Do you remember the first time you heard about NFTs? How far things have come since then.
Hot on the heels of the crypto boom came non-fungible tokens which are essentially unique tokens that represent anything their creators desire. While there is no physical asset to evaluate, NFTs are typically compared to artwork which is given value from its one of a kind look. Just as “art” is highly subjective, NFT’s artistic value can also be subjective. But unlike the Mona Lisa, NFTs do have some real life-applicability.
The NFT boom is closely tied to the Metaverse which has recently picked up steam as Facebook (now Meta) and countless other companies announce their intentions to develop their own digital worlds. VR and AR are integral to facilitating this digital experience, but once all the pieces are in place – mass adoption of the Metaverse is predicted to take place.
As you might imagine, holding a one of a kind asset in the digital world would be comparable to holding a one of a kind item in the real world. If you dig a little deeper, it’s easy to see why major luxury brands like Balenciaga, Selfridges, and Louis Vuitton are already creating NFT versions of their items.
In the real world, the people who wear these luxury clothes are often part of a clique of sorts. Because they are able to afford high-quality items, they seek out others with the same taste and wealth – making these clothes status symbols.
Some NFTs are considered valuable because of what they offer their owners. Because NFT projects launch with a finite number of pieces, their owners are suddenly part of an exclusive club. Now that a wide range of celebrities – including everyone from Doja Cat to William Shatner – have hopped on board, a valuable NFT from any of the high-profile projects can open the door to parties and connections that otherwise would take years to access.
But at their core, NFTs are a speculative investment. Like art collectors who purchase a piece hoping that it will appreciate in value thanks to rising demand and shifting tastes, NFTs’ value is driven by the belief that their worth will be realized with mass adoption of the Metaverse. It’s important to note that most NFT collectors are more like investors looking for an opportunity to flip their investment with the rising tide than collectors who hold their pieces for a long time.
However, just because something is rare does not mean it is valuable. In the same way that not all artists are successful, not all NFTs are valued the same. On this note, we turn to one of the “blue-chip” NFT projects for an analysis of the value behind it and where its heading next.
What is Bored Ape Yacht Club?
Capturing the zeitgeist of the moment, Bored Ape Yacht Club has garnered the attention of almost the whole world with sales of its NFTs totaling $1 billion so far. But when the project launched its pre-sale in April of 2021, very few could have seen where the project was heading.
At the time, each NFT sold for $200 in ETH with the entire collection selling out only a day after its official launch. The trend caught on as investors and collectors began adding their NFTs to their profiles – giving birth to the online “club” that BAYC now encompasses. This club’s connections were only strengthened whenever an NFT sold for a higher price, because the perceived value of the project’s ten thousand NFTs increased together.
This is nothing new for the art world where the price of one painting can inflate the entire value of an artist’s collection. But for the growing tight-knit community of BAYC holders, the incentive to generate more hype and demand for the project in order to push its value higher became one of the underlying drivers of the project’s success. Because – as some have put it – each holder has “skin in the game” the project has seen tremendous success and the abbreviation WAGMI has become the battle cry for this club of BAYC holders.
But there’s much more to the project than meets the eye. The autogenerated ape’s have a few defined properties such as varying fur types, facial expressions, clothing, accessories and more. Apes with rare properties – usually considered to be characteristics shared by less than 1% of the collection – are more highly valued. For example, the “Solid Gold” fur trait is found among only 46 of the apes.
Who created Bored Ape Yacht Club?
Interestingly, BAYC’s founders were a motley group of programmers, editors, and crypto day traders with no official artistic background. Two of the founders “Gargamel” and “Gordon Goner” grew up together in Miami and were later revealed to be Greg Solano and Wylie Aronow. They brought in their two friends from Solano’s university – No Sass and Emperor Tomato Ketchup – who were knowledgeable about blockchain coding although they wrote their first lines of Solidity code for smart contracts as recently as February 2021.
Aside from its utility and value, many have wondered what inspired this collection’s unique style which has since become a benchmark for other NFT projects aspiring to achieve similar success. According to Solano and Aronow’s interview with the New Yorker in 2021, the two were experimenting with the idea of a shared digital canvas – similar in some ways to a bathroom wall at a dive bar.
