Rtfkt — an early Web3 fashion success story — is folding

Rtfkt — the Web3 streetwear brand acquired by Nike in 2021 — is planning to cease operations by January 2025. In a statement shared on platforms including Discord and X on Monday, the founders of Rtfkt announced the decision, referring to it as a “new chapter” for the company. “Since our inception, Rtfkt has been at the forefront of digital culture, pioneering the fusion of sneaker culture, gaming, digital fashion and Web3 technology. Together, we’ve built something revolutionary: a community where traditional boundaries between physical and digital creativity dissolved, and where artists and collectors redefined what the future could be. Today, we’re announcing the plan to wind down Rtfkt operations,” the statement read. Its final project will be an updated website that showcases Rtfkt’s journey, plus another product drop this month, called ‘Mnlth X featuring the Blade’ (additional details were not disclosed). It’s unclear if Rtfkt’s team will stay on at Nike (neither Nike nor Rtfkt responded immediately to requests for comment). Rtfkt, founded in 2020 by Benoit Pagotto, Steven Vasilev and Chris Le, emerged as one of digital fashion’s top success stories, seen as an early example of how digital goods, NFTs and gaming could intersect to create fandom for physical goods. It started with sneaker NFTs before expanding into phygital sneakers and hoodies co-branded with Nike, plus a series of digital avatars called Clone Xs. The brand became known for a dedicated fan base that banked on the ongoing promise that “membership” — achieved by collecting Rtfkt’s goods — would grant them better and more exclusive access to products and experiences. In this way, Rtfkt established a new mode of brand storytelling that depended on hype and anticipation of future access. In less than three years, it reached $185.3 million in NFT sales revenue, according to data analysis of public NFT sales records reviewed by Vogue Business. Its acquisition by Nike — announced in December 2021, for an undisclosed sum — was seen as a very clear, yet early, endorsement of the nascent technology in fashion. This led to partnerships with those including artist Takashi Murakami, beauty brand Shu Uemura, luggage brand Rimowa and crypto hardware wallet maker Ledger. Rtfkt’s founders, whose backgrounds include traditional fashion and gaming, then went on to work under the Nike umbrella, helping to inform Nike’s larger digital product and NFT strategy. At the time, luxury and sportswear brands were in a race to monetise digital fashion and NFTs, with Adidas, Puma and StockX, among others, also introducing elaborate NFT schemes. Nike’s acquisition of Rtfkt led the sports giant to be ranked as the top-earning brand in terms of NFTs by August 2022. It also helped establish a potential playbook for new ideas including phygital goods (meaning physical pieces linked to a digital identity), augmented reality extras, token-gating through NFC-chipped products, co-creation of products and profit-sharing among a community. Since then, the market for fashion NFTs has slowed, with fans growing exhausted from the hype and brands focusing on more practical uses of NFTs as crypto values decreased, such as authentication and transparency. Rtfkt worked through the crypto downturn to maintain the hyped storytelling that fuelled a sense of FOMO for those who might be inclined to sell off their goods or skip the next drop (often, new drops required people to already own certain NFTs or to complete a series of challenges among other hurdles). While Rtfkt aspired to mimic the storytelling capabilities of heritage brands — its founders often cited Nike as inspiration — this closure suggests that it was hard to monetise those efforts on a long-term basis. The floor price for its Clone X avatars, for example, has fallen from at least 19 ETH (about $55,000) in May 2022 to about 0.3 ETH (or $1,000) at the time of the announcement. (Changes in floor price are generally considered a measure of value or desirability.) “Rtfkt’s collapse isn’t a shock,” says Matt Maher, founder and CEO of innovation consultancy M7 Innovations, which advises Chanel, among others, on Web3 fashion projects. “Whether they want to believe it or not, NFT and Web3 companies operate similarly to Fortune 500s: to survive and thrive in the long run, you need relevancy and revenue.” Most online commentators on X and Discord expressed disappointment, calling it a “rug pull”, which is the term for when Web3 communities would aggressively promote and sell NFTs then disappear without delivering on promises; as the utility of digital goods doesn’t hinge on receiving physical products, they are often sold with the promise of future access and special perks. “Rtfkt is a cautionary tale for all brands,” Maher says. “Providing value and utility to consumers cannot be endlessly deferred under the guise of something bigger and better around the next corner. Rtfkt is not unique in these gossamer-thin promises — the majority of Web3 initiatives all ran the same playbook.” As for Nike, the sportswear giant initially went big on digital goods. It introduced Nike Virtual Studios in November 2022, with the aim of co-creating sneakers with its community and sharing revenues accordingly. Since then, Nike has quieted its NFT component in favour of gaming and in-game wearables. The company’s been facing a tough time more broadly, having undergone a series of layoffs — particularly in its tech division — before announcing a new CEO in September as it competes with new players and works to innovate. In October, it reported revenues falling 10 per cent to $11.59 billion for the first quarter of fiscal 2025, missing analyst expectations. While some working in fashion tech say this closure was expected, it comes at an unexpected time for the crypto community. The value of Bitcoin is way up, and the incoming Trump administration is expected to be favourable to crypto entrepreneurs. But that doesn’t necessarily translate into riches for Web3 fashion. “It’s hard to wrestle with the paradox of a Fortune 100’s Web3 unicorn acquisition getting shut down the same week Bitcoin nears a $100,000 stock price,” Maher says. “The incredible surge of Bitcoin has overshadowed the fact that Ethereum and L2 cryptocurrencies aren’t rising at the same rate, the NFT market is on life support and most major companies have shuttered their Web3 efforts or worked tirelessly to rebrand them,” says Maher, adding that brands and collectors shouldn’t be tempted to connect Bitcoin values with Web3 success. “Valuation is divorcing itself from utility, crypto is divorcing from Web3 and Bitcoin is divorcing from the decentralised promise of the blockchain.” It’s unclear what will happen with the existing NFTs that holders own. If anything, they are a relic of an unprecedented period in culture in which a new generation of digital goods provoked fashion fans to really consider the value of fashion. In the brand’s closing statement, it acknowledges this passage of time: “Rtfkt isn’t ending. It’s becoming what it was always meant to be — an artefact of cultural revolution.” Sign up to receive the Vogue Business newsletter for the latest luxury news and insights, plus exclusive membership discounts. Comments, questions or feedback? Email us at feedback@voguebusiness.com.

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