Unchained - Punk6529 on the Significance of Bored Ape Yacht Club and CryptoPunks - Ep.331

Episode Date: March 18, 2022

In his first podcast appearance ever, Punk6529, known for writing massive threads on Crypto Twitter, discusses the cultural and historical significance of Bored Ape Yacht Club creator Yuga Labs purchasing the intellectual property rights to CryptoPunks and Meebits from Larva Labs. Topics: how CryptoPunks set the industry standard for PFP projects how Bored Ape Yacht Club distinguished itself from CryptoPunks – and other NFT projects why 6529 is bullish on the utility of intellectual property rights and commercial use being granted to NFT holders by Yuga Labs why 6529 believes Yuga Labs will be good stewards of CryptoPunks how NFTs (and Bitcoin) are leveraging memes and social construction to go mainstream  what 6529 thinks Larva Labs’ legacy will be in the NFT space how royalty revenue streams led to the Yuga Labs purchase of Meebits and CryptoPunk IP why 6529 is unsure about the significance of metaverse real estate what 6529 thinks about ApeCoin Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021    Coinchange: https://coinchange.io   OnJuno: https://onjuno.com/   Upcoming Book Events Friday, March 26: I’ll be on the Harvard campus at HBS Aldrich 011 from 4 pm ET - 5 pm ET. I’ll be interviewed about my book by NF Castle’s Michelle Choi and will also do a signing.  Saturday, March 27: I’ll be moderating a panel at the Harvard Blockchain conference from 3-3:45 pm. The panel will include NFT artist Pplpleasr, NF Castle’s Will Lobkowicz and Michele Choi, and Nifty Gateway COO Patrick McLaren.  Wednesday, March 30: I’ll be speaking (remotely) with Six Senses about The Cryptopians at 2 pm ET. Be sure to save your spot soon – space is limited! Tuesday, April 5: I will be doing a reading and signing hosted by the City of Miami Beach and Future Perfect Ventures at Sky Yard from 6-8 pm. Jalak Jobanputra, CEO of Future Perfect Ventures will be interviewing me. You need to RSVP by April 1 to [e-mail].   Saturday, April 9: I will be on a panel at the Annapolis Book Festival at 11 am.  Tuesday, April 12: I will be at StartupGrind’s global event in Redwood City, which is focused this year on Web3 (time → TBD).  May 4-7: I will be at the PBS Seattle Crosscut Festival, which takes place from May 4-7.  May 23-25: I will be at the Oslo Freedom Forum which takes place from May 23 to 25. Details on these events are TBD.    Episode Links   6529 Twitter: https://twitter.com/punk6529  Threads: https://threadreaderapp.com/user/punk6529   Miscellaneous Yuga Labs purchase of Larva Labs IP: https://decrypt.co/94898/bored-ape-yacht-club-yuga-labs-cryptopunks-larva-labs  Yuga Labs metaverse land plans: https://www.theblockcrypto.com/post/137829/bored-ape-yacht-club-yuga-labs-virtual-land-sales-metaverse ApeCoin: https://www.theblockcrypto.com/linked/138156/apecoin-tied-to-bored-ape-nft-ecosystem-debuts-with-planned-community-airdrop  Punk 6529 on the Yuga Labs purchase: https://threadreaderapp.com/thread/1502595586960367617.html  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey all, a few quick announcements before we begin. First, this episode is longer than a typical Friday show, but that's because this is the first ever podcast interview with Punk 6529. And once he got talking, and he's an excellent talker, I just wanted to let him run. So even though it's longer than a normal Friday interview, it is well worth your time. Second, I have a number of book events coming up soon. So if you want to see me or get your book signed, please mark your calendars for these events. and I will put all the details in the show notes, and very soon we will also be putting a section for upcoming travel and events on my website, laurashin.com. Okay, so here is the rundown. Friday, March 26th, from 4 to 5 p.m., I will be doing a book signing and reading on the Harvard campus at HBS Aldrich

11. I will be interviewed about my book by N. of Castle's Michelle Choi, and will also do a signing and Q&A. The next day, Saturday March 27th, I will be moderating a panel at the Harvard blockchain conference from 3 to 345 p.m. with NFT artist People Pleaser, NFCastles Will Lopkowitz, and Michelle Choi, and Nifty Gateway, C.O. Patrick McLaren. On Tuesday, April 5th, from 6 to 8 p.m., I will be doing a reading and signing hosted by the city of Miami, Miami Beach, and Future Perfect Ventures at Sky Yard in Miami Beach. Jalak Jobhumputra, CEO of Future Purview Ventures, will be interviewing me, and we will also do a signing. You need to RSVP by April 1st. Information in the show notes. This is right around the time of Bitcoin, Miami. So get there a little bit early, and you can come to this reading. On Saturday, April 9th at 11 a.m., I will be on a panel at the Annapolis Book Festival.

On Tuesday, April 12th, at a time TBD, I will be at Startup Grinds Global Event in Redwood City, California. and this particular conference is focused all on Web 3. And finally, I will also be at the PBS Seattle Crosscut Festival, which takes place from May 4th to 7th, and I will also be at the Oslo Freedom Forum, which takes place from May 23rd to May 25th. Details on these events, TBD. Okay, now, on to the show.

Hi, everyone, welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin. Author of The Cryptopians. I started covering crypto six years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the March 18th, 2022 episode of Unchained. If you're frustrated that your bank account isn't crypto-friendly, it's time to make a change.