This inspired their vision of an online dive bar leading them to develop the fictional world underpinning BAYC and its meta appeal. According to the storyline, the BAYC takes place in 2031 when crypto’s early investors have become disillusioned and bored billionaires.
“Now they’re just fucking bored. What do you do now that you’re wealthy beyond your wildest dreams?” Goner said. “You’re going to hang out in a swamp club with a bunch of apes and get weird.”
It’s easy to see how BAYC caught on with the wealthy and possibly disillusioned celebrities of the world. But the story and aesthetic also held a significant appeal to the burgeoning generation of crypto and retail investors fresh off of the AMC short squeeze. The grungy revitalization of eighties hardcore, punk rock, and nineties hip-hop brought together in the ape first drawn by lead designer – All Seeing Seneca – has garnered the attention of many celebrities.
In fact, by December 2021 BAYC surpassed Crypto Punks as the most expensive NFTs in part because of the popularity celebrities like Eminem, Gwyneth Paltrow, Shaquille O’Neal, Snoop Dogg, Mark Cuban, Post Malone, Stephen Curry, Paris Hilton, Jimmy Fallon, and Serena Williams brought to the project with the purchase of their own BAYC characters.
But not everyone is as enamored with BAYC as these celebrities or celebrity wannabes.
As with any exclusive club or expensive luxury item, there is criticism and Claire Lampen of The Cut hit that point home saying that “[celebrities] really want us to enjoy this monkey, clap for this monkey, know what this monkey is. They can’t make me.” This came not long after Paris Hilton and Jimmy Fallon bored audiences by exhibiting their NFTs on live TV.
Further criticism from Jonathan Jones of The Guardian highlighted that NFTs impact on digital art was not as positive as many have hoped. According to him, BAYC is an example of how NFTs put the consumer experience first – rather than that of the artist. He took it a step further saying that the project’s attitude says it all, “Bored, emptied out, wrecked, and proud of it. That’s how the NFT art investors all feel”.
Commenting on the sizable changes which have occurred throughout history, Cozomo arrived at the present saying “And now, in this decade, we are seeing a similarly sized shift beginning to happen in the art world. For hundreds of years, kings, queens, and noble folk decided which art was relevant. Those works they chose live on in importance today.”
With the advent of NFTs, “Any artist, from any where in the world, with no invitation, can mint a drop. So now, with NFTs, for the first time ever…YOU can decide which artists will define this generation. YOU can access their art before they get big YOU can make them big, by voting with your wallets. By showing them in your own galleries…”
While NFTs may not be the first opportunity for equalization of art, the digital renaissance is definitely upon us and BAYC is at the center of it. The highly regarded auction house – Sotheby’s – recently sold 107 BAYC NFTs as a set for $24 million. By January a BAYC NFT sold for $2.85 million – becoming the most expensive NFT in the collection to date.
ApeCoin & YugaLabs
But BAYC’s creators are far from done. Aiming to become a Web3 lifestyle company, the BAYC creator – YugaLabs – has since announced plans for a play-to-earn gaming title designed around its new “ApeCoin”.
The token was released by ApeCoin DAO which includes council members connected to BAYC but none of Yuga Labs’ employees or executives. So far, the council includes some impressive names such as Reddit co-founder Alexis Ohanian, FTX’s Amy Wu, Sound Ventures’ Maaria Bajwa, as well as Animoca’s Yat Siu and Horizen Labs’ Dean Steinbeck.
Meanwhile, the APE Foundation is the project’s governing body and its official branding is a one-of-a-kind blue Bored Apes logo gifted by Yuga Labs. So far ApeCoin is available on Coinbase, FTX, eToro, Kraken, OKX, Gemini, Binance and Binance US as well as other major exchanges.
As for the token’s utility, the group has a number of games in the works including a previously announced play-to-earn game in partnership with Animoca Brands as well as a game known as MetaRPG. However, the centerpiece of this new venture appears to be an unnamed play-to-earn game being developed in conjunction with the game studio nWay which produced a number of battle games using IP from the Power Rangers and the WWE. This title is scheduled for release later this year.
