ApeCoin, ApeCoin DAO, IRL Utility, & the Otherside Launch
May 26, 2022 - 10 min read
What is ApeCoin and ApeCoin DAO, and what are ApeCoin’s value propositions going forward?
What is ApeCoin?
ApeCoin is an ERC-20 token, built to run on Ethereum’s blockchain standards. It was launched in March of 2022, clearly plugging itself into the Bored Ape Yacht Club community and ecosystem. ApeCoin saw a massively hyped launch, likely due to the massive popularity of the BAYC and its related Bored Ape universe.
Moreover, 150 million tokens (24.2% of the Ecosystem Fund and 15% of the total supply of ApeCoin) are claimable by BAYC and MAYC NFT holders upon launch of ApeCoin. According to Dune Analytics, more than 90% of all eligible addresses had claimed the ApeCoin airdrop within the first two weeks.
An accomplishment in and of itself, ApeCoin can be bought and traded on nearly every major exchange, like Binance, FTX, Coinbase Pro, and Uniswap just to name a few. On its first day of trading, ApeCoin’s price more than tripled from $5 to $17.75 USD before dropping under $10 USD per coin in the following days.
ApeCoin’s all-time-high price reached a lofty $27.50, an over 500% increase from the its ICO. However, in part due to macroeconomic forces and nearly every asset price suffering in the first half of 2022, ApeCoin fell to under $5.20 and is trading hands at just under $8 USD with a market cap of over $2.25 billion at the time of this article’s publication.
ApeCoin DAO and the Bored Ape Community
The firm behind ApeCoin and the Bored Ape Yacht Club is Yuga Labs. Yuga Labs is responsible for the major projects and acquisitions surrounding the BAYC. This includes the Bored Ape Mutant Club, Bored Ape Kennel Club, the BAYC mobile app game, and other Bored Ape IP. They first came onto the scene in April of 2021 and spent the year gaining momentum, releasing a partnership announcement with Adidas in Q4. Yuga Labs also announced their Ethereum-based utility token, ApeCoin, at the end of 2021.
In March 2022, ApeCoin was launched by ApeCoin DAO, a decentralized governing body for $APE holders to participate in the community, including the decision-making process. Its primary function is to offer a platform for community members to submit which token holders can deliberate and ultimately vote on in a sort of Ancient Athenian-style, radical democracy. Each token represents a votee in the ApeCoin DAO and therefore, every token holder has an incentive to participate and promote the community’s best interests.
Though Yuga Labs was founded at the beginning of 2021 with only 11 full-time employees, they have grown rather quickly thanks to major VC backing and popular reception in the retail crypto space. As of March 2022, Yuga Labs announced that they have successfully raised $450 million USD, giving them an impressive $4 billion USD valuation.
The Ape Foundation, which will handle day-to-day operations of ApeCoin DAO, will take care of community proposals, logistics and other management operations to ensure the DAO community’s wishes are given consideration and the community dialogue remains dynamic. Ape Foundation is the backbone and legal backing for the DAO.
ApeCoin DAO’s board utilizes a subcommittee derived from the Ape Foundation, with five prominent thought-leaders and investors from the crypto space. The first subcommittee board members to serve will be FTX’s Amy Wu, Reddit co-founder Alexis Ohanian, Yat Siu from Animoca Brands, Maaria Bajwa from Sound Ventures, and Dean Steinbeck from Horizen Labs. Each subcommittee serves 6 months on the board before DAO members vote again on new representatives.
ApeCoin has a fixed supply of 1 billion tokens without either inflationary or deflationary token-burning mechanisms built into the tokenomics. Moreover, ApeCoin DAO’s treasury is allocated a whopping 47%. Since 15% was airdropped to NFT holders, that leaves roughly 38% set aside for early contributors, and an allocation to the Jane Goodall Legacy Foundation, an environmental conservation organization.
ApeCoin Utility: It’s Going to be Bananas
With the launch of ApeCoin, the BAYC is advancing even further than first imagined by most. Aside from the NFTs themselves, BAYC has hosted in-person events, mutant serum airdrops, and more. Furthermore, ApeCoin breathes fresh life into the community by serving several purposes.
Presumably, this is the start of an entire economy denominated in ApeCoin. By using ApeCoin as a de facto currency rather than simply offering it as a speculative asset, Yuga Labs hopes to evade the ire of the SEC, which has set its sights on several crypto firms in recent years.
The Bored Wine Company allows users to mint their own bottles of BAYC-themes wine as NFTs on OpenSea before shipping out physical bottles.
As previously mentioned, ApeCoin acts as the governance token for ApeCoin DAO, the decentralized autonomous organization which oversees the decision-making process other governance related to the community and use of its IP. As such, ApeCoin holders have a stake in the direction of the community and stand to benefit financially, and perhaps socially, from its success.
While E11even Residences is accepting ApeCoin for its condominium units, they didn’t mention anything about discounts.
Secondly, the token serves as the price denominator for transactions within the BAYC ecosystem and even in real life. For example, E11even Residences announced it would accept ApeCoin as payment for its luxury condominium units in Miami. A beer brewery in Delray Beach, Florida is also accepting ApeCoin, and offering half price discounts, according to their Twitter announcement.
