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Earlier this week, it was announced members of the Bored Ape Yacht Club NFT collection would be getting their very own cryptocurrency, ApeCoin.<\/p>\n<\/div>\n<\/div>\n
The passive voice there is intentional. ApeCoin is explicitly linked to these famously pricey non-fungible tokens<\/a>, and is very much involved with Yuga Labs, the company stewarding the intellectual property behind the Bored Apes. But a carefully coordinated marketing campaign has taken great pains to dissociate ApeCoin from any one conventional corporation.<\/p>\n<\/div>\n<\/div>\n Instead, the public relations messaging insists ApeCoin is a product of ApeCoin DAO, a brand new organizational unit governed entirely by token holders. Holding APE makes you a member of the DAO<\/a> (that\u2019s short for decentralized autonomous organization, a kind of online collective centered around crypto); you don\u2019t even need to own a Bored Ape NFT to join.<\/p>\n<\/div>\n<\/div>\n ApeCoin\u2019s official website bills the token as \u201ca decentralized protocol layer for community-led initiatives that drive culture forward into the metaverse.\u201d<\/p>\n<\/div>\n<\/div>\n Let\u2019s decode some of that gibberish, shall we?<\/p>\n<\/div>\n<\/div>\n ApeCoin is an ERC-20 token, a particular flavor of build-it-yourself cryptocurrency on the Ethereum blockchain. Most of the Ethereum-based social tokens that have taken off over the past year (think FWB, for the social club Friends with Benefits, and WRITE, for the Web 3 crowdfunding platform Mirror) are built using this framework.<\/p>\n<\/div>\n<\/div>\n Unlike NFTs, they\u2019re meant to be \u201cfungible\u201d \u2013 as with bitcoin (BTC), any one ApeCoin should be worth exactly as much as any other ApeCoin, and you can buy and sell them freely on what is known as a decentralized exchange, a kind of digital trading post for cryptocurrencies.<\/p>\n<\/div>\n<\/div>\n Almost every major centralized crypto exchange listed the token immediately after launch. This was an accomplishment in and of itself, given the notoriously finicky nature of major players like Coinbase<\/a> (COIN). After just one day of trading, ApeCoin had a market capitalization of almost $2 billion; one APE is currently worth about $14 and the total supply of tokens is capped at one billion (not all of which is currently in circulation).<\/p>\n<\/div>\n<\/div>\n According to the ApeCoin website and accompanying press materials, ApeCoin is being launched by ApeCoin DAO, a new governing body in which all APE holders are members. It\u2019s meant to field proposals from the community, which token holders can then vote on.<\/p>\n<\/div>\n<\/div>\n Other NFT projects have attempted similar voting structures. Purchasing an NFT from a collection called \u201cNouns\u201d makes you a member of Nouns DAO, an online investment collective that has amassed a treasury of $62 million. On a dedicated page for proposals<\/a>, Nouns owners can decide as a group what they\u2019d like to do with that money. (A typical proposal: \u201cWhat if we made an NFT comic book?\u201d)<\/p>\n<\/div>\n<\/div>\n There\u2019s also a separate organization called the Ape Foundation, which will handle day-to-day DAO administration, proposal management and \u201cother tasks that ensure the DAO community\u2019s ideas have the support they need to become a reality.\u201d It\u2019s the legal backing for ApeCoin DAO.<\/p>\n<\/div>\n<\/div>\n An Ape Foundation subcommittee will also serve as ApeCoin DAO\u2019s \u201cboard,\u201d which will oversee certain proposals. The initial board consists of five high-profile crypto investors: Reddit co-founder Alexis Ohanian; Amy Wu, who leads the crypto exchange FTX\u2019s venture arm; Maaria Bajwa, of Sound Ventures; Animoca Brands\u2019 Yat Siu; and Dean Steinbeck of Horizen Labs. Each board member gets a six-month term, and the ApeCoin website promises DAO members will be able to vote on future members.<\/p>\n<\/div>\n<\/div>\n Floating somewhere in the middle of all this is a Cayman Islands-based consulting company called Cartan Group, which is being paid<\/a> $150,000 per month for a six-month contract; all five<\/a> of the DAO\u2019s active AIPs, or \u201cApe Improvement Proposals,\u201d were posted by Brian Tang, the company\u2019s co-founder.<\/p>\n<\/div>\n<\/div>\n So, in addition to the ApeCoin protocol (the code behind ApeCoin tokens), there\u2019s the ApeCoin DAO, the Ape Foundation and the ApeCoin DAO board.<\/p>\n<\/div>\n<\/div>\n But ApeCoin wasn\u2019t developed by the community of Bored Ape investors. There\u2019s a black hole at the center of this ape galaxy. Who actually put this thing together?<\/p>\n<\/div>\n<\/div>\n The main company behind the Bored Ape Yacht Club is Yuga Labs, a traditional corporate entity registered in Delaware. It\u2019s reportedly in talks with the venture capital firm Andreessen Horowitz about funding that would value it at $5 billion, and it has recently made moves to become, effectively, the first major NFT monopoly.<\/p>\n<\/div>\n<\/div>\n Yuga Labs is also responsible for all the major projects and acquisitions surrounding the Bored Ape Yacht Club. If you want to do anything with Bored Ape IP, you\u2019ll have to go through Yuga Labs.