The debut of ApeCoin also illustrates a problem at the bleeding edge of cryptocurrency, where venture capital firms like Andreessen Horowitz are frequently among the greatest winners.
The Bored Ape Yacht Club is a hugely popular collection of nonfungible tokens, or NFTs, which are prized by celebrities, athletes, and venture capitalists alike.
According to blockchain data tracker CryptoSlam, Bored Apes is already the third-most valuable collection of NFTs, with $1.5 billion in all-time sales. They also granted early access to ApeCoin, a new digital currency.
ApeCoin was introduced on Thursday as a “airdrop,” a form of release in which select groups of cryptocurrency holders are automatically given tokens as a reward. 1 billion ApeCoins were dropped in this instance, with owners of Bored Ape NFTs in line to get a piece of the action.
The coin gives its holders control over a decentralised autonomous organisation, or DAO, which is a crypto-native entity. The goal was to offer the Bored Ape community a say in developing web3, a decentralised, blockchain-powered vision of the internet coined by venture investors. The Bored Ape DAO will use the blockchain to facilitate and record votes on community management decisions.
However, when taken together, the ApeCoin and DAO have supplied yet more fuel for some of the most vehement objections of venture capitalists’ influence and power in this rapidly changing area.
The more tokens a DAO participant owns, the more control they have over the group’s governance. And some of the biggest ApeCoin recipients were venture capital investors that contributed with the launch, such as Andreessen Horowitz and Animoca Brands. A spokeswoman for Yuga Labs, the inventor of Bored Ape Yacht Club, confirmed to Bloomberg that they and other launch partners received a combined 14 percent, or 140 million tokens.
ApeCoin Airdrop Recipients
The following is how 1 billion ApeCoins were distributed.
Despite the idea that ApeCoin DAO is intended to be decentralised, with no single organisation in charge, these token holdings might give Andreessen Horowitz and Animoca significant authority over the group. People like Block CEO and Bitcoin enthusiast Jack Dorsey have chastised VCs for making moves like this. On Twitter, he argued with Marc Andreessen and Chris Dixon of Andreessen Horowitz about VCs wielding too much control over web3, which Dorsey believed goes against blockchain’s ideas of supporting power distribution and decentralisation. In order to dilute their influence, many venture capitalists, including Andreessen, delegate voting of their DAO stakes to organisations such as student clubs.
Andreessen Horowitz and Animoca might earn a nice profit on something they got for free if they sell their tokens and reduce their power in the ApeCoin DAO. According to CoinMarketCap, ApeCoin’s price has varied greatly since Thursday and was at $14.36 on Friday evening, up 66 percent from the day before. The amount of ApeCoin allocated to launch partners is more over $2 billion at this price.
According to Pitchbook, VCs are among of the greatest winners from crypto’s rise, having together spent $32.5 billion into the market in 2021. Even if Andreessen Horowitz sells its ApeCoins, it has already contributed to the creation of ApeCoin DAO.
Other evidence of power concentration can be found in the ApeCoin debut. Yuga Labs’ four founders earned a total of 8% of the ApeCoins distributed. Yuga Labs received 15% of the airdrop as a firm, which is equal to the entire percentage granted to owners of Bored Ape NFTs or Mutant Apes, which is a spin-off NFT collection. One percent of the coins were donated to the Jane Goodall Legacy Foundation, a charitable organisation. The treasury of the ApeCoin DAO received 47 percent of the decline.
The allocation also demonstrates Yuga Labs’ expanding prominence in the NFT space. Larva Labs’ intellectual property for the CryptoPunks and Meebits collections was purchased by the firm earlier this week. According to the Financial Times, Andreessen Horowitz is considering an investment in Yuga Labs that would value the company at $4 billion to $5 billion.
The ApeCoin DAO features a star-studded special council that will carry out the DAO’s decisions, which may or may not be compatible with crypto’s decentralised nature. It comprises prominent crypto figures such as Reddit co-founder Alexis Ohanian, the creator of venture firm Seven Seven Six, and Amy Wu, the head of FTX’s venture arm.
The introduction of ApeCoin — which, according to CoinMarketCap, had a trading volume of almost $9.2 billion in the 24 hours ending Friday evening New York time — could also raise regulatory issues, as it resembles a public debut on a stock market.
ApeCoin DAO is “a placeholder attempt to capture future potential revenue under the Bored Ape brand name,” according to Aaron Brown, a crypto investor who writes for Bloomberg Opinion.
“It’s more like a SPAC—money raised now for a future firm that will be called later—but without the legal safeguards that true SPACs have,” he said. “A small group of people is in charge of the project.”
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