Punks & Apes are now Friends
Two weeks ago, CryptoPunks and the Bored Ape Yacht Club were the two most prominent competitors in the NFT profile picture space. Following the news that Larva Labs has sold the CryptoPunks IP to Yuga Labs, the creators of Bored Ape, the two now share a single owner.
Despite the fact that they are the two largest NFT avatar projects in the field, their methodologies are significantly different. In the Ethereum space, Larva’s 2017 collection was legendary, but the founders remained mostly hands-off while the general market grew last year. Meanwhile, Yuga’s burgeoning enterprise served as a membership club with substantial perks and a rising star following.
It’s a dramatic contrast that’s become even more pronounced in recent months. Larva has now sold the rights to Yuga Labs the CryptoPunks and Meebits properties and a trove of their own NFTs from each collection. In response to long-standing complaints from some CryptoPunks owners, the creators of Bored Ape intend to change things up.
Following the official announcement, here’s a look at what led to Larva Labs’ decision to leave CryptoPunks’ stewardship and what both companies had to say about the deal.
The NFT Players
Matt Hall and John Watkinson had founded CryptoPunks in 2017, offering 90% of the total supply of 10,000 Ethereum NFTs to anyone. Punks gradually gathered value and notoriety in the still-nascent NFT space, and when the market blew up in early 2021, they exploded.
CryptoPunks quickly became an important status symbol in the sector as the NFT market surged to new heights. According to CryptoSlam, the average sale price in USD reached five figures in January and then six figures in August last year. On the secondary market, about $680 million worth of CryptoPunks were sold in just one month. Even Visa bought one of them.
The Bored Ape Yacht Club, which launched in April 2021, is far younger than CryptoPunks, but it operates on the similar idea of creating 10,000 total NFT avatars with randomized attributes. However, it pushed the concept to the next level by branding the so-called Yacht Club as an elite social club, delivering additional and recurring benefits to those who bought into the idea.
Bored Ape owners received two free NFTs—the Mutant Ape Yacht Club and the Bored Ape Kennel Club—in the months after the debut, both of which proved useful. They also had access to rare merchandise and were able to attend a free concert in New York City last fall with Chris Rock, The Strokes, and other celebrities.
For numerous holders, the ability to market the Ape image(s) that they possess is the crown jewel of the BAYC value proposition. Bored Apes can be used for product marketing and packaging, as well as virtual band formation, as producer Timbaland and Universal Music Group have done separately.
Yuga Labs is also developing a play-to-earn game based on Bored Apes, with the goal of launching a potentially valuable Ethereum token in the near future.
While some CryptoPunks holders claimed that their provenance made them valuable and appealing, the creators were under no obligation to give additional perks or rewards. Others began worrying about Larva Labs’ lame commitment to the project.
For instance, during last fall’s NFT NYC event, when Yuga hosted the Ape Fest 2021 event, which included the aforementioned performance, some CryptoPunks owners mused on Twitter about how Larva Labs did little to promote the conference. There will be no parties or perks.
The ambiguous guidelines on commercialization rights for CryptoPunks and Larva’s increasingly litigious attitude toward derivative NFT projects—or those plainly inspired by the original CryptoPunks—proved to be a sticking point for several holders.
Punk 4156, a well-known pseudonymous collector, for example, sold his CryptoPunks avatar in December for more than $10 million after becoming upset with Larva Labs’ apparent inability to address the collection’s rights issue. He was especially annoyed by the duo’s efforts to remove derivatives from marketplaces, such as the CryptoPhunks (not Punks).
Another instance enraged several CryptoPunks owners in February of this year. NFT community members constructed a smart contract that allowed holders to mint a different “wrapped” NFT based on the original CryptoPunks contract—which was abandoned due to a bug—and sell it as a “Wrapped V1” version.
Larva Labs refused to participate, claiming that they were not “genuine” CryptoPunks. However, during this time, the duo began selling some of its own V1 Punks, which they said were illegitimate. Larva Labs eventually apologized for their “stupid” behavior, which Hall explained. Simultaneously, the two hinted at legal action against the V1 project, which was promptly removed from the leading marketplace OpenSea.
Meanwhile, the Bored Ape Yacht Club was drawing star clients such as Eminem, Snoop Dogg, and Steph Curry, and the value of the NFTs was soaring. For much of the last three months, the most affordable Apes were more expensive than the most affordable CryptoPunks.
Some perceived Larva Labs as a Web2 firm fumbling its way through a rapidly evolving Web3 industry, struggling to please owners who expected more openness, collaboration, and rights from pricy NFT investments.
A New Path Forward
They will obtain at least some of it now that Yuga Labs has bought both the CryptoPunks and Meebits intellectual assets, as disclosed yesterday.
Yuga Labs stated straight once that holders of NFTs from both collections would have full commercialization rights, meaning they will be able to use their CryptoPunks and Meebits avatars for products, services, marketing, and other endeavors. According to reports, Yuga will not pursue any of Larva Labs’ past DMCA takedown attempts for derivative works.
Larva Labs acknowledged in a blog post that the increasing expectations on modern-day NFT profile picture (PFP) projects were beyond their goals and skills.
“Our personalities and skillsets aren’t well suited to community management, public relations, and the day-to-day management that these kinds of projects require and deserve.”
Yuga Labs and Larva Labs were introduced to each other by Guy Oseary, a prominent music industry tycoon who represents Yuga in its expanding entertainment initiatives. Larva Labs stated that it was considering cooperating with the makers of Bored Ape. Nonetheless, they concluded that Yuga would be a better fit for the CryptoPunks and Meebits IP in the future.
Larva Labs wrote,
“We found many things in common, but we also saw in them the skill set and expertise in this space that we were missing. In many ways, Yuga is the innovator of the model for the modern PFP project and are the best people in the world at operating and growing these projects and communities around them.”
Larva Labs sold the IP but plans to keep experimenting and launching new initiatives, which the duo claims is their strength rather than maintaining existing ones. Also, it keeps Autoglyphs, a generative art NFT project that precedes the related (but independent) Art Blocks NFT project.
It’s unclear how Yuga Labs plans to use the CryptoPunks and Meebits IP now that commercialization rights have been granted. Yuga co-founder Wylie Aronow (a.k.a. Gordon Goner) told The Verge that the company has no plans to turn the projects into Bored Ape-style membership clubs or add fees to the already royalty-free collections. But, he said, we could see things like streetwear, events, and games centered around the new IP.
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