Dialogue with Puffpaw Founder Reffo: Smoking "Mining" is Cool, but how to implement it?

Author: Arain, ChainCatcher

*Editor: * Nian Qing , ChainCatcher

Good news for smokers, soon smoking will also be a way to make money.

To be precise, this is a project aimed at helping people quit smoking; smoking is just a behavior, and the goal is to quit, with X-To-Earn as the mechanism.

The project Puffpaw, which focuses on "making money by quitting smoking" on Berachain, announced on September 5 that it has completed a $6 million seed round of financing. At the same time, as the first DePIN project on Berachain, Puffpaw has received support from the Berachain Foundation.

"We are currently developing our own e-cigarettes and sensor devices. At this stage, we are launching a brand new e-cigarette brand. By exploring Web3, we aim 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," said Puffpaw founder Reffo in an exclusive interview with ChainCatcher.

Reffo and his two partners are already in the e-cigarette industry, with their own brand in the United States and a complete supply chain covering production, OEM, and tobacco. After spending some time in the Web3 industry, Reffo gradually articulated the concept of "making money by smoking"—an e-commerce application scenario that combines e-cigarettes and blockchain. Thus, at the end of last year, they began to work on this idea.

Currently, Puffpaw has completed the preliminary research and development of e-cigarettes and hardware, and the team has expanded to 15 people. They will launch a TG mini-game in October and conduct a cold start in the form of NFTs.

Interestingly, Reffo also mentioned that they chose Berachain because its culture and community consensus align well with the project. Additionally, the name of Berachain's founder, "Smokey," sounds related to smoking.

The following is the full dialogue:

Making Money by Smoking? NO, Making Money by Quitting Smoking

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 involves hardware. Each e-cigarette and cartridge will have a sensor chip that connects to a mobile app via Bluetooth, allowing for online intelligent monitoring of users' smoking behavior. We primarily promote a nicotine-free, all-natural new formula cartridge, so our mechanism is that if you smoke this nicotine-free cartridge, your earning potential is maximized. The more you smoke this cartridge, the more you earn; however, there is a daily intake limit for this cartridge because our goal is not to encourage users to smoke more.

Within the basic limit, the more you consume the special nicotine-free cartridge, the more incentives you receive. However, beyond a certain range, the earning potential will decrease or even disappear. If you are a heavy smoker, you would definitely want something long-term. But if you are not a smoker, for example, a Web3.0 user, you might focus on earning potential and may give e-cigarettes to friends, allowing both of you to share the earnings.

ChainCatcher: You mentioned that you produce your own devices?

Reffo: Yes. My two partners are already in the e-cigarette industry, and the three of us are college classmates who studied together in Pennsylvania. Now, we have our own brand in the U.S. and a supply chain covering production, OEM, and tobacco. For example, one of our partners was previously the global BD director at Smole, and later started his own brand, serving clients like Korea Tobacco KT&G and including OEM for the four major tobacco companies globally. In recent years, as the e-cigarette industry has developed rapidly, I joined in to help develop the U.S. business and assist them in offline operations. We also established our own brand in the U.S. Last year, our global e-cigarette output was 76 million units.

ChainCatcher: How did the idea of "making money by smoking" come about?

Reffo: I had this idea back in 2021, based on my participation in several large offline Web3 events and gatherings. I noticed many people smoking at the entrances of these conferences, either e-cigarettes or traditional cigarettes. This situation is very common, indicating that the Web3 community and the smoking community overlap significantly. With so many people gathering to smoke and chat, especially younger individuals, the deeper reason might be that during trading or development, there is pressure and anxiety that needs to be released, and smoking is one of the ways to do that. I observed that the smoking rate in Web3 is higher than in ordinary industries. After spending some time in the Web3 industry, I thought about bringing e-cigarettes onto the blockchain to create a fun game.

This idea took shape, and I started writing a white paper. As I researched the mechanism while writing the white paper, I realized that we should not encourage users to smoke more e-cigarettes; the goal should be to quit smoking. However, we cannot expect them to quit all at once. Our final decision was to use the mechanism to help everyone gradually quit nicotine. Smoking is not a hobby; it is an addictive behavior that non-smokers cannot understand how painful the quitting process can be, which is why there are still 1.3 billion smokers in the world. Instead of doing something unrealistic, we should make the process interesting and use incentives to make it more engaging, combining advanced e-cigarette technology to replace traditional cigarettes. I believe this is an e-commerce application scenario that integrates with blockchain.

I believe I am not the first person to think of "making money by smoking," but to implement this idea, there needs to be a strong supply chain behind it, along with knowledge of the e-cigarette industry, combined with experience in operating brands and building communities in Web3. These elements must come together to truly realize it and gain user support. From the end of last year to the beginning of this year, I felt ready to truly launch this idea.

