Punycodes ("Punys") are considered by many to be the first art NFTs. They are a community curated collection of texts, symbols, emojis, and ASCII art minted as on-chain domain names on the Namecoin blockchain starting in 2011. Punycodes illustrate the innate human desire to leverage blockchain technologies to create and own pieces of art. All Punycodes are represented by their distinguishing "xn--" prefix. They employ special encoding to convert Unicode characters to ASCII, a subset style representation that requires a decoder to see the contained art. There is also a separate Punycodes collection found on the Emercoin blockchain (a fork of Namecoin blockchain) with a similar technical and artistic pattern of Namecoin Punycodes.
The Namecoin blockchain is the first fork of Bitcoin meant for domain names and decentralized identities. As such, the representation of names is an important concept. Right after the blockchain's launch on 17 April, 2011, the core developers came across an issue which didn't allow complex, texts, emojis and ASCII art to be displayed in the native style. In a Namecoin forum thread titled Unicode issues (UTF-8 vs. Punycode) posted on May 19, 2011, developers discussed using the Punycode subset style representation for this purpose where for instance xn--tzac would resolve as ϾϿ once decoded. 
An example used in the same forum thread by Namecoin core developer Khalahan Henkh xn--9ca (decoded form: é) would be minted as the first Punycode on May 10, 2011 and only 85 Punycodes would be minted in the entire 2011 year. Punycodes representation style meant for internationalized domain names (IDN) far predates the launch of the blockchain technology and was developed/finalized around 2002-2003. However, in blockchains' context, their usage can be considered creative and artistic because they solved a technical limitation the native chain had, and produced different ways of expressions on the chain. 
Supply and rarity
Punycodes have a total supply of only 3,255, counting the ones minted from 2011 to 2017. The least supply occurs in the years 2017 (43 Punys) and 2011 (85 Punys) while the years 2015 (1,659 Punys) and 2014 (624 Punys) have the highest concentration. A complete list of the Punycodes can be found on this Google Spreadsheet. It lists all the Punycodes by rank, IDs, prefix, decoded message, time and date, rarity value, block explorer links, etc.
There are 966 Punycodes which are attributed to the artist Halluciphile, 5 to Namecoin core developer Khalahan Henkh and 2,284 Punycodes creators are unknown (likely several). The category wide distribution shows that the Punycodes collection has an abundance of texts (2,042 instances). Emojis are the second most preferred representation style (779 instances), symbols appear less (414 instances) and ASCII Art (20 instances) is the rarest.
Prefixes and lingual diversity
All Punycodes start with different prefixes. They are mostly found with d/ (2261). Most other prefixes such as o/, n/, m/ etc. have 66 instances each. id/ prefix number are 48, while 22 are found with other prefixes. It’s possible to have the same Puny with different prefixes.
Punycode words appear in 18 diverse languages used in both East and the West. Chinese appears the most (1,015 times), Arabic 2nd (293 times) while Greek appears the least (5 times) with Other mixed languages (9 times). The character/writing script-wise distribution shows that Cyrillic (38 instances) and Thai (30 instances) are dominant, while Gurmukhi and Hebrew appear only once in the entire Punycode collection.
ASCII art, misprints, and aberrations
Out of all Punycode subcategories (texts, emojis, symbols), ASCII art is considered to be the most significant since it's relatively complex to represent. It's also the rarest with only 20 instances in the entire supply. The first instance of ownable ASCII art on any blockchain is the Punycode xn--tzac which resolves to ϾϿ. Another well known ASCII art is xn--8vh1d9ftiaa (minted in 2012) which resolves to ┣▇▇▇═─. It is used as a cover art for Punycodes by the community. The Punycodes collection of 3,255 assets from 2011-2017 has 5 misprints as well. These are assets starting with xn-- which don’t show anything once decoded since they are invalid and unresolvable. Their purpose remains unknown but it might be a simple case of human error while registering them. 
Besides the misprints, the collection has a single instance of emojis and symbols being combined. There are also 5 instances of multiple emojis being used together for creative purposes and forming unique art.  Interestingly, there is a table flipping sub-collection also available within Punycodes which features 10 Punycodes assets represented in a flip book manner to show a cartoon flipping a table via ASCII art. 
The Twitter rediscovery happened in mid January 2022 and these assets were quickly claimed in a fair manner.  This has ensured a healthy holder distribution for Punycodes and resulted in a significant number of collectors holding them. Punycodes community maintains presence on major social media channels (Twitter, Discord etc.) and is augmented by a decentralized autonomous organization (DAO) which works for promotion/awareness of the collection. The membership is open to all Punycodes holders who have contributed in any way. 
Recently, the community has also launched a collaborative art collection project - the Puny Factory. This allows different NFT projects (both modern and historic) to launch a joint collection with Punycodes - by assimilating elements from both and forming a new hybrid art collection. It also allows the artists to promote their work, sell art directly and earn royalties when their art is traded on the secondary market. Puny Factory has proven to be a useful tool for spreading word about the Punycodes collection and brings wider exposure to artists in the community.
Emblem Vault wrapping and trading
Like other historical NFT collections from blockchains other than Ethereum, Punycodes are commonly wrapped inside Emblem Vaults (EV) to allow them to be traded in the high liquidity NFT marketplaces of OpenSea/LooksRare. The community has also developed an Emblem Vault (EV) generator which produces the title, description and image for the vault, upon entry of the asset's name. This makes it convenient for holders to wrap their Punycodes. Outside the formal marketplaces, trading occurs via over the counter (OTC) deals largely on the Discord. It must be noted that since Punycodes expire after 36,000 blocks (approximately 9 months), some NMC (native token of the Namecoin blockchain) must be kept inside the vault for auto-renewals and continuous ownership of the assets. There's a debate regarding the expiration of Namecoin assets (including Punycodes) and its effect on the provenance of these assets, Chainleft has produced a comprehensive work on the topic which can be read here.