The ApeCoin (APE) is a community project led by the ApeCoin DAO. The latter is formed around the brand image and the popularity of the collection of non-fungible tokens, Bored Ape Yacht Club (BAYC). Overview of this ambitious new project which fascinates the ecosystem of NFTs.
What is ApeCoin (APE)?
If you follow the cryptocurrency industry and, more specifically, the universe of non-fungible tokens (NFTs), you have probably heard of the collection of NFTs called Bored Ape Yacht Club (BAYC). This collection, launched in April 2021 by Yuga Labs on the Ethereum blockchain, is limited to 10,000 copies. Each NFT represents an illustration of a monkey procedurally generated by an algorithm.
Figure 1: Bored Ape Yacht Club NFT number 8585
The image above shows one of Bored Ape Yacht Club’s 10,000 NFTs. This collection of NFTs has been phenomenally successful, and the floor price is at 103 Ethers or 322,000 dollars at the time of writing these lines. This is the minimum price to pay to own one of them.
The popularity of this collection is such that many celebrities like Jimmy Fallon, Eminem, Snoop Dogg, Justin Bieber or Neymar Jr. own one. The collection has a total value of over $1 billion.
Over time, the BAYC collection quickly becomes a brand, and partnerships with big names like Adidas prove it. In the space of a year, it became the most influential NFT project globally.
The second collection of NFTs, also launched by Yuga Labs, was launched in August 2021 and has been a great success. It is called Mutant Ape Yacht Club (MAYC) and is limited to 20,000 copies.
The company behind these projects is accelerating its conquest of the NFT universe on March 12, 2022, by acquiring the intellectual property rights to the two other largest collections of NFTs: CryptoPunk and Meebits. In parallel, Yuga Labs announced on March 16, 2022, the creation of a metaverse entitled “Otherside”, of which here is the trailer:
Finally, ApeCoin (APE) was launched on March 17, 2022, to support the ecosystem growing around the Bored Apes’ communities. These successive announcements in March 2022, leading to the launch of ApeCoin, are part of a single project with excessive ambition.
The APE is an ERC-20 token, i.e. it was created on the Ethereum blockchain. This cryptocurrency is directly related to the previously mentioned NFTs since owners of NFTs from the BAYC or MAYC collection was able to claim many APE tokens via an airdrop.
ApeCoin was created by the ApeCoin DAO, not Yuga Labs, which denies any responsibility for ApeCoin.
The ApeCoin DAO is the decentralised autonomous organisation that governs the project. It is enough to own APE tokens to participate because these give governance voting rights proportional to the amount of tokens owned.
ApeCoin (APE) Logo
The ApeCoin Ecosystem
Since the ApeCoin DAO governs the ApeCoin ecosystem, its members can decide the allocation of funds for the ecosystem, governance rules, partnerships and more. To become a member, all you need is APE tokens.
There is also the Ape Foundation, which is a legal entity based in the Cayman Islands, whose purpose is to ensure the growth and development of the ApeCoin ecosystem by bringing the ideas of the DAO to life. It is notably responsible for cash management.
The Ape Foundation claims to have no governance function; it acts for the ApeCoin DAO and does not influence the decisions made by the community.
Finally, the last entity is added to this ecosystem, the Board of Directors, which oversees the management of the Ape Foundation.
The board is made up of 5 members for a term of 6 months, after which the DAO will elect the next 5 members.
At the time of writing these lines, the Board of Directors is composed of:
- Alexis Ohanian, co-founder of Reddit;
- Amy Wu, Head of FTX Ventures and FTX Gaming;
- Yat Siu, co-founder of Animoca Brands studio;
- Maaria Bajwa , investor at Sound Ventures;
- Dean Steinbeck, co-founder of Horizen Labs.
What are the Roles of the APE Token?
The APE token primarily has a governance role, as we mentioned earlier. Owning one gives the right to participate in the ApeCoin DAO by voting on proposed changes to the protocol, which affect the ecosystem.
This token is also helpful since it offers the community a way to make transactions in a decentralised way. Owning them will also allow access to future services or events reserved for people with a certain number of APE tokens.
The APE will notably be used in Play-2-Earn (P2E) games; the first announced being Benji Bananas, a mobile game from Animoca Brands which will integrate the APE token as virtual currency.
Yuga Labs also plans to use the APE token as the currency of its metaverse, Otherside. This is the most exciting use that is looming for this cryptocurrency, provided that this metaverse manages to convince.
In addition, developers outside Yuga Labs can participate in the ecosystem’s growth by deciding to integrate the APE token into their projects, whether video games, services or events.
Time Magazine also announced that it accepts payment in APE (among other cryptocurrencies) for its digital subscriptions.
Finally, it will be possible to stake its APE tokens in the near future to benefit from interest. The terms of staking are still under discussion among ApeCoin DAO members.
