram (500k followers), serve as hubs for the community to engage in casual conversations, participate in fun contests/games, and exchange ideas, unifying the community and strengthening their bond regardless of physical locations.

Nike Acquisition

In December 2021, RTFKT's acquisition by Nike sent shockwaves through the fashion industry and added the company to Nike's family of notable brands, including Converse and Jordan. This acquisition was a strategic move for Nike to enter the market for customizable and limited edition sneakers and to stay ahead in terms of technology as AR in fashion is expected to grow in popularity. Besides, the giant retailer makes an effort to explore the metaverse with Nikeland built on Roblox and .Swoosh.

Sources: Yahoo Finance, Tracxn, Nike

“This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture... Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.” - John Donahoe, President and CEO of Nike

Thanks to Nike, RTFKT is able to access enormous resources, enabling them to tap into their exceptional creativity to create one-of-a-kind airdrops and merch (Nike Dunk Genesis, Cryptokicks iRL). The support from Nike will help RTFKT accomplish things only Nike can do.

Trading volume reached an ATH at 31k ETH on the week RTFKT announced its acquisition by Nike (Source: OpenSea)

Partnerships

The adage that success breeds success rings true for RTFKT as they consistently draw in partnerships and collaborations with renowned industry leaders and top fashion brands through their ongoing achievements. Below are some of the notable collaborations:

RTFKT’s collaboration with industry leaders

Given RTFKT's enormous backing from Nike, the possibilities are endless for potential partnerships with your favourite idols (Messi, Drake, or BTS) or web3 brands (Azuki, BAYC). Imagine RTFKT teaming up with these industry heavyweights!

INVNTRY

A changing room for your 3D characters? Why not. The brand is developing INVNTRY app, powered by UE5 technology, to allow holders to truly make their Clones unique by customizing them with NFT wearables and creating personalized content for their virtual avatars. In this sense, your Clone not only functions as a regular 3D avatar but also as a personal mannequin, on which you can experiment and try on virtual outfits before redeeming them for physical clothes (if the collection is redeemable).

IVNTRY App (Source: Twitter)

Cryptokicks iRL

Combining Nike's decades of sneaker innovation with RTFKT's mission to merge the digital and physical realms, the Cryptokicks iRL is the inaugural Web3 sneaker that utilizes the latest technology to further Nike's culture of innovation and progress.

The Cryptokicks iRL is a tribute to the iconic Nike Mag, designed by Tinker Hatfield and released in 1989 with the film Back to the Future 2

RTFKT makes the Cryptokicks iRL (CiRL) the ultimate expression of fashion and footwear innovation, with a package full of cutting-edge features such as auto-lacing, enhanced lighting, haptic feedback, gesture control, walk detection, advanced AI/ML algorithms, and wireless charging via the RTFKT Powerdeck (that’s mouthful). To ensure a seamless and enjoyable experience, RTFKT offers an in-house RTFKT Cryptokicks iRL app that allows wearers to connect their shoes to their phones and customize light colours. The smart sneakers will also be equipped with RTFKT's WM (World Merging) NFC (Near-Field Communication) chip that gives users the ability to verify the sneakers' legitimacy and provenance by matching the physical pair with its digital collectible version. We expect that the public will be in awe once the Kicks are shipped sometime in summer 2023.

A Macro Economic Perspective

The fashion industry has shifted from brick-and-mortar stores to online models, driven by the COVID-19 pandemic and the emergence of the metaverse. The metaverse, which includes virtual fashion stores and VR try-ons, is projected to grow at a CAGR of 36% by 2026, with North America driving 38% of the growth. The market is expected to become more dynamic and grow in size as major players like Microsoft, Tencent, and Roblox enter the field. Digital fashion startups are also emerging, looking to get a slice of the market growth. In the same vein, it is expected that the global fashion e-commerce market will increase ~11% YoY, reaching a staggering total value of 1.3 trillion by 2025.

The trend of digital fashion is fueled by Millennial and Gen Z groups, who see the metaverse as a modern-day mall for shopping, socializing and hanging out. Brands are encouraged to take advantage of this trend by selling in the 3D world, making it easy for them to purchase both digital products like NFTs and physical accessories. NFTs and digital fashion are a perfect match, as NFTs provide true ownership, compatibility in virtual worlds, and uniqueness for digital fashion items, serving as a natural expansion of current spending habits. The adoption of NFTs is likely to increase among this generation, who are more likely to own NFTs.