ChainCatcher: The goal of the game is to reduce nicotine intake. After users successfully quit nicotine, will this lead to a decrease in cartridge consumption?

Reffo: There is no data or research on the market indicating that people smoke e-cigarettes due to nicotine addiction; part of it is, and part of it is not. The existing data is inaccurate and not meaningful for reference. What we know is that not only do nicotine-addicted individuals use e-cigarettes as a comfort, but many people need to take a few puffs when they are anxious—sucking is a human stress response that has existed since infancy. This is similar to how some people bite their nails when they are nervous.

Only when we truly help others quit nicotine will we be able to grasp this data—how many people who quit nicotine will continue to smoke e-cigarettes or not.

What we can confirm now is that the existing mechanism ensures that any user will be incentivized for the first 150 puffs of smoke within 24 hours, but there will be no incentives after completing this daily goal. At that point, it will simply be consuming e-liquid, and when the e-liquid runs out, users will need to purchase cartridges, which require tokens for exchange. From an earnings perspective, the first puff of smoke each day is the most profitable; the more you smoke, the less you earn, and after 150 puffs, you start losing money.

Thoughts on the Sustainable Business Model of Quitting Smoking DePIN

ChainCatcher: When did you start working in Web3? What was your background before that?

Reffo: I entered the Web3 industry in early 2020 when the pandemic started. Last year and the year before, I was working on a SocialFi project that was not very successful, so I left and met my two college classmates. They knew what I was doing, and I knew what they were doing, so in July last year, the three of us started working together. My strengths are in marketing and branding, while my partners handle supply chain, production, and logistics.

ChainCatcher: What prompted you to choose to join the Web3 industry? Why did you consider entering this field?

Reffo: I have many friends in VC and PE, and I myself briefly worked in VC for a while. Most of my work experience has been in real estate investment and development, focusing more on research. Between 2020 and 2021, some of my VC friends quit their jobs and went all in on Web3, which influenced me. In April 2020, the pandemic in the U.S. suddenly worsened, making it difficult for me to work outside. Based on my pessimistic view of the future industry, I decisively left my field and resigned to stay at home. Influenced by friends around me, I started playing with NFTs from the perspective of an ordinary consumer or player.

ChainCatcher: Why did you choose to start a business in the DePIN track?

Reffo: It was a coincidence. If you go into a track just because it is popular, that is a misconception; that is an investment logic, not a logic for entrepreneurs to find opportunities. We are already in the e-cigarette industry and have industry resources. I know that the concept of "making money by smoking" will definitely be popular, so when I want to start a new project, it naturally aligns with my own advantages and background, and now it has inadvertently become a DePIN project.

Many other DePIN projects are focused on infrastructure or related to data computation and AI, which are quite hardcore technologies; they are physical infrastructure. However, we are creating a decentralized consumer network, which is an internet infrastructure. For example, our users will have NFC on their e-cigarettes, allowing two devices to touch and add each other as friends, and you can see another person's information on the mobile app. We will incentivize users for this "collision" behavior to build a consumer community. I believe we are broadening the definition of DePIN as a project.

ChainCatcher: DePIN projects usually have predictable future income, typically from selling devices. Besides selling cartridges, what other sustainable business models do we have?

Reffo: Our project will adopt the NFT format, initially issuing 10,000 NFTs. When players receive the NFTs, they will get a free e-cigarette and three cartridges. After receiving the physical products, players will enter the game and need to complete specific actions daily to consume "cartridges." Once they run out, they will need to purchase new cartridges using tokens, requiring players to continuously buy to maintain their participation in the game. Additionally, early holders will receive extra benefits.

As the user base expands, we will enter traditional markets, such as offline sales. The sales volume in this offline segment could be enormous, potentially reaching hundreds of thousands to millions daily. We will encourage everyone to trade using tokens and offer discounts.

In the later stages, there will be a data strategy. As the platform's user base grows, the value of the data generated will increase. Our potential users are the 1.3 billion smokers worldwide, who are also the most typical sub-healthy population. Our new e-cigarettes can record user behavior data, and our platform will collect a large amount of user data, including smoking habits, ultimately forming user profiles of sub-healthy smokers and consumers. This data will be used not only for consumer insights but also for health data, especially regarding respiratory health.

Currently, the e-cigarette industry cannot sell online, preventing brands from directly reaching end users and data, resulting in about a year of lag in e-cigarette R&D, with limited reference value for consumer data. Our platform will incentivize users to upload data, directly attracting a large number of users and forming a traffic advantage. User data will be controlled by users, who can choose to disclose it to third parties for monetization, allowing users to earn income from it.

Therefore, our platform's revenue will come not only from the C-end but also from the B-end, such as pharmaceutical R&D companies and medical device companies.

