Author: Arain, ChainCatcher
Editor : Nianqing , ChainCatcher
Good news for smokers has arrived, and soon you will be able to make money by smoking.
To be precise, this is a project to help people quit smoking. Smoking is just a behavior, the goal is to quit smoking, and X-To-Earn is the mechanism.
Puffpaw, a project on Berachain that focuses on "quit smoking and make money", announced on September 5 that it had completed a US$6 million seed round of financing. At the same time, as the first DePIN project on Berachain, Puffpaw received support from the Berachain Foundation.
“We are now developing e-cigarettes and sensor devices ourselves. At this stage, we have our own new e-cigarette brand. We explore Web3 to enhance consumer experience and help people quit smoking. In the future, our sensors will support more e-cigarette brands. Selling e-cigarettes and cartridges is not our ultimate business goal.” Puffpaw founder Reffo said in an exclusive interview with ChainCatcher.
Reffo and his two other partners are already in the e-cigarette industry, have their own brands in the United States, and have a whole supply chain that covers production, OEM, tobacco, etc. After working in the Web3 industry for a while, Reffo gradually came up with a clear idea of "making money by smoking" - an e-commerce application scenario that combines e-cigarettes and blockchain, so he started working on this idea at the end of last year.
At present, Puffpaw has completed the preliminary research and development of e-cigarettes and hardware, and the team has expanded to 15 people. They will launch the TG mini-game in October and cold-start it in the form of NFT.
Interestingly, Reffo also mentioned that Berachain was chosen because its culture and community consensus are more in line with the project, and the name of Berachain’s founder “Smokey” sounds related to cigarettes.
The following is the full text of the conversation:
Smoking makes money? NO, quit smoking and make money
ChainCatcher: Can you briefly describe your project - a project about making money by quitting smoking?
Reffo: We mainly help users quit smoking through the X-To-Earn mechanism, which mainly involves a hardware. A sensor chip is used between each electronic cigarette and the cartridge, which is linked to the mobile phone app through Bluetooth binding, and the user's smoking behavior is monitored online intelligently. We mainly promote a nicotine-free, all-natural new formula cartridge, so our mechanism is that if you smoke this nicotine-free cartridge, your money-making benefit is the greatest. The more you smoke this cartridge, the more you earn. However, this cartridge has a daily intake limit, because our purpose is not to encourage users to smoke as much as possible.
Within the basic upper limit, the more nicotine-free special cartridges you take, the more incentives you get. But beyond a certain range, the money-making benefits will decrease or even disappear. If you are a heavy smoker, you definitely want something long-term. But if you are not a smoker, such as a Web3.0 user, you will pay attention to the money-making benefits and may give e-cigarettes to your friends, so that you two can share the benefits together.
ChainCatcher: You mentioned that you produce your own equipment?
Reffo: Yes. My other two partners are already in the e-cigarette industry, and the three of us are college classmates who went to school together in Pennsylvania. Now, we have our own brand in the United States, with our own supply chain, covering production, OEM, tobacco, etc. For example, one of our partners used to be the global BD director of Small, and later came out to start his own brand. He has served clients such as Korean Tobacco KT&G, and OEMs for the world's four largest tobacco companies. Because e-cigarettes have developed very rapidly in recent years, I joined them to develop the US business and help them run offline. We also built our own brand in the United States. Last year, our global e-cigarette factory output was 76 million.
ChainCatcher: How did the idea of “making money by smoking” come about?
Reffo: I had this idea in 2021, and this idea was based on my participation in many large-scale Web3 offline events and gatherings. I saw many people smoking at the entrance of many conferences, either smoking e-cigarettes or cigarettes. This situation is too common. In other words, the Web3 community and the smoker community are highly overlapping. So many people get together to smoke and chat, and most of them are young people. The deeper reason may be that when doing transactions or development, there is pressure and anxiety that needs to be released, and smoking is one of the ways. What I have seen is that Web3 has a higher smoking rate than ordinary industries. Since I have been in the Web3 industry for a while, I thought about moving e-cigarettes to the chain and making a fun game.
This idea came up, and then I started writing a white paper. As I was writing the white paper and studying the mechanism, I thought that users should not be encouraged to smoke more cigarettes or more e-cigarettes, and the goal should be to quit smoking. But we can't let them quit all at once. Our final decision was to use the mechanism to help everyone gradually quit nicotine. Because smoking is not a hobby, it is an addictive thing. Non-smokers cannot understand the process and pain of a person quitting smoking, which is why there are still 1.3 billion smokers in the world. Instead of doing something unrealistic, it is better to make the process interesting, use incentives to make things more interesting, and combine the advanced machine form of e-cigarettes to replace traditional cigarettes. I think this is an e-commerce application scenario combined with blockchain.
I believe I am not the first person to think of "making money by smoking", but to implement this idea, you need a strong supply chain, knowledge of the e-cigarette industry, and the construction of Web3 operation brands and communities. These elements together can be truly implemented and gain user support. From the end of last year to the beginning of this year, I felt that I was ready to really start this idea.
