Erik Weijers, a year ago

The Apes buy the Punks

The temporary dip in the prices of the NFT collections CryptoPunks and Bored Apes has reversed after the news broke that the founders of Bored Ape Yacht Club (BAYC) have bought the intellectual property of the CryptoPunks. It was the first mega deal in NFT land.

Since about mid-February, prices of the Apes and Punks had dropped a bit. At the end of January 2022 one still had to put down at least 100 ETH for the cheapest Ape - that amount temporarily dropped to 80 ETH: a bargain! And although the market for CryptoPunks certainly did not collapse, the value of Punks dropped even further than Apes. Also, the average sales amount of NFTs decreased across the board for all NFT collections. On the other hand, the number of unique users who bought an NFT in February 2022 was record high.

Bored Apes owner buys rights CryptoPunks

Back to the breaking news, probably the biggest piece of news since the NFT world has come into existence. It was like Netflix taking over Disney. Larva Labs, the creators of CryptoPunks, have sold the intellectual property of the CryptoPunks to Yuga, the company behind the Bored Apes. The Bored Apes had already overtaken the Punks in terms of price for their collection. Yuga is a company that is clearly more marketing savvy than Larva Labs, a company of artists and free spirits. The total market value of all NFTs under the umbrella of Yuga is now close to $10 billion.

The CryptoPunks have been in existence since 2017 and thus have the status of the OGs of the NFT world. A few months ago, one Punk was sold for 8000 ETH. The Bored Apes were only launched in the spring of 2021 but quickly rose to prominence, in part because celebrities like Eminem, Snoop Dogg and Justin Bieber bought an Ape. An Ape truly makes its owner a member of a club, with all sorts of perks. For example, buyers of Apes also received extra NFTs as a bonus: Mutant Apes. These also proved valuable. Yuga, in turn, benefits by catching royalties on each sale.

For many owners, the Apes were more valuable than the Punks because they may also be used for marketing and merchandise. The company behind the Punks was unclear about this, according to some owners. After the takeover, Yuga immediately announced that owners of Punks may use their beloved jpegs for their own commercial purposes, just like Apes’ owners already were allowed to.

Is there any gas left in the tank?

The price dip of the Punks and Apes is largely over, as mentioned above. It is interesting to note that in December and January (according to Delphi Digital) gas prices on Ethereum correlated with spikes in NFT trading. Both Punks and Apes are minted on Ethereum, which means it takes ETH to trade them. Incidentally, Ethereum is still the blockchain on which by far the most NFTs are traded. Over 80% of the transaction volume is accounted for by Ethereum.

Some analysts see the recovery in prices as temporary. According to young NFT trader and analyst Mr. Fox, the NFT market seems somewhat saturated and lacks vibrancy. While he believes it could be that the market is only dipping temporarily, he also sees a lack of innovation. Although NFTs are being used in the music business and real estate, this use case is really still in its infancy.

The question is whether Apes and Punks will retain their high value in the future. Why did they become so popular and expensive in the first place? Part of the hype was the idea that we would soon be walking around in the metaverse with our own digital profile picture, the most prestigious of which would of course be worth quite a bit. After all, celebrities and wealthy people like to show off.

The problem, however, is that metaverse builders like Decentraland and Sandbox have not yet built in that avatar functionality. So this use case is mostly speculation. Until then, buyers are showing them off on Twitter and Instagram. One thing is certain: both the Apes and the Punks are scarce: both collections only consist of 10,000 unique digital collectibles. And both will forever be part of the very early days of NFT history.

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