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That's try defy.c slash unc. Today's guest is punk 6529. Welcome 6529. Thank you. Very happy to be here. Last Friday, Yuga Labs, the creator of the Bordeaux-a-Biwaclub, announced that it had a the Cryptopunks and Mebets collections from their creator, Larva Labs. Why don't you describe what else it was that they announced with that acquisition

and how you think this will change things for Cryptopunks and Meepets owners? Great. And I'm happy to do that. And I think before we discuss that specifically, I think it's probably useful to take a step back to what the punks represented in the space, what maybe Yuga Labs represented in the space, because I think beyond the technical aspects of the transaction, I think there were quite a few, let's call them, narrative aspects or psychological aspects that are embedded in the various reactions that people had to this.

So if that's okay, maybe we do some context setting. So the punks are not the first NFTs, but let's say they're the first NFTs that reached popular knowledge, popular social construction. They have been in the last year at all points in time the most valuable collection by most metrics of the market capitalization of all the punks cumulatively. And they had this, let's say, countercultural narrative. There's a lot of OG punk holders, and particularly the early punk holders, are people who saw value in NFTs and saw value specifically in the punks early. Or at least saw narrative, saw art, saw that this was something worth claiming. initially they were free, or collecting. This led to both a certain community feel among the punk holders

and a certain aesthetic. I mean, they are, in fact, punks, and they're low-res punks. They are punks, so they have a countercultural vibe in what they're representing visually. And this abstract aesthetic, this 24 by 24 pixelated, aesthetic has dramatically influenced the space, as has the structure of the collection, whether on purpose or by accident, the cryptopunks have set the base model for what a PFP profile picture collection looks like, that it's around 10,000 pieces, that there are dominant hierarchy traits, so in the case of punks, humans, zombies, apes, aliens, and that there

is a generative aspect in how those, their various traits are randomly given to each individual punk. And many of the traits in punks you see reflected in many other PFP collections, right? So whether it's a direct homage, or it turns out that those are traits that people find appealing. For example, hoodies turned out to be a quite appealing trait in punks, even though they're not a particularly rare trait. And so many collections proceeded to then have hoodies as a trait because they've seen the market reaction on which traits people like to use to represent themselves in a profile fixture identity. So the punks were, let's say, nine months ago, the completely unchallenged leaders of the profile picture category. And some of the largest

NFT sales that had ever happened were elite punks, the alien punks, that were between $10 and $20 million and the view being that there's only nine of them. And so those nine might become almost unimaginably valuable over time because of the historical provenance of the collection. That's, let's say, where we were in May. In May is also when the board apes launched. And the board apes, I think it's fair to say they are three things that distinguish them from a lot of what was happening during that period. That was a period where a lot of collections were trying to mint at relatively high prices or to create escalating prices during the mint, So bonding curves where the price of each successive mint or group of mints goes up.

And it ended up, it has turned out, as the field has concluded, this is a bad idea. It actually is bad for the collection. To have people on day one, having some people having paid one price and some other people having paid 20 times the price, actually leads to unhealthy dynamics in the collection. So the one thing that did, which other collections also did, they had a low minting price, 0.08, euth. So that's bucket one. Bucket two is they have also a distinct aesthetic. It's an aesthetic that is more depending on how people discuss it, right?

Some people might say it's more fun. Some people might say it's more mass market. if you follow the discussion among various punk holders online, some might say it's kitch and some might say it's cringe, right? It's this very, it's if the punks are more abstract, right? The board apes are much less abstract. But it was an aesthetic that resonated. People like them, right?

Different people on the whole than the people who liked punks. But people did like them. I was looking at a chart earlier today. There is a 9.1% overlap between punk holders and board ape holders. So 9% overlap across the collections. And one of the things I was thinking about today was if you turn it into absolute numbers, it is remarkable how small they are. There are another way to put that statistic is there's 910 people in the world who own at least one punk

in at least one board ape, which in a world of 8 billion people is not a lot. I famously own some punks. I also own some board apes. I'm one of those 910. But really, that's not a lot of people. So the aesthetic was distinctive, I believe, and I've always thought it would have, it would resonate, which it has. And then the third thing that they did that I think was an important part of their success, both directly and indirectly, is they were a collection that conceded the IP rights in the apes to the token holder.

And this question of rights, and I won't get totally distracted into this right now, we can maybe circle back to it, is one of the more important collection, the topics in NFTs. because their most, almost all cultural objects, certainly all art, operates under a standard model where the artist retains the copyery. Right. So, and there's a lot of confusion, including by non-NFT people in this regard, where if you buy, it's easier to think about, right? if you buy an Andy Warhol soup can, Andy Warhol has not transferred to you the copyright for the Andy Warhol soup can. Andy Warhol and then the Andy Warhol estate has retained that copyright.

If you buy a Harry Potter book, you do not own the Harry Potter franchise. And so 99. I don't know how many 9% of all cultural objects ever created are in this model, as are today most NFTs. You know, most, almost basically all generative art, all one of one art is still in that traditional model. A little bit of photography has experimented with other models and where the real experimentation has happened and really since last May has been in profile picture collections. And part of that is because the value of a profile picture collection is reflexively generated between the creators and the community. community, right? A profile picture collection in abstract is hard to imagine how it generates value, right? The reason it generates value is because people use it. I famously use a punk profile picture. And for better or for worse, whether I'm viewed as being helpful or not helpful to the space, it somehow reflects on the punk community, right? We're better or for worse. But this is true. true in general for PFPs, right? So which community adopts a PFP, how they use it, do they coalesce into some type of group with an identity is what actually drives value in a

PFP collection. The art might have some role in triggering that, but it's not the main outcome, I believe. If the Cryptopunks was a collection launched tomorrow for the the first time, the cryptopunks would have not become what they are. The crypto punks were important. Yes, there was an interesting aesthetic, but it was an interesting aesthetic and a moment in time, right? And that moment in time was in 2017. That coalesced a certain community around them.

