NFT: Bored Ape Yacht Club
Selling price: 85.88 ETH ($250,000)
Source: OpenSea
The Bored Ape Yacht Club (BAYC) collection is a collection that has been making a lot of noise in recent weeks. The company behind this collection, Yuga Labs, had a particularly explosive year, launching in April 2021, 10,000 images representing disinterested, sometimes zany monkeys (clothing, earrings, hats and other accessories of all kinds). Eminem, Steve Aoki, Justin Bieber and even football superstar Neymar succumbed to these digital primates by paying astronomical sums. We are talking here about a purchase at more than a million dollars per unit. The collection’s total sales amount to over $1.5 billion, which ranks it as the third most valuable NFT collection.
BAYC Collection Daily Sales Volumes (in dollars)
Source: Statista
Several million dollars are exchanged daily on the BAYC collection and the famous auction house Sotheby’s has even gotten involved in the affair. In September 2021, a batch of 101 NFTs from the BAYC collection sold for approximately $24.4 million.
What is this collection for? (apart from speculating on the price)
Accessing a Discord server where people can meet other owners, including the previously mentioned celebrities, is one of the privileges of owning an NFT from the collection. In reality, we’re betting it’s unlikely that we’ll be able to chat with Justin Bieber or Steve Aoki on the messaging software in question. It is more likely to see a number of individuals chanting that the BAYC collection is going to take over the world. By holding one of these digital primates, one may also have a chance of being awarded other NFTs, an example is the Bored Ape Kennel Clubi.e. a series of NFTs depicting dogs that have been sent to genuine Bored Ape owners (the famous pixelated chimpanzees).
So far, nothing really extraordinary in the universe of NFTs, you might say. But just recently, the teams behind the launch of the collection promoted a brand new cryptocurrency to propel BAYC into the financial stratosphere.
The birth of the ApeCoin (APE) cryptocurrency
Who says cryptocurrency, says decentralization. Finally, in principle. It was probably not very consistent to issue crypto through a centralized entity like Yuga Labs, because one of the fundamental values of the cryptosphere would have been flouted, the famous decentralization. So, ApeCoin DAO took shape in order to appropriate this feature so important in the crypto ecosystem.
Simply put a DAO (Decentralized Anonymous Organization) is similar to a corporate board of directors, but this time the board of directors is decentralized and it is necessary to hold a certain amount of cryptocurrencies to obtain a right of voting. A kind of techno-democratic approach based on the computer code of the underlying blockchain making it possible to eliminate the need to go through centralized structures for investors-stakeholders of a project.
ApeCoin DAO could have estimated that one needs to hold a Bored Ape NFT to get voting rights, which would have been in line with what the creators have been doing so far through their collection of NFTs. But they thought differently. The DAO in question, ApeCoin DAO, only requires a member to hold a token (here, the token is synonymous with “cryptocurrency”) ApeCoin to participate in voting and community governance. Techno-democratic voting rights allowing holders to participate in the evolution of the BAYC ecosystem. The DAO will use the blockchain to manage community votes regarding the evolution of BAYC. A mode of operation that has something to attract a large number of users, because it allows holders to take part of the power of the organization. Here we are talking about a very small part of power. You will understand why.
The APE Token Airdrop for NFT Holders
There is no connection here with Apple’s functionality, also called AirDrop, which allows you to exchange content with another user nearby. Here we are talking about Airdrop as a “free” distribution of tokens. As part of the DAO launch, one billion ApeCoin was issued, a portion of which was awarded to NFT Bored Ape owners as a reward for investing in the collection. But when we observe this “Airdrop”, we notice that the decor is much less shiny than expected.
The dark side of the DAO
Overall, in the structure of a DAO, the more tokens a participant holds, the more voting weight they have in the organization. As a result, early venture capitalists, with a lot of tokens, have much more striking power than the average investor. In the case of the ApeCoin DAO, the entities that helped launch the DAO, including the company Animoca Brands and the venture capital fund Andreessen Horowitz, were the largest acquirers of APE tokens at the time of the airdrop. For information, the DAO has also recruited eminent personalities from the crypto community to sit on the decentralized board of directors, such as the co-founder of Reddit, Alexis Ohanian or the CFO of FTX, Amy Wu.
They, and other launch partners received a total of 14% of the Airdrop, or 140 million tokens. Figures confirmed by the spokesperson for Yuga Labs, the creator of Bored Ape Yacht Club.
ApeCoin Airdrop Breakdown
Source: Bloomberg
Let’s detail this allocation:
Finally only 15% of the token supply was allocated to NFT holders. 47% of the total supply went directly into DAO resources and treasury. 15% was directly collected by the Yuga Labs company (the same as for the NFT holders), and in addition, an additional 8% was sent directly to the pockets of the founders. Act of kindness (or rather publicity stunt), 1% was sent to the Jane Goodall Legacy Foundationa worldwide organization aiming to protect chimpanzees.
Finally, despite an adornment of decentralization, if we explore the DAO from all angles, the adornment pales in comparison. If we count the 8% of the founders, the 14% of the venture capitalists and the 15% of the company, we get a percentage of 37% which is held in a small circle of entities. Knowing that 47% is blocked in cash to ensure the development of the next activities of the DAO. We therefore observe a recentralization of power in the world of decentralization. The launch of ApeCoin on exchanges saw a trading volume of over $9.2 billion in 24 hours last Friday. An introductory price of $20 per unit, which is now at $10, or 50% lower in a few days.
APE/USD price
Source: CoinMarketCap
The venture capitalists, mentioned above, were able to reduce their quantity of ApeCoin by reselling the tokens on exchange platforms such as Coinbase or even FTX, and in the process make handsome profits. ApeCoin is just one example of many DAOs in the crypto economy, and for your information, venture capital funds have collectively poured $32.5 billion into this type of structure in 2021, according to Pitchbook.
Soon a BAYC game?
Among the early investors in the DAO, we mentioned the company Animoca Brands. The company is also behind the essential metaverse The Sandbox. And everything leads us to believe that a Play-to-Earn (P2E) game is in preparation in the BAYC ecosystem. As a reminder, a Play-to-Earn game allows users to earn tokens based on the time and effort they devote to playing. The mechanism was partially popularized in the game Axie Infinity, which has completed multi-billion dollar transactions over the past year and led its parent company, Sky Mavis, to raise over $3 billion. Yuga Labs, with Animoca Brands in particular, is preparing a similar device for April:
A game-metaverse-nft that will be, and we have a good bet, based on the ApeCoin token. ApeCoin mostly held by, as we have seen, a very small circle of entities. The governance of the DAO has stated that some future features will be reserved exclusively for APE crypto holders, such as games and other upcoming services.
I will end this article by quoting Aaron Brown, a crypto investor who writes for Bloomberg Opinion in particular, and who said regarding the ApeCoin DAO that:
“It’s closer to a SPAC — money raised today for a possible business to be named later — without the legal protections around real SPACs,” he said. “The project is controlled by a small group of individuals.” and is “a placeholder attempt to capture potential future business under the Bored Ape brand”.
The ApeCoin DAO project is ambitious and perhaps revolutionary. Who knows, maybe their future metaverse will have a brand new user experience. On the other hand, we must keep in mind that any crypto project, initiated through a DAO, is not necessarily completely decentralized, quite the contrary. But some of them nevertheless respect, and very fortunately, the criterion of decentralization. See you soon in the columns of Zonebourse to dissect new initiatives with crypto-blockchain-nft sauce.