Did Sartoshi Rug the Mfers Community?

June 10, 2022

Sartoshi (@sartoshi_nft), the creator of the mfers NFT project and prolific meme artist, has dropped the mic and officially announced the “end of sartoshi”. Sartoshi has since deleted their Twitter account and passed the mfers contract to the mfers community.

Sartoshi’s controversial departure has split the NFT community. While some are calling it a textbook rug-pull, many die-hard members of the mfers community have praised sartoshi’s move as the final scene in a masterful meme performance.

This article provides the cold, hard facts and breaks down everything you need to know about sartoshi’s farewell. I analyze the key arguments to determine whether this mfer’s departure was a stroke of genius, or a reprehensible rug pull.

Who on Earth is sartoshi?

For those who aren’t familiar, sartoshi is (was?) an anonymous meme artist and NFT collector. The name is a nod to the anonymous creator of Bitcoin, Satoshi Nakamoto, who notoriously disappeared after creating the revolutionary cryptocurrency – remember this point, it will be important for later.

Sartoshi was an avid CryptoPunks collector, and made their name tweeting jokes and memes about both the real and the NFT world. Sartoshi dipped their toes into NFT waters by minting a number of memes as 1/1 pieces.

After cultivating a considerable audience, sartoshi created a crude stick figure child with headphones, slouched in a chair, smoking a cigarette, with his arms stretched out to a keyboard. This meme was the beginning of the mfers NFT collection.

And what is the mfers NFT collection?

Mfers launched on November 20, 2021 with a mint price of 0.069 ETH. The project had no whitelist, no paid promotions, and no pre-launch hype campaign. Sartoshi tweeted a link to the minting page and the collection sold out in minutes.

In a blog posted in February, sartoshi shared their vision for mfers. “We all mfers… there is no king, ruler, or defined roadmap and mfers can build whatever they can think of with these mfers”. Sartoshi confirmed there is no official Discord, and that mfers do not need sartoshi’s approval as they experiment and build.

By releasing the mfers NFTs as public domain, sartoshi empowered the mfers community to build whatever they wanted. And they built. Countless mfers derivatives cropped up, with projects building a “mfervese”, a 3D mfers collection, tokenomics, merch and much much more.

The collection’s floor price reached an all time high of around 4 ETH in February, and has jumped between 1 to 3.5 ETH ever since.

Sartoshi disappears: the cold, hard facts

To the surprise of the mfers community (and even close-confidants), sartoshi disappeared. Here are the hard facts of the case:

In the days leading up to the disappearance, sartoshi shared a number of hype-building tweets that something big was coming up on June 9th (6/9). Phase 2 of mfers was promised to the community.

On June 1, the floor price of the mfers collection was around 1.8 ETH. On June 9 (just before sartoshi’s exit announcement), the floor price was around 2.4 ETH.

On June 9, sartoshi announces “the end of sartoshi”.

In the announcement, sartoshi confirms that the mfers contract will go to the community via a multi-sig wallet.

The share of royalties of the mfers collection (i.e. 5% of every sale) was updated as follows:

  • 50% to the unofficial mfers multi-sig;
  • 25% to sartoshi creator-royalty wallet;
  • 15% to westcoastnft;
  • 10% to other mfers dev.

Sartoshi announces a final art collection called “end of sartoshi”. It is a 16,996 collection that minted for 0.069 ETH each. It sold out.

Sartoshi deleted his Twitter account.

The mfers floor price plummeted to 1.1 ETH (it has since risen to 1.8, and fallen back again to its current price of 1.47 ETH).

Did sartoshi rug the mfers community?

Whether or not this was a rug pull is being hotly debated on Twitter as we speak. And there are legs to both sides of the debate.

Of course, this discussion largely hinges on what your definition of a “rug pull” is. It is a term very loosely thrown around in the NFT space – people often claim that their internet provider has “rugged” them when their connection briefly disconnects.

But for the purposes of this discussion, I will use a more sensible (but imperfect) definition: a project founder rug pulls their community when they set expectations that they have no intention of meeting. It implies there was an element of dishonesty, and therefore fraudulent behavior.