This concept that the token holder can own the rights for that NFT and then also commercialize them was a big idea. And it is a big idea that so far it's less about, I think, how it's been used in practice and more about the narrative. So in practice, we're still very early for people to have built large commercial enterprises using their PFP, right? You see different, I'll call them experimental issues. So someone has launched a derivative collection using their board ape as the starting point

for that collection. Someone placed their ape on a microbreu. Someone paste their ape on a coffee brand. Someone DJs and puts the ape in the background. Someone licensed several of their apes to be some type of virtual band. None of these are large commercial enterprises yet. But the narrative, I think, does flow into the value of the board apes, the thought that maybe I can do it, or maybe someone else in the future can do it, if the idea is that someday the board apes become an important global brand that effectively you somehow own part of the franchise is an important part of the board apes narrative. And the success of the board apes reset in many ways what is now the market standard for PFP collections. I have a fairly aggressive view. I have a fairly

aggressive view of this, I believe now the only two viable choices for a PFP collection are either commercial rights like the board Apes model or the whole collection goes into the public domain. And it's a very interesting discussion of which of those two models are going to win. But it's hard for me to imagine that a new PFP collection launches in 2022 says the community that's going to use it is going to have no rights to the, value that they co-create with the artist, I don't think that's a competitive proposition in 2022. So what happened over the course of the year, the board apes broke away from the thousands of PFP collections that were launched in 2021, right?

There's huge survivorship bias in PFP collections, right? So everyone says, oh my gosh, I wish I had board a board ape. And there's no one in NFTs that wishes that they'd been by like 20 board apes, right? But there are many collections that looked like they might be somewhat what's similar and didn't go anywhere. And so some combination of how the collection was structured, but also the team execution, led to the board apes accelerating away from a lot of other collections. And late last year, there was this competition. I put this in air quotes between the board apes and the punks, which was really primarily on the board apes. side, right, that the Bored Apes side said, oh, maybe we'll catch the punks. And, you know, a lot of

board apes holders were people who were priced out of punks in May or in June or July. And then, said, oh, well, here's our own community. And it's interesting, I mean, all the PFP collections are still tiny. If we are going to have mass adoption of PFPs, of NFTs, collections of 10,000, 20,000, 30,000 in the world of billions of Internet users are tiny. So you end up with this strange effect that I don't think anyone has solved yet of things that are good for the collectible value of the PFPs are bad for building a community because very quickly they run into prices that are unreasonable for normal people to say, I want a profile picture on a joint community and the ticket industry, $100,000. That's a pretty big ticket item. And then what happened towards the end of last year, the floor price flipped. And I don't overstate the importance of it because I actually don't think it's particularly important.

But it was viewed as psychologically important for some. And for our listeners who are not necessarily NFT native, the floor price just means what's the price of the least expensive available piece in the collection available for purchase, right? So the least expensive board ape at some point was more expensive than the least expensive punk. The analysis I've seen and done is the overall value of all punks together is still probably a smidgen higher than all the board apes together because the highest end punk pieces have traded at significantly higher values than the highest end board eight pieces. But they're broadly the same now, right? And I think it's fair to think of them as broadly the same market cap in collections, which, you know, if you rolled back the clock to May and asked people if this might happen by the end of the year, the average, very sophisticated NFT person would have given you a hundred to one odds against this, right? the punks from a value perspective were viewed as being untouchable. Now, one more turn, and then I think we'll get to the psychology.

So a little bit of the, it depends on how you want to look at it, right? And this comes from someone who has significantly more exposure to punks than board apes, right? So it's not, I'm not harassing the punk community. I'm substantially exposed to punk community. But there was a little bit of the, I don't know, theory or coping on like, well, the punks are historical. They're immortal. They have providence. In 20 years, we'll see who's still standing.

The board apes might be a fashion business, right? They're cool now, but three years from now, something else is going to be cool. And this is going to keep happening. Like today, everyone likes to wear Supreme. the next day, everyone likes to wear a bathing ape, these things will come and go. But the punk's position at the apex of PFPs is something that over the long run will never change. And I think that was, I believe, the view, in fact, until quite recently. And there was substantial pressure on Larvalabs to change their policy on rights.

because you had this weird situation 10 days ago where the countercultural collection, the historical provenance collection, the rebels of crypto collection, had the most restrictive rights policy of any major PFP project. And there was this significant mismatch between those two that the values, I think, represented by people who wanted to own a punk tended to be crypto values. And crypto always tends towards decentralization. But if you read the terms of service agreement, terms of use agreement of the me bits, which is where Larvalabs truly laid out their proper legal agreement, well, was very corporate.

And I read that in May and I said, wow, that could have just been any type of big company terms of service agreement. There's very little punky or countercultural about this. So there was a lot of pressure from some famous punk's holder like 4156, who has had a very famous punk ape and spoke to Larval Labs and said, look, we'd really like you to consider changing their rights policy. And I don't know, he claims they then blocked him on or unfollowed him on Twitter, and so then he sold his ape. There was this in the background of this mismatch, I think, between narrative and, and I don't think it's Larval Labs fault, right?

Like what happened is the market changed, the environment changed. We learned something in 2021, right? This hadn't crossed anyone's mind necessarily in 2020. But in 2021, we learned about rights, we learned about public domain and PFP collections. And so this is where we were one minute before the transaction was announced. So before you go on, I just want to make one clarification, which is that I think the punks actually didn't have any policy. And so people were also criticizing Larva Labs for not being transparent. And when they finally released a policy for me bits, people kind of felt that, oh, that probably is the same approach they would take to Cryptopunks.

