Despite the numerous explanations that have flooded the internet since its introduction, most people are still baffled by Web 3.0 and NFTs.
It doesn’t help that the industry is rife with preposterous purchases, such as Eminem’s roughly $460,000 purchase of a cartoon ape. This ape is one of 10,000 in an NFT collection called the Bored Ape Yacht Club.
Naturally, you probably have a lot of questions. What on earth is the Bored Ape Yacht Club? Why is a cartoon so expensive? Is this another financial bubble masquerading as innovation? Well, we have answers. Let’s dig in.
What Is the Bored Ape Yacht Club?
Bored Apes are a collection of 10,000 unique NFTs based on the Ethereum blockchain. The Bored Apes are grungy simian avatars with different characteristics—some rarer than others. For example, only 5% of Bored Apes have red fur, and 3% have a biker vest. The rarer the traits of a Bored Ape, the more expensive it’s likely to be.
As is the case with all NFTs, the Bored Ape is not the asset itself—instead, it’s a kind of certificate of ownership or, in this case, a passkey. If you’re new to NFT purchases, find out what you actually own when you buy an NFT.
Bored Apes are the cornerstone of an elite movement called, you guessed it, the Bored Apes Yacht Club. Your Bored Ape doubles as your Yacht Club membership card and grants access to members-only benefits—the first of which is THE BATHROOM, a community drawing board where Bored Ape owners can leave digital graffiti. Bored Ape ownership also comes with access to a private Discord server where you can hang out and chat with other owners.
All the Bored Apes were initially available on a first-come, first-served basis and were priced the same—0.8 ETH or about $190 at release. But, because they all sold out quickly, they are now available on the secondary market OpenSea, which is like eBay for NFTs. As of writing, the floor price for an Ape on OpenSea is 108 ETH, or about $368,000.
Who’s Behind the Bored Ape Yacht Club?
The Bored Ape Yacht Club was created by four founders via their company Yuga Labs, in 2021. The founders go by cartoonish pseudonyms: Gargamel, Gordon Goner, Emperor Tomato Ketchup, and No Sass. Or at least they did until February 2022, when BuzzFeed revealed the identities of Gordon Goner and Gargamel.
It turns out Gargamel is Greg Solano, a writer and book critic, and Gordon Goner is 35-year-old Wylie Aronow. Both went on to reveal their true identities on Twitter alongside their Bored Apes. Following that, Emperor Tomato Ketchup and No Sass went ahead and did the same.
Per a Rolling Stone interview, the founders drew inspiration for BAYC from modern NFT OGs like CryptoPunks, which have become a sort of cultural currency. Like Bored Apes, CryptoPunks are also a 10,000-strong collection of unique NFT avatars, and they also cost a fortune—with one selling for a whopping $11.7 million. If you haven’t already, catch up with news about CryptoPunks and why they’re so expensive.
For BAYC, the plan was to combine the collectible-art component of NFTs with community membership, essentially giving NFT ownership some utility beyond just being cult symbols of crypto cool kids.
Why Are Bored Apes So Expensive?
To the most pressing question of all: why do Bored Apes cost so much? Even the most exclusive club memberships in the US do not cost $368k. What’s the fuss about? Let’s see.
Bored Ape art is not only valuable because it serves as a digital identity—but also because of the accompanying commercial usage rights. Not only can Bored Ape owners re-sell the NFT for a profit, but they can also sell spinoff products based on the art.
One Bored Ape owner set up a Twitter account for his ape, spinning an entire backstory where the ape is Jenkins, a valet at the Yacht Club. Jenkins is personable, crypto-savvy, and tells amazing stories—it’s the perfect combo for a successful Twitter account.
Jenkins’ story is made all the more endearing by the fact that he was the cheapest ape in the collection, which influenced his character as a valet. On a basic level, people are drawn to the classic “rise of the underdog” story.
In September 2021, Jenkins was signed to a real-life agency to explore publishing opportunities across books, podcasts, films, TV, and more. He’ll also have his own biography, written in part by New York Times bestselling author Neil Strauss.
Jenkins’ owners are creating a sort of sub-BAYC community by allowing users to buy NFTs that serve as rights to vote on the creative direction of Jenkin’s first book release. It’s essentially a massive community project, except in this case, people are paying to participate.
The potential for opportunities like this drives up the value of a Bored Ape.
