but before I explain why,
we need to understand where it started.
Bored Ape Yacht, this top NFT
collection has had quite the year.
Just last April, you could mint one
of these characters for around $200.
Today, the cost to get in is just shy of
the average home price in the the United States.
These NFTs have the attention of high
profile celebrities, and they've become this kind
of dreamhold for your average NFT investor.
The ultimate online status symbol, one that says I
have so much money I'll buy a JPEG that
I could screenshot for multiple six figures just to
say that I'm in the club.
But Bored Apes have a problem.
They're so out of reach for the average
investor that it almost makes them less cool.
I mean, take Gucci, a very high end brand.
Whether you like it or not, owning a Gucci
piece gives you this small bit of their status.
You could do that by buying a jacket for
several thousand dollars, which is inaccessible to most people.
Or for a few hundred bucks, you could buy this ring.
Still expensive, but not impossible to afford for most.
The point is, even Gucci has options
that are expensive enough to give status,
but cheap enough to be within reach.
It's possible you could buy that
ring if you really wanted to.
Bored Ape is getting out of touch.
300k, it's just too much.
So what does Bored Ape do? First,
They can diversify, which is smart and exactly
what they did purchasing the IP for CryptoPunks
and Meebits, meaning Yuga Labs,
the owners of Bored Apes, now own the
top three NFT brands in the world.
But that's not enough.
I mean, it makes the brand a little bit
cooler and a little more dominant in the space.
But the accessibility didn't get a whole lot better.
They needed something else, something that
they could sell for far less.
But it wouldn't hurt their ultra high end brand image.
They couldn't sell NFTs for $10 apiece,
but they could sell a token.
If Bored Ape came out with a token, they could sell
it to the masses who would feel like they get to
be part of this ultra high end, growing, successful brand.
And they get the opportunity for a couple of Bucks,
not six figures, they could Air drop the token to their
mega rich NFT holders and get all the goodwill of
the brand, creating an entirely new revenue stream.
It's genius, and it's exactly what they did.
But is it a good idea to invest in?
We'll explore that in a minute, because first
we need to talk about this token launch
ApeCoin is the brand new token.
Yuga Labs and some VCs are
the contributors behind its inception.
Now, Yuga Labs insists that it wasn't launched by them.
However, in reality, it couldn't have happened
without significant effort on their part.
Nevertheless, Yuga Labs is distancing themselves from
the project and wants no connection with
it from here on out.
Except, of course, the 150 million tokens
that they received for their participation,
now currently worth about $2 billion. It's kind of odd.
On the Yuga labs homepage, they say that
they're contributors to ApeCoin, and they'll use it
as their primary token in their future projects.
But everywhere you look, you see mentions
that they're not responsible for the token.
Let's put this in a different context.
Imagine your friend starts a business, you decide to
help him out with the creation, and you advertise
to investors that you're a member of the business
and you plan to use his services.
In return for this, you get
15% of your friend's business.
But at the same time, you say that you're not
responsible for the business and anything bad that happens, I'll
let you make your own interpretation of that.
Now Yuga isn't the only one who
benefited from the newly launched ApeCoin.
Every Bored Ape holder was airdropped 10,000 tokens.
At its current price, that's $130,000 for
a single air drop for free. This is awesome.
The community actually benefiting
from the token launch.
And even cooler, the launch kind of came out of nowhere,
being announced only a few days prior to the big day.
Within 24 hours of launch, it had
trading volume of over $9.2 billion.
So if Yuga Labs doesn't control ApeCoin, who does?
Well, that would be the ApeCoin DAO.
Now, my favorite way to explain the DAO
is an internet community with a shared bank
account, an organization where everyone gets a vote.
But it's not exactly that simple.
See, DAOs, they need a sort of foundation to back
them, someone who's writing the checks, making the hires.
So a new organization has been
formed called the ApeCoin Foundation.
Members of the special counsel on the
ApeCoin Foundation include some heavy hitters.
By holding ApeCoin, you become a
member of the ApeCoin DAO.
That means you have a say in the
governance of ApeCoin proportional to how many
tokens you hold, including voting privileges as to
where the community heads in the future.
This is awesome.
A community built around the most well
known NFT brands, with tokens and voting
rights available to basically anyone. Or is it?
What do the voting rights actually mean?
Does your vote really matter?
Looking at the tokenomics, it's hard
to argue that it does.
8% of the total token supply goes to Bored Ape founders.
That's separate from the chunk that Yuga Labs received.
This is where things get a tad sneaky.
Here you can see that it's a 16% of
the token supply went to Yuga labs plus charity.
