Blog on Nutshell
- Yuga Labs, the makers of the Bored Ape Yacht Club, bought the CryptoPunks and Meebits NFT IP from Larva Labs.
- The creators of CryptoPunks have been chastised for their lack of information on IP rights and community interaction.
The Bored Ape Yacht Club and CryptoPunks stood as the two most prominent competitors in the NFT profile picture sector just a few weeks ago. Following the announcement on Friday that Larva Labs had sold the CryptoPunks IP to Yuga Labs, the creators of Bored Ape, now they share the same owner.
Even though they are the two most significant NFT avatar projects globally, they have taken entirely distinct methods. In the Ethereum sector, Larva’s 2017 collection was legendary, but the founders mainly remained hands-off while the general market grew last year. Yuga’s growing project, meanwhile, functioned as a membership club with substantial privileges and increasing celebrity attractiveness.
Larva has now sold Yuga Labs the rights to CryptoPunks and Meebits properties, as well as a hoard of owned NFTs from each collection. In response to long-standing objections from some CryptoPunks owners, the designers of Bored Ape intend to change things up.
Following Larva Labs’ late-week announcement, here’s a look at what led to the company’s decision to leave CryptoPunks’ management, as well as what both companies stated about the agreement.
NFT Giants
Matt Hall and John Watkinson, two members of Larva’s two-man team, founded CryptoPunks in 2017, offering 90 percent of the total supply of 10,000 Ethereum NFTs to anyone for free. Punks gradually gained value and popularity in the still-nascent NFT space, and when the market blew up in early 2021, they exploded in a big way.
As the NFT market rose to new heights, CryptoPunks rapidly became a significant status symbol in the industry. The average sale price in USD spiked into the five figures in January (per CryptoSlam) and then six figures in August. Almost $680 million worth of CryptoPunks were sold in just one month on the secondary market. Visa even purchased one.
The Bored Ape Yacht Club, launched in April, is far newer than CryptoPunks, yet it uses the same principle of creating 10,000 total NFT avatars with randomized features. However, it took the notion to the next level by branding the so-called Yacht Club as an elite social club, offering additional and recurring benefits to those who bought into the concept.
Bored Ape owners received two additional free NFTs—the Bored Ape Kennel Club and the Mutant Ape Yacht Club—in the months following the debut, both of which proved to be valuable. They also had access to rare items and were able to attend a free concert in New York City last fall featuring The Strokes, Chris Rock, and other celebrities.
The potential to market the Ape image(s) that they own has been the crown gem of the BAYC value proposition for several holders. Bored Apes can be utilized for product marketing, packaging, and creating virtual bands, as both producer Timbaland and Universal Music Group are doing differently.
Yuga Labs is also working on a Bored Apes-themed play-to-earn game, with ambitions to launch a potentially valuable Ethereum token soon.
Erratic approaches
While some CryptoPunks holders claimed that their origination made them valuable and appealing and that the designers were under no obligation to give extra bonuses or rewards, others began to worry about Larva Labs’ lack of commitment to the project.
For example, during last fall’s NFT NYC event, when Yuga hosted the Ape Fest 2021 event, which included the performance, some CryptoPunks owners mused on Twitter about how Larva Labs did little to promote the conference with no parties or bonuses.
The bigger picture that proved to be a sticking point for several holders was The unclear guidelines on commercialization rights for CryptoPunks, along with Larva’s increasingly aggressive attitude toward derivative NFT projects—or those plainly inspired by the original CryptoPunks. This issue slowly became a frustration for holders.
CryptoPunk holders weren’t happy
For example, Punk 4156, an anonymous collector, sold his CryptoPunks avatar for more than $10 million in December after becoming frustrated with Larva Labs’ apparent refusal to address the collection’s rights issue. He was particularly irritated by the duo’s attempts to get derivatives removed from marketplaces, such as the CryptoPhunks (not Punks).
Another incident angered some CryptoPunks owners in February of this year. Members of the NFT community developed a smart contract that allowed holders to mint a “wrapped” NFT based on the original CryptoPunks contract, which was abandoned due to a problem, and sell it as a “Wrapped V1” edition.
Larva Labs resisted the effort, saying they were not “authentic” CryptoPunks. During this time, though, the duo began selling some of its own V1 Punks, which they claimed were illegitimate. Larva Labs eventually apologized for their conduct, which Hall described as “dumb.” At the same time, the two hinted at possible legal action against the V1 project, which was quickly pulled from the top marketplace OpenSea.
Meanwhile, the Bored Ape Yacht Club was attracting celebrity customers such as Eminem, Snoop Dogg, and Steph Curry, and the NFTs were increasing in value for much of the last three months, the cheapest Apes on the market were more expensive than the cheapest CryptoPunks.
Some perceived Larva Labs as a Web2 firm fumbling its way through a rapidly evolving Web3 industry, saying
- Unable to please
- owners who expected more openness
- collaboration, and rights from pricy NFT investments, despite missteps and a lack of communication.
A new beginning
They’ll get at least some of it now that the CryptoPunks and Meebits intellectual assets have been acquired by Yuga Labs, as announced on Friday.
Right at the start, Yuga Labs stated that holders of NFTs from both collections will have full commercialization rights, which means they will be able to use their CryptoPunks and Meebits avatars for products, services, marketing, and other projects. Yuga is also apparently not going to follow up on any of Larva Labs’ past DMCA takedown requests for derivative works.
Larva Labs admitted in a blog post on Friday that the escalating expectations on modern-day NFT profile picture (PFP) projects were beyond their goals and skills. They wrote, “Our personalities and skillsets aren’t well suited to community management, public relations, and the day-to-day management that these kinds of projects demand and merit.”
Yuga Labs and Larva Labs were introduced by Guy Oseary, an experienced music industry entrepreneur who represents Yuga in its expanding entertainment initiatives. Larva Labs noted that it explored cooperating with the founders of Bored Ape and ultimately decided that Yuga could better maintain the CryptoPunks and Meebits IP in the future.
Larva Labs sold the IP, but the duo stated that they will continue to experiment and develop new initiatives, which they believe is their strength rather than maintaining existing ones. Autoglyphs, a generative art NFT project that precedes the related (but independent) Art Blocks NFT project, is also kept.
Beyond commercialization rights, it’s unclear how Yuga Labs intends to use the CryptoPunks and Meebits IP. Co-founder Wylie Aronow (a.k.a. Gordon Goner) told The Verge that Yuga doesn’t plan to turn the projects into Bored Ape-style membership clubs. It also doesn’t plan to charge royalties on the currently royalty-free collections. But, he said, we could see things like streetwear, events, and games centered around the new IP.
