What are they and why are they so expensive?

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Despite the many explanations that have flooded the internet since its introduction, most people are still baffled by Web 3.0 and NFTs.

It doesn’t help that the industry is rife with absurd buys, like Eminem’s roughly $460,000 purchase of a cartoon monkey. This ape is one of 10,000 in an NFT collection called Bored Ape Yacht Club.

Of course, you probably have a lot of questions. What is the Bored Ape Yacht Club? Why does a cartoon cost so much? Is this another financial bubble disguised as innovation? Well, we have answers. Let’s dig.


What is the Bored Ape Yacht Club?

Bored Apes is a collection of 10,000 unique NFTs based on the Ethereum blockchain. Bored Apes are grungy simian avatars with different characteristics, some rarer than others. For example, only 5% of Bored Apes have red fur and 3% have a biker vest. The rarer a Bored Ape’s traits are, the more expensive it is likely to be.

As is the case with all NFTs, the Bored Ape is not the asset itself, but rather a sort of certificate of ownership or, in this case, a password. If you are new to NFT purchases, find out what you actually own when you buy an NFT.

Bored Apes is the cornerstone of an elite movement called, you guessed it, the Bored Apes Yacht Club. Your Bored Ape doubles as a Yacht Club membership card and provides access to member-only benefits, the first of which is THE BATHROOM, a community drawing board where Bored Ape owners can leave digital graffiti. Bored Ape ownership also provides access to a private Discord server where you can hang out and chat with other owners.

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All Bored Apes were initially available on a first-come, first-served basis and had the same price – 0.8 ETH or approximately $190 upon release. But, since they all sold out quickly, they are now available on the OpenSea secondary market, which is like eBay for NFTs. As of this writing, the floor price for an Ape on OpenSea is 108 ETH, or roughly $368,000.

Who is behind the Bored Ape Yacht Club?


BAYC screenshot

The Bored Ape Yacht Club was created by four founders through their company Yuga Labs, in 2021. The founders go by cartoonish pseudonyms: Gargamel, Gordon Goner, Emperor Tomato Ketchup and No Sass. Or at least until February 2022, when BuzzFeed revealed the identities of Gordon Goner and Gargamel.

It turns out that Gargamel is Greg Solano, a writer and book reviewer, and Gordon Goner is 35-year-old Wylie Aronow. The two later revealed their true identities on Twitter alongside their Bored Apes. Following this, Emperor Tomato Ketchup and No Sass went ahead and did the same.

According to a Rolling Stone interview, the founders took inspiration for BAYC from modern OG NFTs like CryptoPunks, which have become something of a cultural currency. Like Bored Apes, CryptoPunks are also a collection of 10,000 unique NFT avatars, and they also cost a fortune, with one selling for a whopping $11.7 million. If you haven’t already, catch up on news about CryptoPunks and why they are so expensive.


For BAYC, the plan was to combine the collectible art component of NFTs with community membership, essentially giving NFT property a utility beyond just being cult symbols of cool crypto kids.

Why are bored monkeys so expensive?

To the most pressing question of all: why does Bored Apes cost so much? Even the most exclusive club memberships in the United States don’t cost $368,000. What is it about? Let’s see.

Utility

Bored Ape’s art is not only valuable because it serves as a digital identity, but also because of the commercial use rights that come with it. Not only can Bored Ape owners resell the NFT for a profit, but they can also sell derivatives based on the art.

Bored Ape Owner Creation a Twitter account for his monkey, spinning a whole story where the monkey is Jenkins, a valet at the Yacht Club. Jenkins is friendly, crypto savvy, and tells amazing stories – it’s the perfect combo for a successful Twitter account.


In September 2021, Jenkins was signed with an actual agency to explore publishing opportunities in books, podcasts, movies, TV, and more. He will also have his own biography, written in part by New York Times bestselling author Neil Strauss.

The potential for opportunities like this increase the value of a Bored Ape.

The brands also “monkeyed”, with Arizona Iced Tea purchasing a Bored Ape Yacht Club NFT in August 2021 and using it in marketing materials. Adidas also bought a BAYC NFT intending to develop a character and backstory.

