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It’s been called the “Supreme of the metaverse”, and is best known for its record-breaking digital sneaker drops. It’s made robotic pigeons, mysterious black box NFTs and colourful astronaut-like figurines, with a “perfume of the metaverse” and its first physical merch forthcoming.
Now owned by Nike, digital product company Rtfkt is at a turning point. As an early arbiter of what’s cool in the metaverse, its next move is to build out what physical fashion looks like through the lens of Web3.
Its first physical-plus-digital wearable clothing item with Nike is slated to launch this week. The Rtfkt x Nike AR Genesis hoodie comes with an NFC (near field communication) chip and is trackable using augmented reality, giving the wearer the option to wear, for example, virtual wings. The price will be announced close to the drop, but is expected to be in the neighbourhood of about $250 in Ethereum, and is available only to holders of its 20,000-strong avatar collection, called CloneX, and holders of Cryptokicks. The hoodie is co-branded with Nike, which purchased the company for an undisclosed sum in December.
This isn’t the first time that Rtfkt fans will have the opportunity to physically “forge” a physical product — physical sneaker twins had already been promised — but it’s the first clothing item. It also ushers in a new era for Nike.
With Nike, Rtfkt is laying the groundwork of what a digital fashion play looks like when backed by a major heritage (meaning Web2) brand. “We haven’t seen a Web2 brand come in the Web3 space in an efficient way,” says co-founder Steven Vasilev, who goes by “Z”, adding that Rtfkt is conscious of staying true to the fast-moving, quirky ethos that attracted its fiercely loyal community in the first place. “Some people said it would lead to the death of Rtfkt or slow us down, now that we are part of a huge global corporation.”
They intend to maintain the pace of “firsts” while expanding into the crowded space that is sneakers and streetwear. This spring, for example, Rtfkt sent fans on a series of virtual collective “quests” as they worked to unlock the mysterious black box NFTs, called Mnlths, whose resale value reached more than 9 ETH — before people even knew what was inside. Co-founder Benoit Pagotto considers Rtfkt (pronounced artefact) a “next-generation luxury brand”, influenced by streetwear in the sense of regularly anticipated drops. “You can put ‘Supreme’ on anything and sell it, so you can release anything as long as there is an element of the culture represented,” he says. “We work on the drop system, and when we drop, we don't start over; we keep updating,” like a new version of a video game.
It generates revenue from digital assets, which extends into the secondhand market; because of the way that smart contracts and NFTs are structured, any future sales can generate incremental revenue for the original creator and any partners. Since its November launch, Rtfkt’s CloneX drop has generated $650 million in trade volume, according to the company.
For many, Nike’s purchase legitimised the concept. “It was needed for Web3 to accelerate. It sent a message to take this seriously, and we know for a fact that a lot of big brands started to pick up the phone the day it was announced,” Pagotto says. It gives Nike a competitive advantage as peers like Adidas also push further into the metaverse. And for founders and creators in the digital fashion space, it offers concrete evidence of the long-held theory that digital fashion isn’t just about marketing, but about making money. Now, it will serve not only as a fast-track for Nike’s metaverse ambitions, but will continue as a harbinger for the industry at large.
“It puts us in a powerful position to help dictate the future of Web3,” says Vasilev, including working with Nike’s legal team to help create safeguards for what is still a wild frontier. “A big part of the deal was staying independent and guiding Nike on Web3.”
The “Nike slide”
When Pagotto, Vasilev and co-founder Chris Le outlined their vision, one slide put Nike on the roadmap, through both shoe silhouettes and a target of acquisition in 2025. At the time, they avoided the geeky-sounding words “non-fungible token”, and gaming was not as cool, they said. The pandemic changed that, thrusting the metaverse and NFTs into not just common parlance but the zeitgeist.
“The way they had modelled and branded those shoes was similar to how Nike does it in the physical world, and its mission was so similar to Nike,” says Bianca Pham, who worked in Nike’s innovation office in 2021 and who is now client product management lead at NFT marketplace creator Palm NFT Studio. (Pham was not involved in or employed by Nike during the Rtfkt acquisition). So, as Nike expands into Web3 — it filed a patent for Cryptokicks in 2019 — Rtfkt might help it bypass some growing pains. “They had the speed, the design and the tech to make it an easy transition for Nike,” she says.
Le says that Rtfkt received offers from other companies, but the founders weren’t interested. “They are the best global brand in our eyes. We grew up on Jordans, and they have a whole department making the coolest things.”
A key difference? Nike built its brand on athletes, both the famous ones and the everyday person. Rtfkt wants to do the same, but instead of athletes, it’s targeting internet kids and creators, Vasilev says.