???? 42% of Gen Zers stated that expressing themselves through cool clothing and accessories in the digital space is more important to them than IRL, indicating a strong desire for self-expression in the digital realm - Roblox

Let’s find out how Nike/RTFKT gets ahead of the trend????

Here are some of the intriguing findings from a survey of 1000 American gen Z’ers conducted by Roblox, showing what they expect aspiring metaverse fashion designers and brands should bring to the table:

Expectations of Gen Z’ers for designers and brands breaking into digital fashion

Nike/RTFKT has successfully checked all the boxes, proving they are on the right track to incorporate NFT and align their offerings with current trends and consumer preferences, especially among Zoomers.

In recent years, traditional and luxury brands have started their venture into the metaverse including Adidas (Into the Metaverse), D&G (DGfamily Box, Collection Genesi), Gucci (Superplastic, 10KTH Gucci Grail) and Tiffany (NFTiff). However, thanks to RTFKT, Nike is able to lead the metaverse fashion race and open up a new revenue stream from their NFT arm.Source: Dune Analytics (@kingjames23)

Part of the solid performance can be attributed to their ability to understand and cater to a theory that we call “Maslow’s pyramid of the metaverse”.

Maslow’s hierarchy of needs in the metaverse

The three concepts above can be seen as a hierarchy where individuals first have the desire to access the digital world, then establish their digital identities and finally, interact and express themselves through the ownership of digital items in the digital realm. Nike/RTFKT can capitalize on this trend by continuously providing the necessary products to meet the growing market demand.

RTFKT's Expansionary Efforts: Success or Overreach?

Despite its success, the fashion studio faces criticism for continuously monetizing the Clone holders/community through their merch. Even though they’re backed by the Swoosh, RTFKT is still a young startup with just under three years of operation and in its growth stage. The past years have been a time of experimentation, and they are trying to move fast and break things.

While we agree that it is a great move by the team to capture the market share, we are concerned that the team has overworked themselves. The frequent use of airdrops/mints, although might have lowered entry for newcomers, has diluted the primary collection and also caused secondary collections to become overlooked. This is evident in their failure to meet the standard of the MNLTH 2 reveal experience. Furthermore, the recent Crypotokicks iRL release for US-based holders alone has received negative feedback from the community, making holders question their investments. It is possible that the pressure could have come from meeting sales targets and reducing operational costs set by Nike.

But regardless, we believe the team should slow down their expansionary efforts to focus on honing the existing products and improving user experience, letting the community catch up, understand, and fully appreciate the value of the RTFKT’s offerings.

What lies ahead for RTFKT?

RTFKT closed out 2022 with a full schedule of engaging events, initiatives and airdrops.
 

Full 2022 Schedule. Check out the recap video here: link

Following a fruitful year, RTFKT is expected to bring more surprises for the communities in 2023. This year, the brand will focus on four key themes: Slower, Better, Together and Deliver as shared by Benoit on Twitter. In short, the team will prioritize user experience and tokenomics development for their avatar economy while also placing a strong emphasis on fostering a strong community and working collaboratively to shape the future of RTFKT. It seems that instead of committing to a comprehensive roadmap, the RTFKT team chooses to focus on yearly goals and deliverables to continuously refine and deliver high-quality outcomes.

In an interview with the Business of Fashion (BoF), Benoit shared the ambitious vision of RTFKT:

“First, we did digital sneakers, then virtual fashion and now avatars; the next step is to become a world-building company."

Closing Thoughts

RTFKT is ambitious in their vision. They have proven that the sky is the limit for their capabilities and potential. The question of whether RTFKT can maintain their solid performance in coming years is highly speculated. The stakes are high, and the competition is fierce; however, with the support from the number one fashion behemoth and the feedback learned from the past, we believe the chance for RTFKT to become the metaverse fashion leader is not so out of reach.

Leading by example, RTFKT sets the standard for aspiring metaverse fashion companies, providing inspiration for them to follow and learn from:

• Blockchain technology enables the tracking of transactions on-chain, allowing brands to engage in targeted marketing and offer products that match their customers' needs.
• Building a robust Web3 community and onboarding those who share a common vision and value on the journey.
• Collaborating with industry and thought leaders in both Web 2 and Web3 to expand the reach and enhance the brand’s credibility in the market while tapping into valuable industry insights and networks.

Establishing a digital fashion brand is a long-term game, especially in an ever-expanding metaverse market. Still, RTFKT is taking it on with a bold "Just Do It" mentality inspired by Nike. The fashion house has certainly already made an impression in the fashion world and proven to the industry that “The Future is Now.”