But as far as I understand, I don't think they ever even released a rights policy for. Cryptopunks. So that was kind of another issue was there was like a lack of transparency and clarity about it. Correct. So the best view of the punk's community was that at some point in the punk's discord was there had been a posting by the Larvalap's teams that you could monetize up to $100,000, which is something similar that that appeared in the Meebitts contract. So the Meebitts contract, the means terms of use gave a limited commercial license, but one that I think in practice was useless. It was a commercial license that tapped out at $100,000 a year. Now, it's not to say

that most projects will be beyond $100,000 a year, but it's the type of thing. Nobody starts a business thinking you're going to tap out at $100,000 a year, right? Like by definition, if that's what you think is going to happen, you're not going to do it. And it specifically excluded digital objects, which for a world and community whose whole basis of being is digital. It was basically, sure, if you want to make a baseball hat for you and 10 friends, do that. But honestly, I don't think anyone cares about that, right? Like, I don't think anyone, I don't think the board apes are excited because they're going to make t-shirts.

I don't think the punks were excited they're going to make T-shirts. I don't think the big opportunities in the future metaverse of 10 years from now are we're going to have t-shirts with our PFI on. I mean, it's totally relevant. And realistically, it doesn't matter what they say. No one's going to come and force you because you made a t-shirt with your punk on. Who cares? Like, even if they didn't say that, no one's going to care.

So the announcement, I believe, was very bittersweet for a lot of punk holders. And it was bittersweet as follows. They got one thing that they liked, along with one thing that they didn't like. and the thing that they liked was that contemporaneously with the announcement, Yuga Lab said the punks will go under the same license as the board apes, which means commercial rights have moved to the punk's holder. This is something that a lot of people had asked for over time. This is a good thing.

This is a substantive improvement in the rights of the punk holders and a substantive improvement in the decentralization of the punks. the part that they didn't like. There's probably no more annoying person to have had to do that for the punks than Yuga Labs, right? Yulglaves was there. They're a competitor in a way, sort of not really. Primarily the board apes were competing with the punks, right?

The punks were in this model of like, look, that's fine, it's cool. They should have their fun, but the punks are the punks, right? The punks stand alone. The punks aren't commercial guys trying to commercialize these things. And suddenly, it turns out that Larvalops sold the rights to, in fact, that very specific commercial entity. And this has caused a lot of discomfort. If you see there's both a split in the community is probably too strong. I think there's also just mixed feelings among individuals, right?

in that some people say, well, I expected more from Larvalaps, right? Why did they have to do this? Or why couldn't they have just done this? Why did they have to combine that with a sale? Some other people say, well, the narrative has changed. It's one thing to be the countercultural crypto rebels. And it's another thing to be the fourth collection in a conglomerate backed by venture capital, capitalists that are going to be clearly commercial.

It's a different narrative. Some people say, oh, well, what happens next? If Yuga is sold to Facebook, now our countercultural punks are going to somehow be related to Facebook. That feels strange, right? Feels off. Some people who worry that maybe Yuga will do something cringe-worthy, with the punks. Like the punk holders on the whole aren't particularly excited for someone to make them

a punk's game or a punk's metaverse or any of those things, right? They tend to be fairly deep crypto natives. A lot of them, I think, are fairly wealthy. A lot of them aren't going to be grinding out in a game to pick up a, you know, some special thing in a game, right? And so now there's like new risk factors to the punks that they might turn cheesy. So this is the negative side of the story. I'll give me the positive side.

I appreciate and understand the negative side, right? I'll give you the positive side, though. The positive side is these are natural things that may happen when an indie band goes, starts mainstreaming. And if it wasn't going to happen here, it was going to happen at some other point, right? You can't simultaneously expect that punk's mainstream and punks also are super countercultural forever, right? Those two are contradictory. And the reason I'm more positive about this than I think some of my fellow punk holders is I think, this is, I think, this is funny to say, I had baked in worse into my assumptions.

Once I read the mebuts terms of use, it was clear what Larvalavs position was. It was clear that this wasn't going to be some aggressive experiment on rights or what have you. And so there could have been worse. The Punk's IP could have been sold to Disney. And then Disney could send a bunch of trademark lawyers to send us all cease and desists every time someone does make. a derivative work with a punk or makes a t-shirt and what have you. And this would have been a complete disaster. So the fact that it was sold to people who were the ones who moved the discussion

forward on decentralization on rights. And I don't know if they're like strictly the first project to do this. I think they're not, but they're the first, just like the Cryptopunks were the first to really make a PFP collection work, to really make an NFT collection work, right, in a way that, you know, now someone in my feed is going to say, oh, what about the Pepe is or what have you? But the Cryptopunks practically succeeded. The board apes practically succeeded in moving the field forward in terms of rights usage.

And so would it probably be even better for the punk's narrative if, as people were suggesting, you know, Larvalavs put the IP in a foundation and gave the rights away and then took the key the foundation and lock them away forever and threw them to the bottom of the ocean and then the narrative could never change. Sure, I think that's what have actually been the preferred option for most bunkholders. Larvalabs doesn't do anything ever again. You leave the historical provenance clean. There's no chance for something cringe-worthy to happen.

And we go from there. However, as I explained some of my friends, but that's not our decision to make. It's theirs. They always had the rights. They made it clear they had the rights. They could have made whatever decision they want, and by definition, they did. Right. And so given that they've made conditional on Larvalabs making a decision like that,

I believe it is a better decision than if it had gone to a traditional media, lifestyle, entertainment company, because something substantive has changed. the substantive part that has changed is the license now is dramatically better. And so for the first time in punk's history, and this is going to be a little controversial, I'm going to get yelled at later in Discord. The punks are actually in control of their own destiny because the punks can do whatever they want now, either individually or in groups. So there is a little bit of, I think, still, and it's left over from the Larvalabs days,

A lot of the punks discords were like, I wish Larva Labs would do X or do Y or not do X or not do Y. Today, Yuga might do something or not do something, but you're not bound by it anymore. No one is going to, let's say Yuga makes a punk's game. I don't think they will, but let's say you don't have to play the punks game. Let's say the punks want to do something else. Well, one punk or two punks or 500 punks can get together and do whatever they want. Set up whatever narrative they want, engage in whatever activities they want. It's in the community's hands.

