A "boring ape" valued at $4 billion

On March 24, Yuga Labs, the parent company of the NFT brand Bored Ape Yacht Club, announced that it had raised a $450 million seed round from venture capital firm A16z at a valuation of $4 billion.

Yuga Labs plans to use the funds for its latest metaverse project called "Otherside," which is positioned as a completely decentralized massively multiplayer online role-playing game.

You may not have heard of Yuga Labs or BAYC, but you've seen this style of avatar on social networks or in the news: boring apes.

The image is taken from bayc's official website

Previously, this ape has long dominated the top three positions of the NFT trading platform and has attracted widespread attention, and has now been valued at $4 billion by VCs - you know, as of press time, BAYC has only been online for 11 months since the project was launched, and the market value of all NFT works has exceeded $3 billion.

Of course, if you feel like I do that YugaLabs and all the stories of the NFT are hoaxes, their financial statements will reassure you:

In 2021, YugaLabs had revenues of $138 million and net profit of $127 million, yes, a full-year profit margin of 92%. According to the official website, as of January 2022, the project has only 11 full-time employees, converted down, each employee's per capita annual net profit output is as high as 72 million yuan, looking at the world, such a high return of the start-up project is few.

No wonder that in addition to a16z, big-name funds such as Tiger Global and Lightspeed Venture Capital are also salivating over this piece of meat.

1. The social recognition of NFTs has increased, and mainstream IP has benefited from it

NFT Chinese name is "Non-FungibleToken", is a non-standard certificate of art, copyright, digital art, etc., to put it bluntly, it is a string of code - people who buy NFTs can not get the physical object itself, but can own the online virtual property rights of the artwork.

Using blockchain technology, the virtual property rights of these digital works, including provenance, branding, and influential people behind them, can be accurately traced. The work itself can be images, GIFs, audio and video, online game characters, and anything else.

If you're a calligrapher, you can sell your fonts on platforms like Opensea and NFT China to find buyers. After the transaction is successful, the platform takes profit by charging a circulation fee from it.

Indeed, the value of NFTs is still extremely subjective, it is supported by aesthetic values, no matter how the trading system is designed and regulated, its value is still difficult to have a clear definition.

Still, NFTs are popular with artists and art collectors, gamers, and large commercial brands. For them, the possibilities for NFTs are limitless.

Alex Atallah, co-founder of Opensea, the world's largest NFT platform, has said that NFTs meet the potential need to transfer value in a way that makes communities feel truly independent, and provide users with a whole new space for growth.

Data from research firm Brandessence shows that NFT transaction volume grew by 328% in the first half of 2021 and the third quarter. To some extent, it shows that the NFT industry is growing rapidly and attracting more professional and institutional players into the industry.

In 2022, the NFT market demand gradually formed, and there is a stable transaction liquidity. The data shows that in the past 24 hours (March 24), OpenSea's trading volume in the past 24 hours was 83.62 million US dollars, and the cumulative transaction volume was more than a staggering 23.5 billion US dollars. In addition, the top three projects in the NFT market in terms of cumulative total transaction volume are: OpenSea ($23.5 billion), LooksRare ($18.16 billion), and AxieInfinity ($4.17 billion).

The $4 billion Bored Apes Yacht Club is undoubtedly one of the IPs that have benefited the most during the NFT boom.

2, "Boring Ape" from 0 to 1, 11 months of project popularity, celebrity support

"Boring Ape" is an IP incubated by Yuga Labs.

Through the official website, we learned that "Boring Ape" is a collection of digital collections composed of 10,000 ape NFTs, including hats, eyes, looks, clothing, backgrounds and other 170 different rarity attributes. They are randomly combined programmatically to generate 10,000 unique apes, each with a different expression and dress.

Buying a boring ape requires 0.08ETH, and when 10,000 NFTs are sold out, people can only buy it through a platform like Opensea, from the first batch of owners.

On April 23, 2021, BAYC began to go on sale, and at first it did not receive much attention, until one day on May 1st, when a well-known collector noticed the project and announced that more than 250 apes had been purchased.