Brands have also ‘aped in’, with Arizona Iced Tea purchasing a Bored Ape Yacht Club NFT in August 2021 and using it in marketing materials. Adidas also purchased a BAYC NFT intending to develop a character and backstory.
Some basic economics here: because there are only 10,000 Bored Apes, the supply of the NFT art is pretty limited. Coupled with the massive interest in the brand, we have a high-demand/low-supply dynamic that inevitably drives prices up.
To boot, some Bored Ape avatars within the same collection are rarer than others. Each Ape is a one-of-a-kind, randomly generated combination of 170 traits, such as background color, earrings, expression, headwear, clothing, etc. This derived scarcity also contributes to the high prices of some Bored Apes.
BAYC offers exclusive content benefits to Bored Ape holders, some of which are spelled out in the detailed roadmap on the Bored Ape Yacht Club website. The roadmap is a sort of to-do list that the founders intend to check off when they hit their target sales percentages.
In keeping with the 10th goalpost of finding “new ways to ape with our friends”, the BAYC have gotten even more creative with their community-building tactics.
For example, in June 2021, every Bored Ape holder was allowed to ‘adopt’ a canine companion NFT for free (only paying for ‘gas’, which is the fee you have to pay for processing transactions on the Ethereum blockchain). That’s how Bored Ape Kennel Club was born. The club used secondary sales of these canine companions to raise $1 million for animal shelters.
While these dogs were free for BAYC holders, the current floor price for a Bored Ape Kennel Club dog is 7.60 ETH or about $17,000 at current ETH prices.
In August 2021, BAYC created 20,000 mutant Apes. They released 10,000 to the public for 3 ETH to bring new members on board. It worked— the entire set sold out within an hour, generating $96 million in the process.
But, all Bored Ape owners got a free airdrop of 10,000 digital vials of mutant serums with which they could mint new mutant apes from existing Bored Apes. And they could sell the new NFT on the secondary market for profit.
And in March 2022 — the BAYC launched their own cryptocurrency, the APE coin, and airdropped $ape tokens to each BAYC and MAYC holder. Owners of BAYC NFTs will be able to claim approximately 10,000 ApeCoin each, which amounts to about $100,000 for each holder.
The APE coins are already finding utility within the BAYC community—Snoop Dogg and Wiz Khalifa released an eight-track NFT mixtape for $APE holders.
To top it off, BAYC has started hosting club members at real-life, offline events that will become a yearly tradition. BAYC held its first annual Ape Fest in November 2021, which included a gallery exhibition, a costume contest, and a party on a real 1000-capacity yacht off the coast of Manhattan. Lil Baby, the Strokes, Questlove, Beck, Chris Rock, and Aziz Ansari all made surprise appearances at the grand finale “warehouse” party in Brooklyn.
Jimmy Fallon, Post Malone, Mark Cuban, Paris Hilton, Snoop Dogg, Stephen Curry, Eminem, and Shaquille O’Neal all own Bored Apes. And it’s a well-known fact that involving celebrities in anything can raise interest—and prices.
Because of the significant celeb involvement, Bored Apes have become a status symbol — like a digital Veblen good — the more expensive they are, the more people want to have one.
While Bored Apes aren’t the first NFT collection, they’re one of the few collections out there. Not to discredit the innovation, but the novelty does contribute to the movement’s success. CryptoPunks, for example, are valuable primarily because they represent the first NFT collection.
BAYC bought Cryptopunks in early March 2022—an acquisition that significantly tackles competition and establishes their position as pioneers of the NFT-community movement. BAYC plans to grant intellectual property and commercialization rights to CryptoPunks owners, just as they have with Bored Ape owners. Inevitably, this will increase demand, which will lead to a price increase.
How’s That for Monkey Business?
BAYC has recently raised $450 million in funding to develop its own gamified, decentralized Metaverse project dubbed Otherside. The company is gunning for a “Ready-Player-One-Esque” experience that merges virtual reality with real life. If their Metaverse project succeeds, the utility for the BAYC’s offerings will blow up at scale.
There’s a lot of doubt surrounding the viability of the NFT sector in the cryptosphere, but the BAYC’s moves are establishing the brand as more than just an art collectible. If anyone thought the BAYC a fluke, the company’s methods for building a community and incentivizing participation should change their minds—this is definitely a brand to keep an eye on.
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