Now, this is a maybe more complicated narrative, right? Maybe it's a more complicated narrative than the punks are the holy of holies and they're going to be set in stone forever and blah, blah, blah, blah, blah. But to me, I never quite a hundred percent bought that narrative given that even the punks themselves aren't five years old. I think one of the things that does happen in this space is we're watching social construction happen in real time, right? It's an amazing time to be in NFTs because many things, it's a combination, not just

of a new crypto art movement, which it is, but also a new technology for transporting intangibles, which is an unbelievably big topic because societal intangibles are a multi-deca trillion dollar asset class. And so we now have rails to move around intangibles. And because of A and B, you can now make new forms of social organization, things we have not seen before. And there's a nuance here that I think is underappreciated. Most forms of how NFTs are used are not securities, which means you don't end up with the same centralizing influence that tends to happen or forces that tend to happen. on tokens that are securities, right?

And that you're very worried that there are securities and that leads to centralization and good lawyers and having to make sure you don't get in trouble with SEC. It will be very difficult for me to imagine that, I don't know, the SEC has to give X copy permission to release a piece of art, right? I'm pretty sure that's a violation of the First Amendment, right? It's prior restraint of speech, blah, blah, blah, blah, blah, right? So the fact, in a way, because they are one derivative away, the tokens there, but it's representing very clearly forms of speech.

You have the opportunity to experiment more broadly with social organization. Yeah, well, I just actually, I just want you to hold that thought because we are going to have a quick word from our sponsors. And then we will continue the conversation. It's time to bring Wall Street to Main Street. Coin change is democratizing access to wealth management with low risk, high return, passive income through defy. It's simple, just deposit your crypto into a coin change high yield account to earn more over time. Your yield is paid out daily and can be withdrawn any time. Coin change is yield farming doesn't utilize lending or other risky strategies.

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Back to my conversation with 6529. So go ahead. You were talking about how you felt that, you know, these are not securities. Right. And you see, that allows for a lot of experimentation. And so what you have is three things wrapped up together. A new art movement, a technology that allows us to own, transport, compose intangibles on digital rails, and the ability to think about what forms of social organization you can do in this space. And so given this, we have early hypotheses of what is going to work. We have early hypothesis of what social construction will last over the long term, right? This is all Bitcoin was also social construction, right?

Bitcoin, I am 2013 era, Bitcoin. The idea that Bitcoin should have value is a reflexive idea. It's a self-generating idea. It's a social construction form of idea. And Bitcoin has been incredible at forming the social construction, whether it's digital gold or never sell your bitcoins or put them in cold storage, et cetera, et cetera, et cetera. These social construction or intersubjective myths or whatever you want to call them, they're all the same thing, right? It's at the end of social construction. It's forming of meaning, forming of cultural meaning.

Bitcoin was extraordinarily successful with that. Now, this is happening in NFTs. And so the first, the social construction that owning a crypto punk is valuable, means something, and that valuable can be expressed in the value of the token itself is a new idea. It's an idea that is a year old, year and a half old, right? I did want to ask you a question about this because crypto punks don't have royalties built in the way that the board apes do. And I wondered if you felt, because you know, you were talking about how the community kind of maybe wasn't so excited about the fact that it was EGEL Labs that bought,

that acquired the Punks and Mee-Bets. But there's sort of like already this difference between the collections. And so I just wonder if that will sort of naturally create a difference in how Yuga Labs stewards, the punks? Sure. Well, I think the biggest difference there is reflected in that Yuga Labs is much more valuable than Larvalabs. Right. Yuga Labs is more valuable for a couple of reasons. But the first reason is it has an ongoing 100% gross margin revenue stream from royalties. And the board apes trade pretty actively, as do the mutants and a little bit the puppies. but this creates an ongoing revenue stream that Larva Labs does not have.

And you see this reflected. I mean, I don't have a direct view on these numbers, but it's clear that if you think through it, the Yuga Labs has a multi-billion dollar valuation. Those are the numbers thrown around in the press over February, and raised some money and had some money on balance. She even had enough money between those two things to buy both, the Larva Labs held punks plus the punks and Meebans IP, which means this ended up being valued

at a fraction of, so even though the collections are the same value, right, the buying all the punk NFTs and buying all the board ape NFTs will cost about the same. The company, Yuga, is much more valuable than the company larva. And it's two things. One is the royalty stream, which is an ongoing value that moves from holders to the company, right? Because it is in effect, Yuga is your 5%, is it 5%? I don't know my rough hands. There are 5% the realties, I think, is a 5% co-shareholder in all the board apes forever, right? And also, of course, that the Yuga team is much more commercial, much more active,

much more likely to convince a set of VCs that they're going to generate a variety of new and exciting business opportunities and therefore their company should be much more highly valued. Whereas the Larvalabs team very expressly does not want to do this, right? Their geniuses, right? Their contribution to NFTs is irreplaceable. I mean, the punks, the autoglux. the autoglyphs, which was the first on-chain generative art. The mebits will see over time how important they end up being,

but they're interesting and they were fairly cutting edge as well. And what the team said very clearly is they do not find their best personal satisfaction and running a big commercial business. They don't want to scale up a team and be business people, but they consider themselves artists and programmers, and they have historically been on the absolute cutting edge. I mean, NFTs have basically three main categories, PFPs, generative art, on-chain generative art,

and one of one art, which I mean, in the rest of the world we just called this art. The first successful collection in two of those three categories was the same two guys. which is an incredible legacy. I mean, even if they retired tomorrow, never did anything else. It's an incredible legacy. And to me, I think the provenance of punks will survive the sale of the IP. I think it doesn't really change it. It was several years ago.

