The Breakdown - Culture vs. Commerce? The Upheaval of Apes Buying Punks

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexus.io, Arculus, and FtX, and produced and distributed by CoinDesk. What's going on, guys? It is Friday, March 18th, and today we are talking about the upheaval of apes buying punks. Culture versus commerce. It's a major, major moment, I think. Before that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to join the conversation. Come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Also, a disclosure as always, in addition to them being a sponsor of the show, I also work with FTX.

Starting point is 00:00:55 So this show, I kind of teased a couple days ago. Last weekend, one of the big pieces of news was that Yuga Labs, the parent company, of the Board Ape Yacht Club had bought the rights to the Cryptopunks. Meibits as well, but obviously the punks were the real landshaker here. Their first act was to give punk holders full commercial rights, same as the Board Ape Yacht Club holders. And of course, given how much these collections had vied for some sort of supremacy and leadership in the NFT space, it was a really, really big deal and fodder for a ton of conversation. I framed this when I mentioned it a couple days ago with two separate quotes. One from Punk 6-529, who said, today's news is immensely good for

Starting point is 00:01:40 punks, will unlock tons of activity that was sidelined due to lack of clarity on rights, and one from DC investor, who said, I don't expect everyone to understand, but it feels like my favorite corner bar just got turned into an applebee's. Today's episode is about going a little bit deeper in how the community is thinking about this, how they're processing this, and I want to start actually with that feeling of loss. ABX writes, Larva Labs did a sellout and terrible move for punks once again. The right play was to create a punk Dow, not sell to a centralized company. As much as I like Borde Ape Yacht Club, Dow is the way. Some thought it was a culture mismatch. Nate Alex NFT writes, Imagine Picasso getting bought out by some new up-and-coming artist who had started a year prior. Some

Starting point is 00:02:24 thought it was good for business, but maybe still lost something culturally. Zerox depression writes Yuga buying punks maybe good for the price, but it's tragic for the culture and ethos of punks, in my opinion. DC investor again was grappling with something similar. Yuga is a business and realize they can make more money if we build a brand for them. I applaud them for realizing what Larva Labs did not. But I still think it's a very open question how they use the rights, which surely they will, otherwise they wouldn't have bought them. Do I want to help build a brand which Yugo will likely further monetize in ways I possibly cannot anticipate as intellectual property and not art? I don't really know yet. On the flip side, punk 6529 has definitely become one of the

Starting point is 00:03:04 major voices for the this is good side of things. A lot of his argument to me comes down to acceptance of change and appreciation of the creativity that giving the commercial rights to holders enables. He wrote a very long thread about this that I'm going to excerpt slightly here. He's talking about who are the winners, the losers, and the neutrals from this deal. Winner? Punks. This is going to be the controversial part, so let's start with the anti-case. There are a lot of disillusioned OG punk holders today that feel that the magic is gone, that they bought art, that they don't want a brand manager. First of all, I get that. It is logical that if you bought a punk one, two, three years ago when it was wildly countercultural, it feels super weird to see

Starting point is 00:03:46 the punk's IP trade as any other IP. It breaks a bit of the counterculture cool feel. I think the best analogy for how some feel as indie band goes mainstream, so the indie band Cool Kids don't feel is connected anymore. I get that, and it is normal, and this is in fact what happens when indie bands go mainstream. The more sophisticated version of this was I liked the fact that Larva Labs were not business people and did not do anything so I would not have to risk that they do something super cheesy, counterbrand, break the punk's narrative. I get that too. Larva Labs did not do very much. So these arguments seem decent. Why do I feel differently? I have many reasons, starting with From the day I read the Mebitt's license, I realized the media and view in Punks discord about the

Starting point is 00:04:24 punks was just protection, not reality. Larva Labs owned the IP and was going to monetize it. So once you have baked into your existing assumptions that Larva Labs was going to monetize, which I did almost a year ago, what are the possible ways? A, Larva Lab starts running LL as a business, hard, not their style. B, LL licenses or sells to traditional media companies. C, LL does some super inventive Dow where everyone buys in and owns the rights to punks. Gary Gensler sends everyone to jail, do not pass go, do not collect 200. So I had eliminated A and C as real possibilities, so the only real possibility was B. Relative to my expectation in B, Yuga Labs is a vastly better choice.

