It’s a BAYC world; we’re just living in it. And the ApeCoin is the native currency of the Bored Ape Yacht Club’s ever-growing universe. The creators of the second most popular and successful NFT collection released a governance and utility token… Or did they? The official story is that Yuga Labs isn’t exactly behind the coin’s creation, the APE Foundation is. Let’s untangle this fascinating story and find out exactly what the rationale behind ApeCoin is.
Even though the Bored Ape Yacht Club is Yuga Labs’ main product, it’s definitely not the only one. They created the Mutant Ape Yacht Club and their companion dogs, the Bored Ape Kennel Club NFT collection. Plus, the Otherside future metaverse and its promised lands, that people will be able to claim via an NFT called Otherdeed. Yuga Labs also recently got the rights to manage the first most popular and successful NFT collection, the CryptoPunks. Last but not least, they also manage the Meebits.
Will ApeCoin interact with all those projects? That’s not clear at the moment. However, only BAYC and MAYC holders received the ApeCoin airdrop. In any case, ApeCoin will be the currency of choice in the Otherside metaverse, and all of the Otherdeeds were minted using it. “Otherside doesn’t take cash, credit, or checks. The economy here runs on ApeCoin,” the website informs.
Are we going too fast? It’s probably better if we back up and define some concepts in a rapid-fire round.
The projects around ApeCoin
- ApeCoin is an ERC-20 governance and utility token, so it runs in the Ethereum blockchain. The APE Foundation created it and the ApeCoin DAO controls what happens to it. Yuga Labs and its creators got a hefty allocation, though. According to their official site, APE Coin “will serve as a decentralized protocol layer for community-led initiatives that drive culture forward into the metaverse.”
- Bored Ape Yacht Club is an NFT collection that consists of 10,000 unique digital collectibles. At the time of writing, the floor price for an Ape is 84 ETH on Open Sea. So far, the collection has moved a total volume of 646K ETH. They’ve become a cultural phenomenon, with many celebrities using them as their profile picture. Eminem and Snoop Dogg’s Apes recently starred in the artists’ most recent music video.
- Mutant Ape Yacht Club is an official BAYC derivative collection created to reward their holders. By exposing Bored Apes to a Mutant Serum, a new NFT was created. Additionally, newcomers to the ecosystem were able to mint Mutant Apes and enter the BAYC universe at a lower price. There are 20.000 Mutant Ape Yacht Club NFTs.
- Bored Ape Kennel Club are companion dogs. They were offered as a free-mint to every Bored Ape holder, so there are 10.000 of them. Considering that at the time of writing the floor price for these NFTs is 8 ETH, we would say it was a phenomenal gift.
- According to their website, “Otherside is a gamified, interoperable metaverse currently under development. The game blends mechanics from massively multiplayer online role-playing games (MMORPGs) and web3-enabled virtual worlds.” Besides the already mentioned projects, avatars from World Of Women, Cryptoadz, Nouns, Coolcats, and other NFT collections will be available.
- Yuga Labs has a hard time describing Otherdeeds, “Otherside will be what you make it, and your Otherdeed will be your key. Your Otherdeed enables you to claim a plot of land when Otherside launches.” At Opensea, the company expands on the land part. “Each have a unique blend of environment and sediment — some with resources, some home to powerful artifacts. And on a very few, a Koda roams.”
What is ApeCoin Good For?
First of all, ApeCoin is a governance token. Each ApeCoin represents a vote on the ApeDAO. Besides that, it can be used as a medium of exchange in the BAYC universe, and using it can bring special perks and access to exclusive features. If Otherside becomes or is a Play-To-Earn game, the rewards will probably come in ApeCoin.
ApeCoin will probably guarantee early access and discounts in everything the ApeCoin DAO creates. And they’re planning events, merchandise, and even other videogames not-related to Otherside. Plus, the ApeCoin DAO is making it easy for developers outside the BAYC ecosystem to integrate ApeCoin into their games and services. Can they create a circular economy, though?
The ApeCoin Tokenomics
According to the DAO’s main site, “The total supply of ApeCoin is permanently fixed at 1 billion tokens. No minting capability is exposed through the contract interface, thus the total supply will never increase. Similarly, the contract interface does not expose any token burning capability, so the total supply will never decrease.” A fixed supply a-la-bitcoin is a rarity among crypto projects, but how is ApeCoin distributed?
- The ApeCoin DAO controls 47% of the tokens. All of the proposals are funded from this allocation.
- Bored Ape Yacht Club and Mutant Ape Yacht Club holders could claim 15% in sort-of an airdrop. This keeps the money circulating among the community. As an example, BAYC holders got 10,094 APE for each of their NFTs. For their part, MAYC holders got 2,042 APE per NFT. And both camps got a bonus if they had a Bored Ape Kennel Club companion NFT.