Did it happen? Did the puns happened? They were clearly the OGs of the space. you seems to understand this right it was their announcement was very respectful I think they correctly said we're not going to do very much for now we just want to listen to the community right like I I do think the right way that they should be handled the punch should be handled now is fairly light touch for the time being let people settle in process it and see what happens now in the community and if

what people want to do with their punks. In theory, more people can do more things with the punks. Now, there's in practice, a lot of punks holders are pretty crypto-rich and don't plan to do anything with their punks. I think some people will turn over. I think some people will feel like some piece of the magic is gone. And it's interesting because it's all psychological. Even before the sale, the punks were under a much more corporate context than the Bordaibs. The board apes, legally speaking, were much more web three than the punks.

But seeing, and even though now the punks are equally web three as the board apes, the fact that it happened through a business transaction, I think feels cold, maybe, something like that. Like not what people, yes, you knew in your back of the mind that might happen someday, but it's different than you know the back of mind. And in fact, it did happen. But I think the narrative is going to be robust to this. And I think the, you know, if you had told me the punks were sold to some normal corporation and stayed under the old license and now, you know, Disney's the new punks holder, I'd be pretty bummed because I think it would have been very hard to imagine where that plays out. now you have a substantive improvement in the decentralization of the punks. And I do believe we are, there's significant failures of imagination among a good chunk of

the NFT community. Because a lot of people, particularly like the more successful people, the richer people. They're like, well, I don't want to commercialize my NFTs or then you say like, well, I don't want to make a baseball cap with my NFTs. And obviously, that's just a failure of imagination. where one eight thousandth of the way there from getting the whole planet into NFT world. And the idea that the most important thing one would do with a piece of interesting art and culture is make a baseball cap is a bizarre failure of imagination, right? We're going to be in digitally composable spaces.

And the fact that you can go ahead and try things, experiment, do different projects, and not have to wait for permission for someone, not have to send the letter and email, discuss the terms, I believe over the course of time will lead to a much better outcome than any collection that we have to do that. And so I'm pretty bullish overall, even though I know I think there'll be some short-term heartburn among some folks in the community.

Yeah, and I also wanted to ask about how Yuga Labs announced it would be selling land in a metaverse. And the block reported that the company was projecting, would bring in $455 million in revenue largely off these virtual land sales. What do you think of those plans? Look, I can't have a particularly well-formed opinion until I see exactly what it is that they're planning to do, what the technology behind this land sale looks like, what the terms are of this land sale, how it is organized for board apes holders versus the public.

without doing any of these things, I can say some generalities. I believe it will do pretty well because, you know, there's a fairly excited community in and around the Bored Apes world and the idea that, oh, we're going to have our land or we'll have our metaverse sounds exciting to people. Historically, Yuga has succeeded in all of their launches, right? So it would be strange to bet against them here. Second, and this is a very high concept discussion, because it doesn't apply just to Yuga, it applies to all metaverse land experiments, whether it's decentral land or somnium or there'll be many, many more. I do wonder if the construct of land sales is exactly right for these types of projects. And I'll give you an example not from Yuga because it hasn't launched it, but if you go through a lot of these metaverses, you'll see, you'll find yourself at times walking through a bunch of empty fields and looking around to see if there's anyone around. And it is, quite frankly, boring.

And it is, quite frankly, a failure of imagination to go into a computer mediated environment and have empty fields there. The reason you might have empty fields and not well-planned cities is because there's physical constraints on the land, right? Like someone, there's a piece of property and until they develop it and put millions of dollars of concrete or whatever, it's empty in the middle of the city. It's a parking lot. That doesn't exist in a computer-based environment. You could vanish the empty fields, right? You could have portals from one place to another. there is, I understand, of course, why all Metaverse platforms so far are doing this.

It is both an excellent funding mechanism to sell land, right? And so most of these land sales have done well. And then there's the view of if you give some, once you commit people through purchase of the land, maybe they'll then expend additional resources, both economic and intangible, psychological, to develop it out, right? You know, say, oh, it's a mental model that is familiar to people. Oh, I have a plot of land. I can build something on the plot of land.

I respect that. But it is also bringing a mental model that is based on a unmovable 3D grid of the real world into computers where that's just not true anymore. And I suspect, and I can't tell you the answer because I haven't seen it. but I suspect this is one of those of this category. You know, when the first, when television first came out, a lot of the early TV shows were radio shows with a camera pointed at the presenters because you were still stuck in the prior mental model. Land sales without necessarily having the solution, the alternative solution,

to me feel like that, that we are in the mental model of, the real world where, yeah, oh, if there's going to be a 3D space in the real world, and then you saw land, you built a house, and you go in and out of it. And then we've transported it to the digital world. And I'm not sure then it's going to be the right fit. If you want to think of something more recent, early internet, right? We did online magazines, online newspapers, right? The 90s were all about that.

And were online magazines and online newspapers successful? Yes. And does the New York Times that have any? is the New York Times more successful today online than it will be if it didn't have online, of course. But it turns out the native informational mediums of online weren't the New York Times magazine but online, but Twitter and Facebook, right? Where they changed fundamental parameters of how you convey information. and those became massively larger businesses than the offline business now presented to you in the same format about a new computer. But this is not a comment specifically about Yuga, right?

It's my view generally about these Metaverse land sales. And they've been successful. They've been successful. But I suspect there's a turn of the, there's an orthogonal shift in the model somewhere where there'll be really. successful. And what do you also make about the company's announcement that it would launch a governance token called Apecoin as well as a Dow? So from what I understand, reading their website about the coin, it is a combination payment token and governance token, but primarily a payment token, right? And so it's one of those, you don't get any rights from owning it because if you

did, it would be a security, and then they couldn't issue it to retail participants, not accredited investors. They said that they and Animoca are going to use it in their virtual world. And then there's a treasury that the Dow can vote on to spend for, I assume, community building type activities. Right. So the treasury governance token part is fine. In and of itself, I don't think huge is exciting.