But YugaLabs’ vision could be even grander than this.
Yuga recently acquired the CryptoPunks and Meebits NFT IP from Larva Labs giving it the copyright for both the CryptoPunks and Meebits collections in addition to 423 CryptoPunks and 1711 Meebits. This transaction is part of Yuga Labs’ plans to develop a thriving crypto economy built around their IP.
According to the official press release, Gordon and Gargamel are not in a rush to do anything with the projects at this point besides transfer IP, commercial, and exclusive licensing rights to individual NFT holders. Holders of both CryptoPunks and Meebits will receive the new terms and conditions for their NFTs soon which could open the door to new possibilities for the NFT projects.
A notable difference between YugaLabs and Larva Labs has been their approach to intellectual property. Larva Labs maintained their intellectual property rights to the NFTs whereas Yuga Labs decided to give their holders free reign. This means that BAYC holders can use their NFTs as a launching pad for entrepreneurial endeavors ranging from Cannabis and skate decks to music videos.
Cannabis in particular has offered a number of branding opportunities for BAYC holders who have overseen the use of their apes for marketing new cannabis strains such as Crypto Gelato in California and Crepe Ape in Washington. In this way, many owners are looking to turn their NFTs into a brand and some believe that the IP a BAYC brings with it is more valuable than the token itself.
by handing over these rights, we’re further aligning CryptoPunks and Meebits with the web3 ethos, and we expect a wide range of third party developers and community creators to incorporate CryptoPunks and Meebits into their web3 projects,’ Yuga Labs
Now that CryptoPunks and Meebits holders have the same rights, it’s only a matter of time before more business-minded NFT holders find ways to commercialize their NFTs and build a brand around them. Whether these ventures are as lucrative as many hope remains to be seen, but this approach to NFTs will likely help bring them to the forefront of pop culture and business.
As is, BAYC and NFT projects like it have pioneered a space for NFT collectors to show off their investments, connect with a pre-built network of BAYC holders, and socialize at exclusive parties. But with time, investors will continue to explore ways to capitalize on these NFTs without selling them.
Meanwhile, YugaLabs is reportedly looking to capitalize on virtual land sales this year in an effort to push the company closer to its projection of $455 million in net revenue for 2022. This is likely part of its play-to-earn games and according to the report, the virtual land will be sold as NFTs connected to plots in the metaverse game which contain traits such as natural resources, artifacts, and even rare characters.
However, Yuga Labs has remained tight-lipped regarding this new endeavor and has instead shared a tantalizing trailer for what appears to be its new play-to-earn game – Otherside.
Already incorporating a variety of NFTs in its in-game world, YugaLabs launched Otherside on April 30th using its recently released ApeCoin (APE) to power it. Speculation has run high on the MMORPG (Massively Multiplayer Online Role-Playing Game) which appears to include NFT collections like Cool Cats, World of Women, CrypToadz, and more in its ecosystem
Through the release of the first round of 55,000 Otherdeed NFTs, Yuga raised an estimated $320 million in revenue. Demand for the plots was fueled by a number of factors since this metaverse supposedly contains virtual plots of land with artifacts, natural resources, and rare characters on it. Following this first round, another 45,000 Otherdeeds became available to Bored Ape Yacht Club and Mutant Ape Yacht Club holders who are free to claim their own Otherdeed NFT over the next 21 days if they pay the gas fees. The final 100,000 will be issued to Otherdeed holders.
Despite becoming the largest NFT mint in history, the mint process ran into complications and YugaLabs abandoned the Dutch auction style at the last minute. This did nothing to stop traffic which temporarily crashed the blockchain explorer Etherscan and pushed gas fees to roughly 2 ETH each – consuming over $160 million in gas fees.
Responding to this, YugaLabs shared that it is “abundantly clear that ApeCoin will need to migrate to its own chain in order to properly scale. We’d like to encourage the DAO to start thinking in this direction”. Additionally, the demand had created failed transactions which cost a hefty sum for those affected. Reaching out to them, YugaLabs said, “we’ve got your back and will be refunding your gas.”