If you're like me, your first thought is, okay,
that 16% is split with charity, but looking at
the fine print, charity gets 6% of that 16%.
Now, I'm not sure this is a red flag.
Ultimately, donating to charity is great, but it's surely
written in a way to make the charity donations
seem larger, then we have the 14% of the
supply going to "launch contributors", which is just
code word for venture capitalists.
And then finally we have the community fund
that makes up 62% of the supply.
This includes air drops to NFT holders.
The question is, is this equitable?
Is it fair that roughly 38% of the total
supply is going to insiders essentially for free?
I mean, we might suppose that they deserve
some of the supply for building the project.
They definitely deserve something.
But what have they actually built?
So far, we have a website and the Apecoin,
which is an ERC-20 token.
I've demonstrated in the past that you can make an ERC-20
token with about $500 and ten minutes of time.
There we go.
The coin is created and no token would be
complete without a proper logo or a white paper.
And there you have it, a complete ERC 20 token.
And you might think, okay, maybe it's cheap
to get started, but they have to pay
for staff and infrastructure for the future.
However, within that 62% ecosystem fund, we can
see the inclusion of treasury and resource funds
to not only sell this token to the
public, but also fund future operations.
But maybe none of this matters
if ApeCoin has enough utility.
If they're really building something exciting,
maybe we can look past this.
But before we explore that, we need to chat about
the claims that this token is an outright scam.
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When ApeCoin first launched, it was priced
at over $20 before dropping almost instantly.
This left many potential investors thinking the party
was already over before it got started.
This doesn't mean it's a scam, it's
just a quirk of air drops.
Token holders don't really have an incentive
to hold long term, so they sell.
I mean, think of yourself in the
shoes of a Bored Ape holder.
You're air dropped $100,000 in tokens. What would you do?
Personally, I'd sell at least some of
the tokens, so again, a price drop
doesn't necessarily mean that it's a scam.
However, speaking of scams, there are tons of fake
ApeCoin giveaways that you need to watch out for.
If you see anyone offering to give away free
Apecoin, there's a high likelihood that they're a scammer.
Never give them your seed phrase or any
kind of information that could compromise your wallet.
Whether you like ApeCoin or not, you're probably
curious about the price potential, because if we've learned
anything about crypto, you don't necessarily need a ton
of utility to see massive growth.
If people like it, they will invest
in it and push up the price.
Unfortunately, Apecoin isn't a tiny token, as is.
If it were to 6X, it would roughly match the
market cap of Polkadot, one of the largest and
most diverse projects built on its very own blockchain.
The largest ERC-20 token currently is Shiba, with a
market cap above four times larger than ApeCoin.
Unfortunately, we don't really know where
the price is going to head.
On the one hand, we've seen
how far hype can move markets.
I mean, Shiba went from on nobody's radar to a
top ten in a matter of weeks, but on the
other hand, if you want staying power, you need utility.
So what is the ApeCoin actually going to do?
Strangely enough, the main ApeCoin website, which appears to double
as their white paper, seems to have no roadmap or
mention of what is being built Besides the DAO.
However, remember, Yuga Labs says they will use
Apecoin as the currency within their future projects.
Yuga Labs just received $450 million in investments
to build their very own Metaverse.
We don't have a ton of details, but we
do have this teaser video that shows their NFT
characters interacting in a 3D world, and the post
itself says powered by ApeCoin.
But how will ApeCoin be used exactly
to support the Metaverse economy and mechanics?
My guess is as good as yours at this point.
What we do know is that their goal
is to create an interoperable gamified and decentralized
world in the style of Ready Player One.
$450 million is serious money, but we can't forget that
they're not the only players in the space.
I mean, Meta is planning on investing
$10 billion into the Metaverse, and Microsoft
just bought Activision Blizzard for 70 billion
in their attempt to enter the space.
That's tough competition.
Then again, Animoca Brands is building their very
own play-to-earn game as well that
plans to use Apecoin as currency.
So where does this leave us?
We have powerful brand recognition,
but hesitation to have responsibility.
Big claims, but nothing really built yet.
Here's what I think.
It's not a scam, but a bet
at this point is high risk territory.
If the market cap was $200 million,
this would be a completely different story.
But of course that doesn't mean the price can't go up.
I mean, crazier things have happened.
In terms of the actual token, though.
I'm not a fan of token allocations
as they err on the greedy side, given
what it would have cost to get started.
Either way, this is a token
to absolutely keep an eye on.
Especially once we know more
about this metaverse being built.
That's going to do it for today.
I'm Max Mahar.
And I hope you have a profitable day!