In and of itself, that part shouldn't drive a ton of value. The interesting question is going to be the payment token. And, you know, again, it's one of, it's again, social construction because the first question one will ask yourself is, wait, so where did these billions of dollars come from? They didn't exist. People are saying, oh, well, maybe it will be, maybe it'll end up settling out in a billion or five billion or ten billion. You know, where did they come from, right?

They hadn't mixed no sense. But there could be a problem. place they come from, as follows. If Yuga and Yuga's partners create various services online, metaverses and quotes or games or what have you, and the in-game in-medaverse sales require that token. That does create a base level of buying pressure for that token, particularly, you know, if they then sold at the next moment, I don't know, but if they held it, right, which I imagine they might, you could, I think, accrue value into that token and use it, but you'd have to, but I think they will, make it the coin of the realm in a way for Yuga World.

And so to me, my mental framework on this is this is going to be the M1 of Yuga World. And I don't know, is that going to be good, bad, and different? Well, it's a great question. I think it is the token. I believe even the NFTs. I think this is what the Cryptopunks worry about. I think the token and the NFTs for the board apes are execution dependent, as is the land, as is the quote unquote metaverse, as is the game.

Whereas the punks pre-purchase were not, you know, by Larvalab's not doing anything, which they're very explicitly said they're not going to do anything. Great. Well, you're not execution dependent. They also can't do anything bad. And so Yuga is a higher beta play, right? If Yuga hyper-executes and becomes a quote, unquote, Disney or Marvel or whatever of the digital era, well, then the whole Yuga universe, the upside is vastly higher than, oh, it's historic collectible art, right?

There will, of course, be over the next few years, multi-hundred million dollars. brands formed in NFT world, right? And did I say million or billion? I meant billion. Multi-hundred billion dollar brands formed in NFT world. And so Yuga is a leading contender to form one of them, but it's hard. You have to execute. And you have to execute on a variety of dimensions that are complete unknowns right now.

What is a successful metaverse built on NFTs? what is, you know, people say games. Again, I don't think the state of the future world is going to be that everyone pays hundreds of games and hundreds of games universes of their NFT collections because, you know, who has time for that, right? If you read between the lines and the UGA announcement, they're saying, oh, no, no, I'm going to make a game where you can bring your NFTs from other collections into my game. That's what I said. Right. They're trying to be the meta platform. They're trying to be the one that, okay.

Could be. Could be. If I succeed, it would be extremely valuable. But it is execution dependent. And it is a significant step up in complexity in terms of the execution from what they've done now. So looking at it just coldly as a business, running a metaverse of gaming platform, a token of community, and continuing to help community moderate the board apes community? It's a big step up with complexity. Now, they've executed very well so far. They have unlimited capital available to them, but nonetheless, execution's hard. Well, I guess we will have to see what happens, obviously, at this moment. It's all very new. It's just an announcement. And I think at the time we're speaking, you know, people are getting kind of hyped up about this coin. So we will have to see how it all plays out. 6529, I have to thank you so much for this incredible interview. I just really enjoyed hearing your thoughts on all these things. It was almost like listening to like a cultural historian sort of at the moment that all of this is happening. And it was just a really fascinating discussion. Thanks so much for coming on Unchained. Thank you so much for having me.

Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. Join over 10 million people using crypto.com, the easiest place to buy, earn, and spend over 150 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 8% cash back instantly. Plus, 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 with the code Laura. Link in the description. Thanks for tuning into this week's news recap. Crypto legalized in Ukraine as government uses donations to buy supplies. Alex Bornyukov, the deputy minister of digital transformation of Ukraine, reported last

Friday that the country has begun to utilize the funds donated to Ukraine via crypto. According to Bornyakov, Ukraine has purchased, among other things, 5,500 bulletproof vests, 500 helmets, and 400. 10,000 packed lunches for its army. tweeted Bornyakov, crypto assets proved extremely helpful in facilitation of funding flows to the armed forces of Ukraine. This week, President Vladimir Zelenskyy legalized crypto within Ukraine's borders by signing the law of Ukraine on virtual assets. By signing the bill, virtual assets officially come under the jurisdiction of Ukraine's securities and stock market commission. According to Ukraine's Ministry of Finance, the bill will also allow

foreign and Ukrainian crypto exchanges to operate legally within the country, with support from Ukrainian banks. Ukraine is also planning on launching a set of NFTs, reports the Guardian. Deputy Minister Boynikov told the Guardian that Ukraine's NFT collection would be like a museum of the Russian-Ukrainian war. We want to tell the world in an NFT format. Bornyakov added that each NFT would include a piece of art memorializing a new story. We want us to be cool, good-looking, and it takes time, he told the Guardian. A week ago, Elliptic estimated that Ukraine has received over $63 million in crypto donations on chain, while Coin Desk reported that the number was closer to $100 million. The merge is coming. The Ethereum merge occurred on the Kieln TestNet this week, taking the

smart contract network one step closer to its transition from a proof of work consensus mechanism to proof of stake, a moment in time called the merge by Ethereum's. According to a blog post by Ethereum Foundation developers, Kieln is expected to be the last Merge TestNet created before existing public test nets are upgraded. From there, the merge will go to MainNet and Ethereum will be fully secured, proof of stake. That being said, a date for the merge on Mainnet has yet to be set. Only once the merge successfully occurs on the public test nets will an exact date be known. Ethereum's approach to the merge comes as data from EtherScan shows that over 10

in Ether have been staked to the official ETH-2 deposit address. This surmises a roughly $29 billion bet by ETH stakers that Ethereum will successfully merge at current prices. With Ethereum's market cap sitting around $337 billion, that means roughly 8% of all ETH is locked into the network's consensus layer, formerly known as ETH2. With the merge, analysts are expecting a drastic decrease in ETH issuance. For example, Hot Protocols, Lido Cohen, calculated that daily eth emissions will drop 90% after the merge, or the equivalent of three Bitcoin halvings in one. Consensus raised at a $7 billion valuation.

