Nike is now on the defense in a class-action lawsuit brought against it by the owners of RTFKT NFTs, accusing it of making empty promises. This ongoing legal battle highlights the challenges that brands face in the often chaotic NFT landscape. After a brief and massive boom, this highly speculative market has faced an unprecedented bust. Nike now finds itself exposed to tremendous legal and reputational peril. On the flip side, Adidas is having a fantastic Web 3.0 experience, regularly dropping NFTs and further showcasing the contrasting success between these two sportswear behemoths in the digital collectibles world.
So if you are thinking this change started when brands like Gap and PacSun first entered the metaverse three years ago, think again. Art collectors funneled all their money into NFTs at the time. In the other corner, corporations were clamoring to plant their flag in the nascent, but rapidly growing, Web 3.0 space. Even Salesforce tested the waters for an NFT platform to allow its users to sell their own digital assets. The NFT market has largely cooled down since then, with trading volumes and prices plummeting from their highs.
Exempt from the controversies Nike’s initial entry into the NFT space via its purchase of RTFKT has largely gone smoothly. The company is now facing a $5 million class-action lawsuit. Disgruntled former RTFKT NFT holders allege that Nike has failed to deliver on its promises related to the digital assets. Each of these issues have since met widespread criticism on social media platforms, making the brand’s situation even worse.
Nike’s lawsuit is the latest blow in NFT litigation. DraftKings had just settled a class-action lawsuit about its NFTs for $10 million. This action is symptomatic of a larger trend toward legal scrutiny and accountability in this new market, which is decidedly better late than never. As NFTs will increasingly grow in popularity and in use, companies need to be ready to respond to consumers’ complaints as well as any legal backlash.
Nike has not only taken a beating in the courts, but in negative public relations. At the same time, Adidas has been crushing it on the Web 3.0 front. Adidas has kept up the cadence of NFT releases, at least appearing to have evaded the trap that has caught its competitor. This difference underscores the necessity of a prudent, deliberate approach. If you’re a brand that wants to succeed in the NFT space—this is where your focus should be.
The crash in the NFT market has left card investors with literal paperweights. Some digital assets have lost up to 97 percent of their value, and many more have become almost entirely worthless. This recent slump serves as a cautionary tale to anyone who entered the housing market when it was at its highest. It highlights the danger of engaging in risky, speculative investments in digital assets. Today’s NFT market is a prime example of why comprehensive research is critically needed. It’s important to understand the myriad of possible dangers.
The climate harms from NFTs have been exposed. In addition to the financial risks, the environmental impact of NFTs has come under scrutiny. Minting and trading NFTs uses a considerable energy footprint, and the environmental impacts are truly alarming. It raised expectations for more sustainable practices across the industry. As environmental concerns continue to rise, the NFT market will undoubtedly need to come under pressure to mitigate its carbon footprint.
Nike and Adidas have had radically different experiences since launching their NFT projects. Their differing paths offer insightful learnings for other brands looking to step into the Web 3.0 world. A successful NFT strategy needs you to set aside time for thoughtful planning, set achievable expectations, and show a willingness to face risks and challenges head-on. Furthermore, brands must be mindful of the environmental impact of their NFT initiatives and strive to adopt more sustainable practices.