From the moment Pranksy posted Twitter, BAYC's sales, users, and transactions surged, selling out after only 117 minutes. According to the BAYC team, they never had a private conversation with Pranksy.

Why are people frantically buying these seemingly meaningless "ape" avatars? According to an industry insider, in the BAYC community, the boring ape avatar can be regarded as a status symbol, as long as you have BAYC in your wallet address, it is equivalent to obtaining the qualification to enter the BAYC club and enjoy the benefits of the club.

First, you have free access to BAYCBATHROOM, a virtual creative space where you can paint or write on the bathroom wall to express your thoughts and emotions, and a virtual land in a holder-only SandBox.

Second, each Boring Ape NTF has full commercial access, and you can sell physical products printed with them, such as books, comics, baseball caps, etc., and control the pricing power of these goods.

In terms of running the community, the BAYC team is also clever. From creating a detailed "growth book" for the holder, to organizing a series of treasure hunts, to occasionally "airdrop" the holder's perimeter NFT (some market prices even exceed 2ETH, equivalent to nearly 40,000 yuan), and even forwarding Twitter and Aite celebrities have a chance to get a BAYC. This not only makes BAYC holders happy and gain a sense of belonging while gaining financial benefits, but also allows IP to fission indefinitely in social media, eventually forming a free advertising effect.

BAYC is also very good at playing with the celebrity effect. According to incomplete statistics, NBA player Lamello Bauer, NBA chairman Darrell Morey, domestic film and television star Xu Jinglei, F4 members and other celebrities announced the purchase of BAYC on social media. Coincidentally, the day before the press release, the famous American singer Madonna changed her Twitter profile picture to BAYC No. 4988 and announced that "I have finally entered the metaverse."

In the community atmosphere stirred up by a wave of sound, BAYC's volume and price rose in unison, experiencing a series of appreciations. From May to August 2021, a BAYC avatar rose from the initial 0.644 ETH to 24.8 ETH, an increase of more than 28 times. As of March 25, 2022, the minimum price of a BAYC is 103.4 ETH.

In other words, Madonna, which recently purchased BAYC, theoretically paid a minimum of 319,000 US dollars, equivalent to 2.01 million yuan.

"Price is no longer the only way to assess and measure the value of NFTs, and sometimes building a loyal system that deeply engages fans and club members can go far beyond the value of the digital collection itself." Opensea co-founder Alex said of BAYC.

3, VC heavy gold entry, NFT is a good business?

NFTs are undoubtedly controversial, and there are two levels here.

The first layer is the VC led by a16z, which occupies almost the position of the absolute monopoly of the NFT, and the value calculation, a16z participates in a total of 39.27% of all VC financing of the NFT company.

This makes it difficult for "clear-eyed people" not to worry that the real NFT is just a "bureau" designed by a few top giants. A Polish VC simply commented directly and publicly on the Yuga Labs financing incident: We decided to give up this opportunity outright.

In July 2021, a16z led a $100 million Series B round of financing for openSea in the NFT market and inserted general partner Kathryn Haun into openSea's board of directors, followed by a significant increase in the platform's trading volume and breaking through the $20 billion mark in February 2022, showing its influence in the NFT circle.

That's why, when a16z injected $450 million into boring apes, it exacerbated industry concerns about the future "pseudo-decentralization" of NFTs.

On the other hand, back home, our NFT market seems to be much further away from maturity.

First of all, the liberalization of secondary transactions in the NFT market needs to be carried out under the national financial supervision, and there is no underlying policy framework guidance at present, which makes the NFT market unable to take a step.

Some institutions predict that if China's NFT secondary market is liberalized, the size of China's NFT market will be about 30 billion in 2026; if the secondary transaction is not liberalized, the market size will only be about 6 billion, which is about 1/5 of the liberalization.

Of course, as the NFT collectibles community matures, players will not only be interested in digital art or the transaction itself, but will enter a larger world of identity and community affiliation.

Bored ape let us see the infinite possibilities of the NFT market, a16z immediately opened the door to capital's imagination of NFT, whether it is the best era of NFT or not, it will continue to stage the story of people's pursuit of digital wealth. (Text/Xu Kuntao, Source/Touzhong Network)