Ethereum application in an infrastructure builder consensus announced a $450 million Series D funding round valuing the firm at $7 billion, more than doubling its November valuation. Parify Capital led their own with Tradfai behemoths like SoftBank and Microsoft, a computing behemoth, also participating. Consensus plans to add 300 employees with the funds. The consensus raise coincided with the Ethereum Focus company reporting that Metamask had reached

30 million monthly active users. They did not define what a monthly active user is. The digital wallet, according to a decrypte interview with Consensus founder Joe Lubin, will soon begin pursuing progressive decentralization. Lubin revealed that a Meta Mask-related Dow is in the works and confirmed that Metamask intends to launch a token. The raise comes at a contentious time, as 35 former Consensus A.G shareholders recently initiated an audit regarding serious irregularities in a deal that saw Metamask in Infura transferred from one consensus entity, Consensus H.E, to another at what they say is a low valuation. The shareholders claim that this deal was to the detriment of the minority shareholders of Consensus A.G and to the benefit of Lubin personally.

Consensus A.G has since disputed these claims. Coming soon, Instagram NFTs. Meta CEO Mark Zuckerberg confirmed that Instagram will be supporting NFTs in the near term, in a panel at South by Southwest, according to Engadget senior editor, Carissa Bell. The Financial Times reported Meta's intent to bring NFTs to both Instagram and Facebook in January. Disclosure, I write a meta-bulletin newsletter. Instagram adding support would be a massive milestone for crypto, with CNBC reporting in December that the app engages 2 billion monthly active users. Gary Gensler gets flack from Congressman. On Wednesday, SEC Chair Gary Gensler received a strongly worded letter from eight members of the Congressional Blockchain Caucus.

The letter claims that the Securities and Exchange Commission's recent investigations into crypto firms are in inconsistent with standard procedure and might be at odds with the Paperwork Reduction Act. The representatives asked Chair Gensler to answer 13 questions pertaining to the burden of voluntary document requests on crypto companies, including how many voluntary document requests the SEC has sent to crypto entities and the associated compliance costs. Representative Tom Emmer spearheaded the letter and did not hold back from directly addressing Gensler's actions on Twitter. My office has received numerous tips from crypto and blockchain firms that SEC chair Gary Gensler's information reporting requests to the crypto community are overburdensome, don't feel particularly voluntary, and are stifling innovation, he wrote. Crypto startups must not be weighed down by extra jurisdictional and burdensome reporting requirements.

We will ensure our regulators do not kill American innovation and opportunities. In related news, on Thursday, Senator Elizabeth Warren introduced a bill during a hearing on digital assets and Russian crypto use that would grant Treasury the right to bar crypto service providers from doing business with any crypto address associated with Russia. As has been the trend with U.S. legislation, the definition of a digital asset transaction facilitator is rather vague and will most likely spark protest from lobbying institutions such as the Blockchain Association and Coin Center. Don't sleep on Defi OGs. The meme goes that the bear market is a time to build, and this week, a slew of defy protocols proved the meme to be true. Sushi Swap launched Phase 1 of its product Trident, a framework for deploying automated market makers on Polygon. According to a press release, AMMs will build on top of and synergize with Trident without hard coding a certain way to swap assets. Sushi Swap was able to ship Trident despite a substantial leadership voice.

in the wake of former CTO Joseph DeLong's departure. Ave V3 is here. With the release of new code, the lending protocol is going cross-chain on Polygon, Phantom, Avalanche, Arbitrum, optimism, and harmony. In addition, V3 will offer layer two specific designs,

gas optimization, to the tune of a 20 to 25% reduction, and new ways to borrow. Thorchene released a synthetic asset product this week, With Thorchain synths, users can mint over 20 different synthetic assets, including BTC and ETH, on the network without having to bridge, wrap, or automatically swap tokens. The Roon Price and TVL in Thorchain have exploded in the wake of synth going live. Time for FunBits!

Three Friends slew their way to a mystery gift from Larva Labs. This week, three friends, led by Andrew Botter, found the price. private keys to a $25,000 NFT and an impressive bit of sleuthing. The story, as summarized by Bader on Twitter, began during the Grail's drop last month, in which 20 artworks by 20 anonymous artists were released, with the artist's names being revealed Post Mint. As it turns out, Grail 11 was a piece designed by Larva Labs, the team behind me bits, cryptopunks, and autoglyphs. Interestingly, on the edges of the work were two shapes, regular and upside-down L's that struck Botter as being more than ornamental, which led him to write a script that

turned the assorted else into a message. Secret is in the pig numbers, LL, as in Larvalabs. From there, Bader had to deduce what the pig was, leading him on a nine-day scavenger hunt with a couple of friends until he realized that the message was likely referencing pig mebit NFTs, wearing jerseys. After that deduction, Bader was able to take the 60-form me bits with jerseys, concatenate a hex string out of the 46 jersey numbers, and voila. He was able to claim the private key to an account with 0.25E and a pig mebit. Thanks so much for joining us today. To learn more about Punk 6529 and all the Yuga Labs news, check out the show notes for this episode.

Unchained is produced by me, Laura Shin, without from Anthony Yun, Daniel Ness, Mark Murdoch, Shishonk, and CLK transcription. Thanks for listening. Thank you.