Earlier this month, it released all the 3D files and commercial rights to its CloneX avatars through a token-gated site, meaning that anyone who owns a Clone can create additional content that they monetise, ranging from clothing for the Clones, to movies about them or physical merch using Clone imagery. It took a long time to convince Nike to buy into the concept of releasing intellectual property, Pagotto says. The fact they were successful “shows our ability to influence a billion-dollar company,” Vasilev adds.
Rtfkt also released YouTube tutorials explaining how to use various design programmes. The thinking is that this will continue to foster a community of ambassadors; so far, the brand is yet to spend any money on marketing.
“For the uninitiated, [releasing the 3D files] is a Herculean task that I would not want the onus of delivering,” says Tyler B Cohen, creative director at B2B NFT-tech provider Giglabs, who is working on a fast food restaurant in the metaverse based off of his two Rtfkt Clones. “But, in doing so, they’re signalling to the market that interoperable 3D is their goal, while encouraging CloneX holders to be active participants in monetised content-creation around intellectual property.”
Artist, music producer and animator Ila Orbis invested about $24,000 into two CloneX avatars after connecting with Rtfkt’s roadmap and vision for a creative economy. Now, Orbis is using the 3D files and IP rights to create a brand around his music and artistry. “It's brought a wave of creativity out of me I have never experienced in my life,” he says.
Rtfkt is also providing platforms and partnerships to emerging artists. Its Space Drip sneaker collection tapped creatives to personalise digital Nike Air Force 1s, sharing a per cent of revenue with all artists, as it does with all collaborators. Collectors can now physically “forge” these sneakers, co-branded with Nike. Nike partnerships are notoriously difficult to achieve, and some of the artists are as young as 15, Vasilo says.
Rtfkt is also starting to onboard Nike’s famous athletes into the Web3 world by giving them digital identities, starting with Serena Williams. Last week, she tweeted, “CloneX. That’s it. That’s the Tweet.”
The vision for Rtfkt is to make “phygital” products that are authenticated via NFC chips in the physical world and NFTs digitally. In the early days, Chinese manufacturers began copying some early designs, Vasilev says, and copycat NFTs are also a hallmark of the Web3 space. The team has a prediction that by releasing files to the community, people will be inspired to make iterations, rather than copies.
Rtfkt is designed with an “ecosystem” mindset akin to Apple’s, meaning that products and perks are created to work in concert. Those who owned a Clone were airdropped Mnlths, and its products can be worn by Clones, and so on. “Because you have all the elements, you don't want to drift away from it,” Pham says. “It is your digital identity and the 3D avatars and the items they can wear.”
Opening the platform to developers is also similar to the Apple strategy, Pagotto points out, and was informed by the founders’ backgrounds. Le, who lives in Salt Lake City, worked in entertainment and gaming making music videos and skins. Vasilev, based in Miami, worked on social media pages for streetwear brands before creating a sneaker customisation business. And Paris-based Pogotto worked in luxury, before becoming CMO of esports company Fnatic. They met when Pogotto approached them to turn a skin into a shoe. They quit their day jobs in October 2020 when their digital sneakers began selling for six figures.
For all its inclusion, the price of admission into the Rtfkt ecosystem might have more in common with luxury than with Nike. A Clone will run you at least 11 ETH, or more than $13,000. “It is still a couple thousand dollars on a digital artefact. To me that tradeoff is not realistic enough yet to spend a couple thousand dollars, versus, you know, rent,” says Pham. The progressive nature of NFT projects, meaning that early collectors get access to future drops, also means that new fans have a higher threshold of participation, she adds.
Vasilev says that Rtkft is working to onboard new people, but every drop still has a scarcity model. And every item doesn’t start high — the Metapigeons started at $1 in May of last year. (The resale value of the pigeon is now in the thousands.) While Rtfkt gets some revenue from the resale market, it doesn’t set those higher prices. “If an item sells for $100,000 on the secondary market, we are not making $100,000,” Pagotto says. “One of our collectors and supporters makes the money.
People always say you need your first 100 customers, then 1,000. Our first hundred customers are now millionaires. We made people millionaires,” Pagotto says, due to the dramatic rise in resale prices. Growth in terms of customers is likely to be an ongoing metric of success. “With every new drop, we are thinking about how to onboard new people,” he admits. “But, it’s an interesting position that is very luxury, because we have more demand than we have to offer.”
Expect more physical-plus-digital drops linked to NFTs and NFC chips, especially in the sneakerverse, which has been an early adopter of digital fashion. Competitors include Cult & Rain and a new luxury brand from Gmoney, in addition to expansions from incumbents Adidas and Puma.
Aside from teasers and speculation on Twitter and Discord, Pagotto can’t share details about plans for later this year. He can offer that it will continue to invite people to change the way they think of a sneaker, and will play on the idea of multiple skins to embellish a single primary form. “You have a base, just like a base character, and you change the look with skins. We will focus on the base and we developed a cool material, but I can’t talk about it now. When you see it, you understand it came from a digital world first.”
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