Starting point is 00:05:00 First and foremost, they did the most important thing they could, which was give unlimited commercial rights. Also, they are very PFP competent. I was much more worried that LL would sell to a Disney-type company and we would end up permanently locked into some atrocious licensing regime with Disney-style lawyers chasing around every violation. That is over now, even if Yuga sells further, can't be pulled back. How many of the important PFP projects have been a full commercial rights drop? A handful? How many of those teams have knocked it out of the park?

Starting point is 00:05:27 One, Yuga. So if your assumption was LL is going to monetize, Yuga is almost certainly one of the best choices. Now, there's a later part where he also goes in on what precedent this might set. And he basically says that this creates incredible pressure for all of these sort of NFT projects to give commercial rights to holders. He says, quote, nothing else is competitive anymore. Punks were the problem with this thesis

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Starting point is 00:07:44 I'll try to do a link in the show notes. And of course, I'll drop it in the NFTs room in the Discord. But there's another thread actually that I want to excerpt as well. And this one comes from Cosimo de Medici, who out of themselves as snow. or some collection of people around Snoop last year. He starts with where the world was, saying mid-2020, crypto punks are the number one NFT project by every metric. In July, researching for my first NFT, I heard things in chat like, you buy a bored ape if you can't afford a punk, or ape equals poor man's punk. What would happen next would shake the NFT world

Starting point is 00:08:14 to its core. He then goes on to describe how for the next couple months it was all about historically significant NFTs. As he puts it, those with the richest history were the most valuable. Cryptopunks, he said, being both early artsy and having the most mainstream penetration, became the Bitcoin of NFT. Punk floor price was used to determine how the NFT market was holding up during crypto downturns. But then he notices something started to change. Quote, but one day in November, one seemingly little thing BordApe Yacht Club gave you that Cryptopunks didn't start to mean something. You see, BordApe owners owned commercial rights to their ape. So Apeholder, Jimmy Eith, and A-Lis music manager, Nickyads get together and form an ape band.

Starting point is 00:08:54 Jenkins Deval and 10x bestselling author Neil Strauss get together and make an ape book. Now for the first time people are seeing what is possible with commercial rights to an NFT, and while most don't plan to go commercial with their own Borde Ape, they know people like Jimmy and Jenkins doing their thing with theirs will bring eyes to all. And let's be honest, I know some of you dreamed your ape would one day be discovered by an ape agent and made into a star. Plus, Bort Ape now has a manager, Guy O'Siri, one of those all he does is win type people. Madonna and U2's manager crushed venture investing and Guy is managing the broader brand. He immediately starts putting up big ape Ws on the board, while Larva Labs, for the most part, do nothing.

Starting point is 00:09:30 And in fact, as he goes on, Larva Labs didn't just do nothing, and I thought that this story was really telling. Quote, what was happening behind the scenes in Punkland is also noteworthy. G Money NFT and Punk's comics sign a deal to bring Adidas into NFT. G is not allowed to use his infamous ape punk, though, because punks are repped by United Talent Agency, UTA. And they want to save the rights to the punks to make a movie or something that most punk owners will secretly fear will be cringe. So G Money is told he cannot use his 8-punk and is forced to hire a branding company to instead create a new logo for himself. And rumor has it that United Talent tries to push out our friend G-Money out of the deal and do-it-only Cryptopunks and Adidas with no G-Money, but that is a story for another day. Anyway, G-Money and Punk's comics get the deal done with Adidas, another win for NFTs, but in the community's eyes, another L for Larva Labs and Cryptopunks.

