Technique (gif)

Freeboy 2

After see the beautiful work of @rnorgan, the test of @jamesmcdonald ( and a few mins off I tried use the same technique but with other way, playing around Illustrator.
See the result and below the steps.

Find a font type
Type > Create Outlines
Effect > Stylize > Round Corners — 3px
Effect > Distortion & Transform > Pucker & Bloat — 1% (If it’s too much effect, disable it)
Effect > Distortion & Transform > Tweak — Horizontal 2 - Vertical 0

Finally some touches on Photoshop and done ;)

UPDATE: Download the PSD file here

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