- Yuga Labs got 16% of the tokens. From that generous percentage, they’ll re-gift a portion to the Jane Goodall Institute. Appropriately, the foundation’s aim is to protect chimpanzees.
- The creators of ApeCoin got a whopping 14% of the tokens.
- The creators of the Bored Ape Yacht Club got 8% of the tokens.
All of the team’s coins are locked for 12 months, and after that they’ll get a specific amount each month. Buyers beware, this is extremely dangerous for retail holders. The percentage of ApeCoin that is beyond their control is gargantuan. As soon as the creators can sell those coins, they probably will. And if they do, the price will fall.
The ApeCoin DAO and the ApeCoin Foundation
According to their website, “holding ApeCoin is the only requirement for membership in the DAO.” This novel approach to decentralized autonomous organizations is worthy of study. “ApeCoin holders must go through a wallet authentication process to post ideas or give feedback to ideas via comments,” a simple solution to a complex problem.
However, under their model, one ApeCoin equals one vote. And since most of the coins are in the DAO and BAYC creators’ hands for at least 12 months, it’s safe to say they’ve been making most of the important decisions so far. In time, they want that to change. “ApeCoin DAO exists because decentralized governance is critical to building and managing a globally dispersed community—and therefore critical to the success of the APE ecosystem,” the website claims.
In any case, what does a DAO control, really? The allocation of funds, in this case, “the Ecosystem Fund.” According to the “governance” section of the website, “The ApeCoin community governs itself via the ApeCoin DAO, the decentralized governance framework that supports the Ecosystem Fund. The DAO follows a proposal process to vote on how the Ecosystem Fund will be distributed by the APE Foundation to promote a diverse and self-sustaining ecosystem.”
So, the ApeCoin Foundation controls the DAO? Not exactly. According to the website, the Foundation “is tasked with administering the decisions of the ApeCoin DAO, and is responsible for day-to-day administration, bookkeeping, project management, and other tasks that ensure the DAO community’s ideas have the support they need to become a reality.” The Foundation has a governing body. Every six months, the community votes for who’ll get the five seats in The Board.
The current and inaugural members are:
- Alexis Ohanian - Co-founder of Reddit; Founder of venture capital firm Seven Seven Six.
- Amy Wu - Head of Ventures & Gaming at FTX
- Maaria Bajwa - Principal at Sound Ventures, Ashton Kutcher's investment firm.
- Yat Siu - Co-founder of Animoca Brands (the company developing Otherside with Yuga Labs)
- Dean Steinbeck- Web3 builders Horizen Labs’ president
So, a who’s who of the crypto and tech industries. Are these the people behind that came up with ApeCoin?
Examples of the ApeCoin DAO in action
Speculation aside, the DAO already took at least one controversial decision. The context is this: when the Otherdeed NFTs went on sale, the demand was so high that the event shut down the Ethereum blockchain. A day later, Yuga Labs tweeted, “We're sorry for turning off the lights on Ethereum for a while. It seems 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.”
On May 2, a proposal to debate whether or not to keep ApeCoin in Ethereum went up. The other options were to move the coin to a Layer-2 scaling solution or to create their own chain, as Yuga Labs suggested. The proposal argued that “migrating to a different chain is a costly, risky, and complex endeavor with many moving parts that may, if not thoughtfully considered, result in catastrophic loss.”
The results were close. A total of 3.8 million ApeCoin voted for staying in Ethereum and 3.3 million voted against it. Remember, these millions don’t represent the number of people voting. If a person has a thousand ApeCoins, he or she would get a thousand votes in that total. According to Snapshot, the website in which the DAO votes, 801 accounts took the decision to defy Yuga Labs.
Other proposals that the ApeCoin DAO is considering are more trivial, like “Restructuring the Forum Categories”; constructive like the creation of the “Bored Ape Gazette: Ape Coin Media/BAYC News;” and controversial like “Guy Oseary as ApeCoin Representative.” For context, Guy Oseary is a very successful music manager who works with the likes of Madonna. He’s also Bored Ape Yacht Club’s manager, and one of the reasons for the collection’s rise to fame.
So, Yuga Labs and its people are heavily involved with ApeCoin. And so is every person on The Board that controls the Foundation.
Buy/No Buy recommendation
If you think the BAYC and Otherside will end up being a niche phenomenon, catering to their admittedly affluent fans and holders, why bother with ApeCoin?
However, if you’re in any way involved in the Bored Ape Yacht Club ecosystem, consider buying. Even if you’re not, think about this. Do you think that BAYC will become a global brand in the next few years? Will Otherside become a leading metaverse and cross over to mainstream audiences? Bottom line, if you think the Apes are ready for prime time, consider buying.
If you buy though, be aware of this: the creators, Yuga Labs, and the DAO control the lion’s share of the ApeCoins. Someday, they’ll dump them on the market and cash in. Don’t get caught on the wrong side of that trade.