Starting point is 00:10:16 As they see G-Money has spent much time building a brand around his punk, billboards, major podcasts, the guy is a machine. And then come game time, his punk is on the bench. Again, 99% of Cryptopunks community is likely not building a commercial enterprise around their punk, but as project after NFT project launches with commercial rights to owners, the knife twists. So I think at this point it's worth reframing this culture versus commercial narrative. It's too simplistic. Is it possible, in fact, that not dealing with commercial issues, not giving the holders of these NFTs commercial rights from the beginning,

Starting point is 00:10:50 means that culture or culture holders inevitably get screwed by commerce that they don't actually have control of. This gets back to 6529's thesis that there was always going to be a commercial aspect to the punks. It was just a matter of who did it and what power punk holders had along the way. By the way, one wrap-up thought from Medici on the art versus brand side, he writes, punks are now a brand, not art, some are saying, no longer counterculture. But art gone big always becomes a brand. Basquiat, Warhol, Banksy, Coons, all appear on hats, pillows and mugs in the home of boomers everywhere. Nothing good counterculture stays, and such is life. There is an entire art thesis that we could do on that topic, and I would love to if you're

Starting point is 00:11:31 interested. But for now, I think that the real question is two parts. One, what is Yuga going to do with this new power, this new asset? And two, what are punk holders going to do? On number two, I have no doubt that there will be interesting things, but on number one, we did not have to wait long. Earlier this week, a deck was leaked suggesting that Yuga had big plans for their own board ape metaverse. The deck suggested that they would be selling 200,000 plots of virtual land on their way to raising hundreds of millions of dollars this year. The deck also made clear plans for Apecoin, the official coin of that Metaverse ecosystem. However, we did not have to wait long and only have leaked documents on that. On Wednesday night, Yuga announced the official

Starting point is 00:12:12 launch of Apecoin and then yesterday they airdropped 15% of the supply to BordApe holders. Owners were airdropped 10,000 ape coins apiece, making that initial $250 mint a year ago a pretty good friggin investment. Now, the token is going to be governed by an ape Dow, and the supply beyond that 15% is split 47% to the ape Dow Treasury, 16% to the parent company Yuga, 8% to the board apiote club founders, and 14% to launch contributors. There is, as you might imagine, a ton of chatter about this. Luke Martin tweets, if you add up all the value that Yuga Labs has airdropped to board ape yacht club holders, it makes minting an ape one of the greatest investments of all time. 1898x-Eath return 2100X USD return. It all happened in less than one year to everyone that

Starting point is 00:12:57 contributed $200 of ETH and held. Insane. Now, some took this moment of AirDrop to remind people that this wasn't just free money, it was also governance. Farouk, the host of Rug Radio, says, remember that you are not just claiming some token with ape, but are claiming governance, just like E&S. Go look into the proposals on the website and who is behind them and understanding what can be done with Ape Dow. Take money out to be comfortable and ride what you can. There were also a bunch of skeptical takes. I Am Nomad says, I'm not sure how ape skirts around obstacles every other ICO utility token ran into in the United States, but crypto is all about fuck around and find out. There was a ton of discussion about precedent as well. Moon Overlord tweets sure feels like Apecoin is opening a can of

Starting point is 00:13:38 worms in relation to tokens for NFTs. I think everything is getting a token soon. King Blackboard lays out from here what they think the roadmap is going to look like. Ape will be the token used for public metaverse land sale. Ape will be the in-game currency for that metaverse. Ape will be in-game currency for at least two upcoming play-to-earned games. Use cases will be there, very well thought out. This is obviously a pretty seismic shift, but I think that we will look back on this week as a pretty dramatic and clear before-then and after-then type of moment for the NFT space.

Starting point is 00:14:11 There are questions of culture, the end of one-fifference. the beginning of another. There are questions of commerce and all the opportunities that this is going to open up. And of course, there are regulatory questions, legal questions, new areas that will make a lot of lawyers, a lot of money. But I have to say, as someone who still is a step outside the NFT space and mostly as an observer, it's pretty fascinating. I'm glad someone like Yuga is in the space to put the pedal to the metal and push the boundaries of what can happen. For now, though, I want to say thanks again to my sponsors, nexo.io, Arculus and FTX. And thanks to you guys for listening. Until tomorrow, be safe and take care of each other. Peace.

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The Breakdown - Culture vs. Commerce? The Upheaval of Apes Buying Punks

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