Finally, ApeCoin holders might be used to offer discounts or special access to future BAYC events and games. For instance, the mobile game Benji Bananas from Animoca Brands (co-founder Yat Siu sits on ApeCoin Foundation’s board, remember), has integrated ApeCoin as a special in-game currency. For under 0.2 ETH, OpenSea users can purchase a Benji Bananas Membership Pass NFT, giving owners in-game $PRIMATE tokens which can be used to redeem ApeCoins on Ethereum’s blockchain.
The price of the membership pass has fluctuated quite a bit, perhaps due to the extreme volatility the market has experienced since the launch of the NFTs.
Otherside Metaverse Land Sale Highlights Ethereum’s Scalability Woes
It should not surprise anyone that Yuga Labs and BAYC would make a metaverse play, or several. The Otherside metaverse is a colorful landscape consisting of 200,000 plots of “land,” which will be owned after users purchase and mint Otherdeeds: NFTs that acted as ownership titles for the virtual plots of land.
Otherdeed presented an opportunity for new investors who had missed out on BAYC’s initial release. Consequently, they had previously been priced out of participating in the BAYC due to the popularity of and demand for Bored Ape NFTs, and therefore the hefty price tags associated with joining the Ape community. The most affordable Bored Ape listed on OpenSea costs 66 ETH at the time of this publication, for instance. Therefore, investors went out and purchased $APE in preparation for the Otherdeed mint and hoped for the best.
55,000 Otherdeed land parcels were launched in a public sale on April 30, 2022, with the remaining parcels of virtual land allocated to BAYC NFT holders and Yuga Labs, their partners, and employees. Image credit: Otherside
Bored Ape and Mutant Ape NFT holders did not need to KYC since their identities could be verified on chain. Despite efforts to verify new investors through a Know Your Customer (KYC) process before the mint and to offer the NFTs at a fixed price of 305 $APE, it wasn’t enough to prevent total chaos at launch. Within minutes, over $200 million USD in virtual land was sold via the initial NFT mint. The sudden increase in activity essentially strained the Ethereum network so much that some witnessed gas fees reading upwards of $5,000 USD per transaction.
It turned out there were far more KYC’d wallets than there were NFTs available for sale, and many investors failed to mint anything, despite having enough ApeCoin to pay and after suffering through a stressful transaction which cost them way too much ether in gas fees during the mint as well.
Early minted NFTs were sold on secondary markets for double or triple what they cost to mint (305 $APE, plus ETH gas fees), while the demand for the remaining initial mints and ferocious gas war persisted until all 55,000 plots of Otherside land were gone. Several users claimed to pay between as high as 5 ETH in gas fees during the minting process, with some simply losing the entire fee due to transaction failures without getting their NFT after all due to Ethereum’s trouble with throughput during periods of heavy network activity.
Following the event, Yuga Labs posted on Twitter to apologize for nearly crashing Ethereum. The posts suggested the community consider migrating ApeCoin to another blockchain in order to more effectively scale, given the demand for the token and the limitations of Ethereum in its current form.
Furthermore, the posts encouraged ApeCoin DAO to begin discussing possibilities for addressing a potential migration or layer 2 scaling solution. Of course, any blockchain protocol would be eager to accept the BAYC community into their ecosystems if given the chance. However, choosing a scalable blockchain as secure as Ethereum may be difficult to find, given that Ethereum’s competitors have fared even worse when the network undergoes periods of heavy traffic.
The development of a bespoke ApeCoin blockchain has also been floated in their forum discussions, though this seems less likely given that research and development could take longer than the community can wait. It has also been reported that ApeCoin DAO is in talks with Avalanche by Ava Labs or Flow by Dapper Labs.
Conclusion
The Otherside NFT mint, broader adoption of ApeCoin in the crypto space, and IRL token adoption demonstrate significant staying power for Yuga Labs, BAYC, and ApeCoin. The evidence is clear that people love Bored Apes and want to “ape into” the community. Now it is just a matter of making ApeCoin more easily accessible and allowing its IRL use cases to proliferate.
While the less-than-ideal Otherside mint caused frustration for many and created some uncertainty as to the direction of the community and their home on Ethereum’s network, the case for BAYC could not be more bullish. Once Yuga Labs and the ApeCoin DAO figure out how to offer ApeCoin to a broader audience without pricing normal folks out of the process, real adoption of the token will occur. Think of it like Curious George morphing into King Kong; it may be colossal.
Note that this article is for informational purposes only, and should not be considered financial advice.
References
- Coghlan, J. (2022, 2 May). Solana suffers 7 hour outage as bots invade the network. Cointelegraph.
- Gottsegen, W. (2022, 18 Mar.). What is ApeCoin and who is behind it? CoinDesk.
- Hu, E. (2022, 11 May). ApeCoin is down 70%+ since the Otherside launch — Can Yuga Labs turn the ship around? Cointelegraph.
- Kelly, L. J. (2022, 29 Apr.). Bored Ape Yacht Club’s ApeCoin soars as community mulls DAO proposals. Decrypt.
- Tan, E. (2022, 17 May). ApeCoin migration draws interest from Avalanche, Flow. CoinDesk.
- Thomas, L. (2022, 4 May). Otherside: Everything to know about the new BAYC NFT project. NFT Now.
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