<\/p>\n<\/div>\n<\/div>\n In a statement, Yuga Labs CEO Nicole Muniz said that \u201cYuga Labs will continue to be builders of products and experiences that bring new ideas and energy to the community.\u201d Yuga Labs has gifted a special one-of-one NFT to the ApeCoin DAO treasury, and plans to \u201cadopt ApeCoin as the primary token for all new products and services,\u201d which ties its value to the health of the Bored Ape collection as a whole.<\/p>\n<\/div>\n<\/div>\n Even still, Yuga Labs has insisted it\u2019s not responsible for ApeCoin.<\/p>\n<\/div>\n<\/div>\n A press release, courtesy of a company called Strange Brew Strategies, warns journalists that \u201cit\u2019s probably tempting to write that ApeCoin is from the Bored Ape Yacht Club to simplify things, but it\u2019s not accurate.\u201d<\/p>\n<\/div>\n<\/div>\n The distribution model for ApeCoin further complicates that question of agency.<\/p>\n<\/div>\n<\/div>\n Sixty-two percent of the total ApeCoins are being set aside for token holders and the DAO treasury. For the first 90 days of ApeCoin\u2019s existence, anyone who holds some combination of NFTs from the Bored Ape Yacht Club and its two spin-off collections, the Mutant Ape Yacht Club and the Bored Ape Kennel Club, can claim a certain amount of APE from ApeCoin\u2019s website.<\/p>\n<\/div>\n<\/div>\n Because APE has a discrete value and is already trading on major exchanges, claiming these coins is a little like claiming free money. For each Bored Ape you own, you\u2019re entitled to 10,094 APE. That\u2019s around $150,000 at today\u2019s prices \u2013 about half of what you\u2019d need to buy yourself another Bored Ape.<\/p>\n<\/div>\n<\/div>\n The other 38% of ApeCoin is set aside for \u201cinitial contributors,\u201d and also the Jane Goodall Legacy Foundation, which supports conservation efforts for (real-life) jungle primates.<\/p>\n<\/div>\n<\/div>\n Yuga Labs is getting 150 million APE, 10 million of which (\u201cor equal value\u201d) will go to the Jane Goodall Legacy Foundation. Next, 140 million APE goes to \u201cthe companies and people that helped make this project a reality\u201d \u2013 an as yet unnamed group that most likely includes members of the Yuga Labs team. And 80 million APE goes to the founders of Yuga Labs. All these coins are \u201clocked\u201d for the first 12 months, so holders can\u2019t just cash out and tank the price.<\/p>\n<\/div>\n<\/div>\n The \u201cfree money\u201d token claim concept for NFTs isn\u2019t a new one. Back in September, a developer launched a cryptocurrency called \u201cAdventure Gold\u201d (AGLD) as a companion to an ascendant NFT collection called Loot<\/a>. Anyone with a Loot NFT was automatically entitled to a certain amount of AGLD, and claiming those tokens meant coming into tens of thousands of dollars without any extra effort. In this sense, an NFT can function as a license to print money.<\/p>\n<\/div>\n<\/div>\n Again, Yuga Labs claims zero responsibility for ApeCoin \u2013 it\u2019s just taking a significant chunk of the profits.<\/p>\n<\/div>\n<\/div>\n It hinges on the idea that ApeCoin DAO is entirely independent from Yuga Labs. If Yuga Labs issued a token explicitly as a reward for Bored Ape holders, you could more easily make the argument that a Bored Ape is a kind of investment, and therefore subject to securities regulations. In the way that certain stocks pay dividends, part of the value of investment-style NFTs would be tied to the perks they could get you down the line.<\/p>\n<\/div>\n<\/div>\n With ApeCoin ostensibly coming just from ApeCoin DAO and not from Yuga Labs, there\u2019s a veneer of plausible deniability \u2013 an independent entity allocating tokens to a company and its founders, rather than that company and its founders pumping their own investments.<\/p>\n<\/div>\n<\/div>\n Of course, traditional companies do this all the time, via initial public offerings of stock. The difference is the ApeCoin offering is essentially unregulated because, in the U.S., the Securities and Exchange Commission still doesn\u2019t oversee NFTs.<\/p>\n<\/div>\n<\/div>\n According to Rohan Grey, a law professor at Willamette University and crypto regulation observer, the distinction between ApeCoin DAO and Yuga Labs probably also has to do with something called the Hinman Test. It\u2019s named for former SEC official William Hinman, who now works at Andreessen Horowitz; Hinman\u2019s idea<\/a> was that if a governing body is “sufficiently decentralized,” it\u2019s free to issue a token without having to register it as a security. ApeCoin DAO is (at least nominally) decentralized; Yuga Labs is not.<\/p>\n<\/div>\n<\/div>\n \u201cIt’s the next iteration of the crypto world\u2019s attempts to get around securities regulation,\u201d he said. \u201cFirst of all it was coins, and then in 2017 with the [SEC\u2019s] ICO report<\/a> they couldn’t do that, so they switched to stablecoins, and then there was a clamp-down on that, so they switched to NFTs.\u201d<\/p>\n<\/div>\n<\/div>\n In Grey\u2019s opinion, ApeCoin amounts to an attempt by the crypto industry \u201cto almost relitigate 2017 \u2013 they were kicked out of the bar wearing a fake mustache, now they’ve come back with a fake nose in a week.\u201d<\/p>\n<\/div>\n<\/div>\n Right now, ApeCoin mostly exists for speculation and \u201cgovernance\u201d for the DAO. But Yuga Labs has grand ambitions for the token.<\/p>\n<\/div>\n<\/div>\n