Last Week, I wrote an article on ApeCoin, the brand new cryptocurrency that was launched to be “the main token for all new products and services” of the Bored Ape Yacht Club (BAYC). To quickly summarize, ApeCoin is an ERC-20 governance token; holders can vote on potential changes to the token. These tokens can be used to buy exclusive events and merchandise.
After a turbulent start, the coin went up in value and now has a market capitalization of $3.7 billion. BAYC once again demonstrated that it can bring success to whatever it touches (although some Bitcoin supporters might not like the choice of words in this expression).
$450 Million Surge
Yuga LabsBAYC was founded by a man named Jeremy, who is also the founder of ApeCoin. The cryptocurrency announced this week that it had raised $450 million in funding, equating to a valuation of around $4 billion. They plan to build their own metaverse. Otherside. In addition, they recently acquired two NFTs that are the largest rivals: Cryptopunks and Meebits. Cardi B would agree that they are making some serious money moves.
It’s clear that BAYC is constructing something huge here. This has allowed them to stand out from the thousands of other NFT projects. The focus is now on the community. Those who own an ApeCoin don’t need to own an original piece of art. The token can be used as a ticket for events, including exclusive Miami Yacht parties (all over social media), merchandise, airdrops, and social gatherings. When marketed properly, scarcity and demand can generate interest and fame. Kanye West is only releasing a limited number of his books. Yeezy To give a real-world example, only certain shoes of his will be available. And you can use the power and fame of celebrities to promote itEminem, Snoop Dogg, Serena Williams, Steph Curry are just a few of the stars that can be used.
Cumulating Money
But I’m somewhat uncomfortable with this.
The token airdrop happened last week. Each Bored Ape holder received 10,094 ApeCoin tokens. At today’s prices, this means that $134,000 is sitting in the wallets of holders, and they don’t have to do anything. And there are only 10,000 apes in the wild. The current floor price is 103 ETH, or $313,000. Thus, there are some people who are already extremely wealthy and are becoming wealthier. .
Minimum BAYC Price, data via OpenSea
So, what’s the point? Web 3.0? Isn’t it supposed to be a decentralized platform that is accessible to all? Don’t we expect a more democratic, transparent, and accessible environment? And yet, there is a massive concentration of wealth at the top.
Here are some of the names that were involved in the $450 million fundraiser:
- Coinbase
- FTX
- Andressen Horowitz
- Animoca Brands
- MoonPay
There are few timers and no cash-hungry entities or individuals. If this worrying trend continues in crypto, the rich will get richer and ordinary investors will be left holding the bag.
Unequal Distribution
Let’s now look at the tokenomics. I’m not guaranteeing anything, but it’s possible that the coin price could drop 70% from its $3.7 billion market cap. Let’s just assume that it’s the new players who get the bag. They will still be massively in the black, and they will be running like bandits. Unfortunately, they will be the ones who came late and bought after this week’s hype. Remember, a 70% drop requires a 333% rise to break even – the “butler equation” (a patent is pending for this expression).
Bag Holders
Creating this token was a piece of cake for the parties who captured the top cut of 52%. This was made possible by celebrity influence and marketing power. The same is true for angel investors and venture capital funds that were involved in the fundraising rounds. They have their exit points and their goals for getting a return. Meanwhile, ordinary investors who are caught up in the hype through celebrity endorsements and screenshots showing 100X early buyer returns are the ones who will pay the price. There is a good chance they have already left.
A Wider Problem
To be clear, this isn’t just about the Bored Ape Yacht Club. They are just the latest example. The coin price could rise to $100 billion. I’m concerned, but perhaps everyone will make it;
