Earlier this week, it was announced that members of the Bored Ape Yacht Club NFT collection will issue their own cryptocurrency, ApeCoin (APE). So what is ApeCoin? We have prepared it for the curious Kriptokoin.com readers.
What is ApeCoin?
ApeCoin is an ERC-20 token, a special variant of a DIY cryptocurrency on the Ethereum Blockchain. Most of the Ethereum-based social tokens that took off last year were created using this framework. Unlike Non Fungible Tokens (NFTs), they were intended to be ‘exchangeable’ as with Bitcoin (BTC). Any ApeCoin is of exactly equal value to other ApeCoins and can be freely traded through a kind of digital trading centers for cryptocurrencies known as decentralized exchanges.
Almost every major centralized crypto exchange listed the token right after launch. Given the notoriously meticulous nature of big players like Coinbase (COIN), this was a success in itself. After just one day of trading, ApeCoin has reached a market cap of around $2 billion. One APE is currently worth around $14 and the total token supply is capped at one billion (not all of them are currently in circulation).
What is ApeCoin and who is behind it? According to
ApeCoin website and accompanying press materials, ApeCoin was launched by ApeCoin DAO, a new governing body to which all APE holders are members. This body receives proposals from the community, which token holders can then vote on. There is also a separate organization called the Ape Foundation, which is the legal support of the ApeCoin DAO, which will handle the day-to-day DAO administration, bid management and other tasks that ‘ ensure the DAO community has the support they need to make their ideas come true’.
An Ape Foundation subcommittee will also serve as the ‘board’ of the ApeCoin DAO, which will oversee certain offerings. The initial board consists of five high-profile crypto investors: Reddit co-founder Alexis Ohanian; Amy Wu, who heads the venture arm of crypto exchange FTX; Maaria Bajwa of Sound Ventures; Yacht Siu of Animoca Brands; and Dean Steinbeck of Horizen Labs. Each board member has a tenure of six months, and the ApeCoin website promises DAO members will be able to vote for future members.
In addition to the ApeCoin protocol, there is the ApeCoin DAO, the Ape Foundation and the ApeCoin DAO board. However, ApeCoin was not developed by the Bored Ape investors community. There is a black hole at the center of this monkey galaxy. Who really put this thing together?
The parent company behind Bored Ape Yacht Club is Yuga Labs, a traditional corporate entity registered in Delaware. Yuga Labs is also responsible for all major projects and acquisitions surrounding the Bored Ape Yacht Club. If you want to do anything with Bored Ape IP, you have to go through Yuga Labs. “Yuga Labs will continue to be the founders of products and experiences that bring new ideas and energy to the community,” said Nicole Muniz, CEO of Yuga Labs.
Yuga Labs has gifted an exclusive one-to-one NFT to the ApeCoin DAO treasury and plans to ‘adopt ApeCoin as the primary token for all new products and services’ linking its value to the health of the Bored Ape collection. However, Yuga Labs insists that it is not responsible for ApeCoin.
Distribution and free money
ApeCoin’s distribution model further complicates the agency problem. 62% of total ApeCoins are reserved for token holders and DAO treasury. During the first 90 days of ApeCoin’s existence, anyone holding a combination of NFTs from the Bored Ape Yacht Club and its two subsidiary collections, the Mutant Ape Yacht Club and the Bored Ape Kennel Club, can claim a certain amount of APE.
Since APE has a separate value and is already traded on major exchanges, claiming these coins is a bit like asking for free coins. You are entitled to 10,094 APEs for every Bored Ape you own. That’s about $150,000 at today’s prices, which is about half what you’d need to get yourself another Bored Ape. So far, around 110 million APE tokens have been claimed by NFT holders.
The other 38% of ApeCoin is reserved for “first contributors” as well as the Jane Goodall Legacy Foundation, which supports conservation efforts for (real-life) forest primates. All these coins are ‘locked’ for the first 12 months, so their holders cannot withdraw the money. Again, Yuga Labs claims zero liability for ApeCoin. It just takes a significant portion of the profit.
Is there a legal problem?
is based on the idea that ApeCoin DAO is completely independent from Yuga Labs. If Yuga Labs has explicitly issued a token as a reward for Bored Ape holders, it could be argued that Bored Ape is a form of investment and thus subject to securities regulations.
Since ApeCoin apparently only comes from ApeCoin DAO and not Yuga Labs, there is a reasonable possibility of deniability. Tokens are an independent entity that allocates a company and its founders rather than pumping their own investments into a company and its founders.
Of course, traditional companies always do this through an IPO of stocks. The difference is that the ApeCoin offer is essentially unregulated. Because in the US the Securities and Exchange Commission still does not oversee NFTs.
Ok but what is ApeCoin, what does it do?
Currently, ApeCoin mostly works as a speculation product for the DAO and for “management”. But Yuga Labs has big ambitions for the token. A mobile game called Benji Bananas developed by Animoca Brands adopts ApeCoin as a kind of in-game currency. For 25 ApeCoins, a Benji Bananas Membership Card can be purchased that allows you to earn ‘exclusive tokens’ in-game. These tokens can then be exchanged for ApeCoins.
This is probably just the beginning of an entire ecosystem powered by ApeCoin. Yuga Labs plans to use APE as the de facto currency for all new projects. This is also part of the legal element. Because the more you can do with tokens beyond speculation, the better your chances of evading the SEC.
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