ChainCatcher: The goal of the game is to reduce nicotine intake. So after users successfully quit nicotine, will the consumption of cigarette cartridges decrease?
Reffo: There is no data or research on the market that shows that people smoke e-cigarettes because they are addicted to cigarettes. Some people smoke e-cigarettes because they are addicted to cigarettes, but some people smoke e-cigarettes because they are not addicted to cigarettes. The existing data is inaccurate and has no reference value. What we know is that it is not just because people who are addicted to nicotine use e-cigarettes as comfort, but many people just need to take a few puffs when they are anxious. Sucking is a stress response of humans, which has existed since infancy. This is the same as some people biting their nails when they are nervous.
Only if we truly help others quit nicotine, we may be able to grasp this part of the data, that is, how many people will continue to smoke e-cigarettes after quitting nicotine, or not.
What we can be sure of now is that the existing mechanism ensures that any user will be incentivized for the first 150 puffs within 24 hours, but there will be no incentive to achieve this goal every day. At that time, it is simply consuming e-liquid, and when the e-liquid is exhausted, you need to buy cartridges, which need to be exchanged with tokens. From the perspective of income, the first puff of a day is the most profitable, and the more you puff, the less profitable it is, and you start to lose money after 150 puffs.
Thinking about the sustainable business model of DePIN
ChainCatcher: When did you start working on Web3? What was your background before that?
Reffo: I entered the Web3 industry when the pandemic began in 2020. I was working on a SocialFi project from last year to the year before last. This project was not very successful, so I quit and met two of my college classmates. They knew what I was doing, and I also knew what they were doing. In July last year, the three of us started working together. My strengths are marketing and branding, while the two of them are responsible for supply chain, production, and logistics.
ChainCatcher: What opportunity prompted you to join the Web3 industry? Why did you consider joining this industry?
Reffo: I have many friends who work in VC and PE, including myself who worked as a VC for a short period of time. Most of my work experience is in real estate investment and development, and more of my work focuses on research. Between 2020 and 2021, some of my VC friends resigned and went all in on Web3, and they had some influence on me. In April 2020, the epidemic in the United States suddenly became severe, which made it difficult for me to go out to work. Based on my pessimistic view of the future of the industry, I resolutely decided to leave my industry and resign to stay at home. Influenced by my friends around me, I started playing NFT at home and entered this industry as an ordinary consumer or player.
ChainCatcher : Why did we choose the DePIN track to start a business?
Reffo: This is a coincidence. If you look for opportunities in a track just because an opportunity is popular, it is a misunderstanding. This is an investment logic, not the logic of entrepreneurs looking for opportunities. We are in the e-cigarette industry and have industry resources. I know that the concept of "making money by smoking" will definitely be popular, so if I want to start a new project, I will naturally do it based on my own advantages and background. Now I accidentally became a DePIN project.
Many other DePIN projects are doing infrastructure or content related to data computing and AI. They are hardcore technologies, and they are physical infrastructure. But what we are doing is a decentralized consumer network, which is an Internet infrastructure. For example, our users have NFC on their e-cigarettes. You can add friends by touching two cigarettes together, and you can see the information of another person on the mobile phone APP. We will encourage users to add friends through this "collision" behavior, and encourage them to add friends to each other to build consumer communities. I think we, as a DePIN project, have broadened the definition of DePIN.
ChainCatcher: DePIN projects can usually foresee future revenue, usually from selling equipment. In addition to selling cartridges, what other sustainable business models do we have?
Reffo: Our project will adopt the form of NFT. 10,000 NFTs will be issued in the initial stage. When players get NFTs, they will get a free e-cigarette and three cartridges. After players get the physical products, they enter the game and need to complete specific actions every day to consume the "cartridges". After consumption, they need to buy new cartridges. Tokens are required to buy cartridges, and players need to keep buying to stay involved in the game. In addition, early holders will receive additional benefits.
As the user base expands, we will enter the traditional market, such as offline. The sales scale of offline sales will be very large, with daily sales volume possibly reaching hundreds of thousands to millions. For this part of sales, we will encourage everyone to trade with tokens and provide discounts.
In the later stage, there will be a data strategy. As the number of platform users increases, the value generated by data will increase. Our potential users are the 1.3 billion smokers in the world, who are the most typical sub-healthy people. Our new e-cigarettes can record user behavior data. Our platform will collect a large amount of user data, including smoking habits, and eventually form user portraits of sub-healthy smokers and consumers. These data are not only used for consumer insights, but also for health data, especially in respiratory health.
Currently, the e-cigarette industry cannot sell products online, which means that brands cannot directly contact end users and data. Therefore, the research and development of e-cigarettes on the market has a lag period of about one year, and the consumer data used as a reference for research and development is of limited significance. Our platform directly attracts a large number of users by incentivizing users to upload data, thus forming a traffic advantage. User data is controlled by users, who can choose to disclose it to third parties to realize data monetization, and users can also earn income from it.