At the time of writing, the roles of the APE token remain quite limited since the project is still in its infancy, but no doubt the ambition is high, and Yuga Labs plans to use the APE token as a currency in all its future projects.
The Involvement of Yuga Labs in the ApeCoin Project
Yuga Labs, the company behind the Bored Ape collection, has said that it is not responsible for the ApeCoin project. But then, who developed this project? The ApeCoin DAO, a community of investors from the NFTs BAYC and MAYC collections?
Yuga Labs hold the Bored Ape IP, and Yuga Labs assigns the IP to the ApeCoin DAO treasury. On paper, Yuga Labs is therefore not involved, but we will see that it is not so simple. For this, we must dive into the tokenomics of the project.
The ApeCoin project did not benefit from any fundraising. The maximum supply of the APE token amounts to 1 billion units and will be fixed: there will be no mint of new tokens nor burn (unless the DAO decides otherwise). The distribution of the APE token took place as follows:
- 15% were airdropped to owners of the BAYC and MAYC collections;
- 15% was allocated to Yuga Labs;
- 1% was donated to the Jane Goodall Legacy Foundation;
- 8% was allocated to the founders of Yuga Labs;
- 14% was donated to contributors at the launch of the ApeCoin project;
- 47% was allocated to the DAO treasury.
It should be noted that apart from the tokens that have been distributed, most of the other tokens are locked for a minimum of one year (so until March 2023), which explains the difference between the supply in circulation and the total supply of the APE token.
We see that 23% of the total APE token supply went directly to Yuga Labs. That’s way more than the owners of the BAYC, and MAYC NFTs received. So although the company denies any responsibility for the project, it has at least greatly enriched itself given the valuation of the APE at the time of writing these lines.
Additionally, Yuga Labs had 7 NFTs from the BAYC collection and 10 from the MAYC collection at the time of the airdrop, meaning the company likely benefited.
Therefore, it is evident that insiders have benefited a lot from the launch of this project regarding tokenomics. Consequently, it is relatively centralised contrary to what is claimed.
Yuga Labs was also obviously instrumental in creating the ApeCoin DAO, and they are reaping a lot of benefits from it. They will be able to participate (and therefore influence) in the project’s governance, given the many APE tokens of which they are the owners while making profits thanks to the APE tokens received.
This choice to officially delegate the creation of ApeCoin to the ApeCoin DAO was surely made to comply from a legal point of view and, more precisely, pass the Hinman Test. This test, the idea of which comes from a former Security and Exchange Commission (SEC) official named William Hinman, indicates that if an entity were decentralised enough, it could issue a token without having to register it as a security.
Yuga Labs is obviously not decentralised, while ApeCoin DAO is, at least officially. Therefore, the latter is not a legal entity and does not need to register with the SEC.
This is how the APE cryptocurrency presents itself as a utility token.
Finally, Yuga Labs announced in parallel that it had raised $450 million to develop its metaverse, “Otherside”, which will be based on the APE cryptocurrency. No doubt, Yuga Labs has a well-established strategy for ApeCoin, and its involvement in the project is evident. However, in the end, this does not mean that the alarm bell should be sounded immediately because any decentralised project starts relatively centralised in order to be able to launch correctly.
How to Buy APE tokens?
The APE is available on most popular exchanges such as Binance, Coinbase, KuCoin, Huobi or Gate.io.
Explanations for buying APE on Binance
- Register on Binance;
- You will receive an email and need to click on a link to verify your account;
- Deposit funds on the platform;
- Click on the Market menu and look for the pair APE/USDT ;
- All you have to do is buy APE for the amount of your choice;
- Congratulations, you are now in possession of APE tokens!
Ratings and Reviews on ApeCoin (APE)
In a few months, Yuga Labs has shown its ambition by acquiring major NFTs projects (CryptoPunks and Meebits) and by announcing its Otherside metaverse, which will use the IPs owned by the company. The APE cryptocurrency seems to be at the centre of this new strategy, and the eventual success of this metaverse could propel the APE token to new heights.
Therefore, the ApeCoin (APE) appears to be a community project at first glance. Still, by analysing the mode of governance and the tokenomics, we realise that this is not necessarily the case, at least at the launch of the project: 37% for the insiders (who will probably participate in the governance), 15% for the owners of NFTs, then the rest for the treasury which is supervised by 5 members of the board of directors who were not elected by the community.
It is appropriate to ask which community claims this project and question its decentralisation. However, at least at the time of writing these lines, it must still be remembered that reaching a high level of decentralisation takes some time.
The development of this project in the months and years to come will be interesting to follow. There is no doubt that Yuga Labs will support the adoption of the APE token through all its future projects and mainly on its Otherside metaverse.
It will also be interesting to see whether the EPA will deliver on its promises of decentralisation in the future. Anyway, given the brand image and the popularity of the intellectual properties that the company holds, the initial enthusiasm is not surprising, and the ambition is very high for ApeCoin.