Our long-term goal is to cultivate brand loyalty through product innovation and user participation, rather than solely relying on token incentives. This differs from traditional e-cigarette brands that depend on offline channels and brand loyalty cultivation. Additionally, I want to emphasize that we are different from purely X-To-Earn games because we have a product; we are still e-cigarettes, and we are cultivating a new brand that allows users to repurchase and generate income, relying on physical devices.

ChainCatcher: Why did you choose to launch on Berachain?

Reffo: We are an X-to-earn project. At the time of consideration, we looked at Base, Solana, or finding a new Layer 1 public chain that had not yet launched. We did not choose Base because we felt that the consumers there were not very interested in games, and the distribution area is mainly in the U.S., which does not match us very well. There are too many DePIN projects on Solana, so we did not consider it. We chose Berachain because its culture and community consensus align with us, and the founder's name, Smokey, sounds related to smoking. Berachain also has NFTs, which carry a layer of cultural attributes related to religious beliefs, and this preference for a radical cultural community matches with X-to-earn games. Additionally, this public chain community is very active, and there is strong community consensus. During my interactions with their ecosystem, I found that they are very supportive of our project's concept, so we ultimately decided to go with Berachain.

Launching the Project with E-Cigarette NFTs, Prioritizing the Korean Market

ChainCatcher: You can only play your game using your self-developed e-cigarette devices. How can users obtain your e-cigarette devices?

Reffo: We sell early NFTs on our official website, conducting a round of sales through NFTs, and subsequently, sales will mainly occur within the app. There will be no direct sales on the official website. Since users typically consume e-cigarettes outdoors, our sales and internet monitoring will be based on our app. Currently, we are prioritizing entry into leading markets like Korea, as there are many smokers there and the market potential is huge. We have already partnered with local e-cigarette brands in Korea to directly ship products to Korea, where they will be filled with e-liquid and then shipped directly to our end users, bypassing offline distributors, thus competing with traditional brands on price and cost to provide higher value products.

Our hardware products are produced by us to ensure quality. Our products have already been showcased at offline events like ETHCC and KBW, receiving positive feedback, with no middlemen taking a cut, allowing consumers to experience performance and quality superior to most products on the market.

ChainCatcher: Will you start with the Korean market?

Reffo: Yes, we will even open a flagship store in Seoul. This flagship store is not an ordinary offline e-cigarette shop; it is primarily a consumer experience store, allowing consumers to feel how we differ from other traditional e-cigarette brands and to perceive it themselves. This also includes the X-To-Earn gameplay. We mainly hope to use Korea and this flagship store to help us quickly radiate throughout the entire Asian market. In the future, we will also open offline experience stores in other places.

ChainCatcher: You have spent five months growing from 22 participants in weekly community calls to 166 participants. Can you share your growth secrets?

Reffo: Our project began external promotion in April this year, and we have been conducting community AMAs almost every week, only missing one week during KBW. As long as you actively communicate with the community and do not work behind closed doors, if you do well, everyone will see you. The summary is to earnestly build the community.

ChainCatcher: How large is the team now?

Reffo: The team now has 15 people, mainly focused on brand building, operations, and business development, as we have already completed the initial hardware R&D and production, and my two partners have sufficient experience and deep industry backgrounds, so we do not need many people in this area.

ChainCatcher: Can you reveal the timeline for the next few important events?

Reffo: In early October, we will launch our TG mini-game. In mid to late October, we will pre-sell our first batch of 10,000 Genesis NFTs (which we call Puff Pass) and Genesis cartridges, which will align with the launch time of the Berachain mainnet. After the sale is completed, we will send out 10,000 e-cigarettes to users, allowing them to enter the game.

Entering the game means that contract deployment and app listing will also be completed, and these major actions will happen almost simultaneously. We will ensure that users can play the game as soon as they receive their e-cigarettes.

The game will progress in several quarters: in the first quarter of next year, we will update the second season of the game and also launch our data platform and a vape2earn product for the Japanese and Korean markets (similar to IQOS). Our players will expand as we progress through the quarters, and by the third season of our game, after expanding these three nodes, we will start to layout the offline market in mid-next year, truly entering the traditional world and competing with ordinary e-cigarette brands.

Additionally, we are developing a sensor that can connect to any ordinary e-cigarette on the market through a TYPE C interface, even disposable e-cigarettes, to collect user data. This means that at this point, we will become a sensor company, selling sensors instead of continuing in the e-cigarette business. This will broaden our user base and reach more countries. Our true goal is to build the Puffpaw platform, which can reshape the entire industry chain on one hand and help users accumulate and monetize their consumption data and health data on the other, providing users with more long-term rewards, rather than just the early earnings incentives brought by vape2earn.