Therefore, our platform revenue not only comes from the C-end, but also from the B-end, such as pharmaceutical research and development companies, medical device companies, etc.
Our long-term goal is to cultivate brand loyalty through product innovation and user participation, rather than relying solely on token incentives. This is different from the model of traditional e-cigarette brands that rely on offline channels and brand loyalty cultivation. In addition, I would like to add that we are also different from simple X-To-Earn games, because we have products, which are still e-cigarettes. We are cultivating a new brand ourselves, which can allow users to repurchase and generate income, and rely on physical equipment behind it.
ChainCatcher: Why did you choose Berachain as your first choice?
Reffo: We are an X-to-earn project. At that time, we considered Base, Solana, or a new Layer1 public chain that has not been launched. We did not choose Base because we felt that consumers on it were not so interested in games, and the distribution area was mainly in the United States, which was not very compatible with us. There are too many DePIN projects on Solana, and we did not consider it. We chose Berachain because its culture and community consensus match ours, and the name of the founder Smokey sounds related to cigarettes . Berachain also has NFTs, which have a layer of cultural attributes of religious beliefs. This kind of radical cultural community matches the X-to-earn game. In addition, this public chain community is very active and has a strong community consensus. In the process of dealing with their ecology, I found that they are very supportive of the concept of our project, so we finally decided to go to Berachain.
Launching the project with e-cigarette NFT , giving priority to developing the Korean market
ChainCatcher : Your game can only be played with the electronic cigarette equipment developed by you. How can you get your electronic cigarette equipment?
Reffo: We sell early NFTs on the official website, conduct a round of sales through NFT, and then mainly conduct sales in the APP. There will be no direct sales on the official website. Because users mostly use e-cigarettes outdoors, our sales and Internet monitoring will be based on our APP. At present, we are giving priority to entering the markets of leading countries such as South Korea, because there are many smokers in South Korea and the market potential is huge. We have cooperated with local e-cigarette brands in South Korea to send products directly to South Korea, fill them with oil in South Korea, and then ship them directly to our end users, bypassing offline channel dealers, thereby competing with traditional brands in price and cost, and providing more cost-effective products.
Our hardware products are produced by ourselves to ensure quality. Our products have been shown at offline events such as ETHCC and KBW, and the response has been good. There is no middleman commission, and consumers feel that its performance and experience are better than most products on the market.
ChainCatcher: Will you start with the Korean market?
Reffo: Yes, we will even open an offline flagship store in Seoul . This flagship store is not an ordinary offline e-cigarette store, but mainly a consumer experience store, so that consumers can feel the difference between us and other traditional e-cigarette brands and let them feel it for themselves. This also includes the X-To-Earn gameplay. We mainly hope that through Korea, through this flagship store, we can quickly radiate the entire Asian market. In the future, we will also open offline experience stores in other places.
ChainCatcher: It took you five months to grow from 22 participants in your weekly community calls to 166 participants. Can you share your secret to growth?
Reffo: Our project started to be promoted in April this year. We have been doing community AMA almost every week, and only missed one week during KBW. As long as you actively communicate with the community and do not work behind closed doors, as long as you do well, everyone will see you. In summary, we should work hard to build the community.
ChainCatcher: How big is the team now?
Reffo: The team now has 15 people, mainly focusing on brand building, operations and BD. Because we have completed the early hardware R&D and production, and our two partners have sufficient experience and deep industry background, there are not too many people in this area.
ChainCatcher: Can you reveal the rhythm of the next few important events?
Reffo: We will launch our TG mini-game in early October , and we will pre-sell our first batch of 10,000 Genesis NFTs (which we call Puff Pass) and Genesis cartridges in mid-to-late October, which basically matches the launch time of the Berachain mainnet. After the sale is completed, we will send 10,000 e-cigarettes to users to let them enter the game.
Entering the game means that the contract deployment and APP listing are also completed, and these major actions happen almost at the same time. We will ensure that users can play the game when they receive the e-cigarette.
The game will be promoted in several quarters: the second season of the game will be updated in the first quarter of next year, and our data platform and vape2earn products, which are heat-not-burn products (similar to IQOS) for the Japanese and Korean markets, will also be launched. Our players will expand as we push forward quarterly. After the third season of our game, that is, after the expansion of these three nodes, we will start to layout the offline market in the middle of next year and truly enter the traditional world to compete with ordinary e-cigarette brands.
In addition, we are also working on a sensor that can be connected to any ordinary e-cigarette on the market, even disposable e-cigarettes, through a TYPE C interface to collect user data. In other words, at this point, we become a sensor company that sells sensors and no longer does e-cigarette business. This broadens our user range and countries. Our real goal is to build the Puffpaw platform, on the one hand, to reshape the entire industry chain, and on the other hand, to help users accumulate and realize their consumption data and health data, thereby providing users with more long-term rewards, rather than just the profit incentives brought by the early vape2earn.