Scarcity

Some basic economics here: Since there are only 10,000 Bored Apes, the supply of NFT art is quite limited. Coupled with the massive interest in the brand, we have a high demand/low supply dynamic which inevitably pushes prices up.

For starters, some Bored Ape avatars within a single collection are rarer than others. Each monkey is a unique, randomly generated combination of 170 traits, such as background color, earrings, expression, headgear, clothing, etc. This derivative rarity also contributes to the high prices of some Bored Apes.


Exclusive Content

BAYC offers exclusive content benefits to Bored Ape holders, some of which are detailed in the detailed roadmap on the Bored Ape Yacht Club website. The roadmap is a sort of to-do list that founders intend to tick off when they reach their target sales percentages.

In line with the 10th goal of finding “new ways to monkey with our friends,” BAYC has become even more creative with its community building tactics.


Screenshot of the Bored Ape Yacht Club roadmap on the website

For example, in June 2021, every Bored Ape holder was allowed to “adopt” an NFT canine companion for free (paying only for “gas”, which is the fee you have to pay for processing transactions on the Ethereum Blockchain). This is how Bored Ape Kennel Club was born. The club used secondary sales of these canine companions to raise $1 million for animal shelters.

While these dogs were free to BAYC holders, the current floor price for a Bored Ape Kennel Club dog is 7.60 ETH or around $17,000 at current ETH prices.

In August 2021, BAYC created 20,000 mutant monkeys. They returned 10,000 to the public for 3 ETH to bring new members on board. It worked – the complete set sold out within an hour, generating $96 million in the process.

But all Bored Ape owners got a free drop of 10,000 digital vials of mutant serums with which they could create new mutant monkeys from existing Bored Apes. And they could sell the new NFT in the secondary market for profit.


Screenshot of Mutant Apes on OpenSea

And in March 2022, BAYC launched its own cryptocurrency, the APE coin, and airdropped $ape tokens to every BAYC and MAYC holder. BAYC NFT owners will be able to claim around 10,000 ApeCoin each, which equates to around $100,000 for each holder.

APE Coins are already finding utility within the BAYC community – Snoop Dogg and Wiz Khalifa have released an eight-track NFT mixtape for $APE holders.

To top it off, BAYC has begun hosting club members at live, offline events that will become an annual tradition. BAYC held its first annual Ape Fest in November 2021, which included a gallery exhibit, costume contest and party on a real 1,000-seat yacht off Manhattan. Lil Baby, the Strokes, Questlove, Beck, Chris Rock and Aziz Ansari all made surprise appearances at the big “warehouse” party in Brooklyn.

Celebrity endorsement

Jimmy Fallon, Post Malone, Mark Cuban, Paris Hilton, Snoop Dogg, Stephen Curry, Eminem and Shaquille O’Neal all own Bored Apes. And it’s a well-known fact that involving celebrities in anything can increase interest and prize money.

Due to heavy celebrity involvement, Bored Apes have become a status symbol – like a Veblen digital good – the more expensive they are, the more people want to own one.

Early entry

Although Bored Apes is not the first NFT collection, it is one of the few collections available. Without discrediting innovation, but novelty contributes to the success of the movement. CryptoPunks, for example, are valuable primarily because they represent the earliest NFT collection.

BAYC purchased Cryptopunks in early March 2022, an acquisition that significantly tackles the competition and establishes its position as a pioneer of the community NFT movement. BAYC plans to grant intellectual property and marketing rights to the owners of CryptoPunks, just like they did with the owners of Bored Ape. Inevitably, this will increase demand, which will lead to higher prices.


What’s next for BAYC?

BAYC recently raised $450 million in funding to develop its own gamified, decentralized Metaverse project called Otherside. The company is aiming for a “Ready-Player-One-Esque” experience that fuses virtual reality with real life. If their Metaverse project succeeds, the usefulness of BAYC’s offerings will explode on a massive scale.

There are many doubts about the viability of the NFT sector in the cryptosphere, but BAYC’s moves make the brand more than just an art collectible. If anyone thought BAYC was a fluke, the company’s methods for building community and encouraging participation should change their minds – it’s definitely a brand to watch.


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