With the “reveal” for these Otherdeeds scheduled for May 1st at 5pm, a lot has yet to be discovered about the soon to be released metaverse. While each plot of land cost $5,846 – equivalent to 305 Ape Coin at the time of the sale – it will give holders the opportunity to “collect resources, create and play on it, and make yourself at home”. This NFT entitles the holder to a plot of land in the Otherside once it launches, and enthusiasm is already running high.
In Otherside, over 10,000 players “will be able to interact simultaneously in a single place, connect with natural voice chat (even in crowds of thousands), experience rich, immersive gameplay supported by AI and physics, and move between metaverses”. On top of this, all BAYC, MAYC, BAKC, and CryptoPunks holders will receive Otherside-ready 3D models of their NFTs once the game launches. Meebits are soon to follow and will join the other NFTs as playable characters in the metaverse. Other users will be able to import and create characters via the SDK.
On a macro level, the Otherside land grab could be exactly what the crypto market is looking for after trading sideways for the last few months. Even monthly sales on OpenSea were down from its all time high in January, but Otherside seems largely unaffected with the floor price for Otherdeeds sitting solidly at 7.18 ETH at the time of writing.
Meanwhile the coin behind it all – APE – has been on a wild ride along with the Otherside mint.
First listed on March 17th, ApeCoin ran up before dropping to its all time low of $6.31 on the same day. Since then, it appreciated steadily with anticipation of the NFT mint – starting to climb significantly on April 22nd before reaching its all time high of $26.70 on March 28th.
Out of the total 1 billion tokens created, Yuga Labs dropped 150 million APE among NFT BAYC holders giving each owner 10,904 tokens per NFT. However, those holding the project’s Mutant Apes received 2,042 APE. The coin has seen an uptick in part due to the $450 million in funding it has reportedly raised so far and could continue increasing in value as the token proves its utility in Yuga’s play-to-earn games.
Already, the estimated $320 million in ApeCoin raised from the NFT sale will be locked up for one year – lowering APE’s circulation temporarily. Despite the success of its NFT project, APE took a sharp hit following Otherside’s NFT launch and is currently holding around $16.34. The coin’s value was also partially buoyed by OpenSea’s announcement that it is now accepting ApeCoin.
Currently downtrending, ApeCoin is trading at $16.34 with a strong support at 16.12, 14.93, and 13.80. Meanwhile, ApeCoin shows a resistance at 17.47, 19.38, and at its all time high at 26.05. The drop following minting was to be expected and was the completion of an inverse head and shoulders pattern.
Accumulation clearly took a huge hit after hitting its zenith and the RSI is now in oversold territory at 35. Meanwhile the MACD is bullish as the coin regulated after the initial buying frenzy for the Otherdeeds.
*Updated April 4th
After Elon Musk – known for setting off Shiba-Inu’s epic run just by tweeting a picture of his Shiba Inu – changed his PFP to his BAYC NFT, ApeCoin the crypto saw a 20% spike – testing its resistance at $17.47. While it has backslid since, ApeCoin is showing signs of what could be an incredible run and is currently up 9%.
The Future of ApeCoin
So where is ApeCoin heading next?
ApeCoin’s performance against a backdrop of flagging cryptocurrencies is an indication of the power YugaLabs wields through its burgeoning empire. With the possibility of the group establishing its own blockchain in the future and the impending launch of not only the Otherside but YugaLabs’ other games as well, ApeCoin will likely recover from this dip – but its long-term survival will ultimately depend on the player experience this ecosystem offers them.
YugaLabs’ move into the cryptosphere is likely a strategic one as many expect the overcharged NFT bubble to burst soon. If Yuga is able to create real utility and an enjoyable user experiences through the Otherside then this could indicate the long-term promise of ApeCoin even if the NFT project which gave birth to YugaLabs’ empire takes a hit in the short-term.
However, what will likely set YugaLabs apart is its decision to supercharge the ecosystem’s growth by providing each holder IP rights – inspiring even more entrepreneurship as third party developers and community creators incorporate their NFTs into web3 projects and more.
Overall, the Otherside is another opportunity for YugaLabs to broaden its audience and appeal to a new group of investors. Seeking to establish itself as the lifestyle brand for web3, these early moves are only an indication of what Yuga has planned next.
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