I’m going to break down some of the key arguments made by both sides.

This was not a rug pull

  • Sartoshi dropped mfers with no expectations and no roadmap: Many mfers on Twitter are making the case that it was very clear that sartoshi was not the leader or ruler of this project. They argue that there was never any roadmap, and therefore never any expectations that sartoshi was obliged to fulfill.
  • Mfers is a community and culture founded on decentralization: The whole point of decentralization is that there is no leading authority or figure. A decentralized project is a project run by the community, for the community. Proponents of this argument claim that if mfers (a web3 brand) cannot function without a ‘leader’, then is it really web3 at all?
  • Disappearing is a (reasonably expected) continuation of sartoshi’s meme-brand: In the footsteps of Bitcoin’s founder, Satoshi Nakamoto, sartoshi had disappeared as their final scene in a meme performance. Sartoshi had entered the world of nfts, pushed the boundaries of the NFT meme culture, created a meme-fuelled community and project, completed their mission, and then strolled off into the sunset. Many mfers on Twitter argue that this has only increased their respect for sartoshi – a legend that created a community they loved, and then gifted it to them.

This was a rug-pull

  • Sartoshi hyped “phase 2” leading up to June 9, then disappeared: Sartoshi made a series of tweets that hyped the phase 2 of the mfers project. The mfers floor price increased notably during this time period. A reasonable person would speculate that this was hype-building leading up to an airdrop or second generation collection.

    The most damning accusation would be that sartoshi intentionally fuelled speculation to pump trading volume (and therefore royalties) ahead of departing. If sartoshi didn’t intend this, then it was certainly reckless. The floor price plummeting after the announcement is clear evidence that it did not meet the expectations of many mfers.

  • Sartoshi changed the royalty share to take 25% despite leaving the project forever: Royalty shares were updated so the mfers community sig wallet receives 50% of the royalties, and sartoshi receives 25% of the royalties. That means sartoshi will receive 1.25% of every sale of the mfers collection. Some commentators argue that taking a significant chunk of the royalties (rather than giving all royalties to the community) while providing no further value to the project is a hallmark rug-pull move.

    However, ongoing royalties for artists are a very important aspect of web3. Blockchain technology and smart contracts are often praised for providing artists a share in the success of their artwork in perpetuity. Maintaining a share of the royalties is, to me, not the greatest indicator of a rug pull.

  • The ‘end of sartoshi’ collection to commemorate his departure is a clear cash grab: The ‘end of sartoshi’ launch saw around 17,000 mints, for a mint price of 0.069 ETH. That is approximately 1,170 ETH raised, totalling around $2 million. I’m not certain where those funds are going, but I’m pretty sure they will be lining sartoshi’s pockets.

    While this final ‘hoo-rah’ is a clear cash grab, I think it is a stretch to say this (alone) indicates sartoshi’s departure was a rug pull. Sartoshi’s announcement is clear that they will “vanish forever sometime during the mint”, clearly indicating this collection comes with no roadmap or utility. Everyone who bought an NFT from the ‘end of sartoshi’ collection did it at their own discretion, in full knowledge that sartoshi will be providing no additional value.

Closing thoughts

We live in a time and age of influencers. Many people who buy into projects are actually buying into the founder’s vision. From the outside looking in, sartoshi’s departure – after securing considerable amounts of money from the mfers community – seems like a clear-cut rug pull. But for many mfers, they bought into the founder’s decentralized vision of a project run by the community, for the community. For many mfers, the creator is gone, but the strength and significance of the community continues just as it had before.

That is, however, not to say sartoshi is not at fault. The hype that was built ahead of “phase 2” indisputably led to speculation that persuaded some people to buy into the project. Although it would be almost impossible to prove that sartoshi generated this hype dishonestly, it can reasonably be accused of reckless behaviour inflating the floor price (and therefore royalties) before disappearing.

There is a spectrum of rug-pull severity. The difficulty to prove sartoshi’s dishonesty makes it a much less clear-cut rug pull. Maybe a better analogy would be that sartoshi simply cut a quarter of the rug off, and then walked into the sunset.

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