Venture capital firm Andreessen Horowitz is among the investors that received a windfall this week when billions of dollars worth of tokens were issued to the creators, backers and owners of the Bored Ape Yacht Club digital collectibles.
Crypto traders rushed to get a slice of the action on Thursday when a consortium, in which Bored Ape creator Yuga Labs is the largest single shareholder, debuted “ApeCoin”. More than $9bn worth of ApeCoin changed hands in the first 24 hours of trading, according to data from CoinMarketCap.com.
A billion ApeCoin were created on the Ethereum blockchain by an organisation that Yuga helped to found alongside a small group of backers and advisers.
The tokens suddenly became very valuable after millions were given away to Bored Ape holders on Thursday and they began trading on major crypto exchanges such as Coinbase, FTX and Binance, where any other investor was able to buy them.
ApeCoin’s release is one of the most high-profile examples of “airdrops”, in which cryptocurrency projects effectively give away free digital tokens to collectors, employees and investors, sometimes minting new millionaires overnight. The coins tapped into the success of Bored Ape non-fungible tokens, which have taken off in popularity in recent months.
Before public trading began Yuga and its ApeCoin partners approved the allocation of the tokens, handing crypto now worth billions to a handful of insiders, as well as Bored Ape holders, an environmental charity and the organisation’s treasury. A Yuga spokesperson said token distribution was determined by a “large group involving the contributors as well as industry experts they consulted”.
The four founders of Yuga — until recently known only by their online pseudonyms such as Gargamel and Emperor Tomato Ketchup — were allocated 8 per cent. A group of “launch partners”, including Andreessen and Hong Kong-based NFT and crypto investor Animoca Brands, were together given a 14 per cent allocation, in exchange for helping prepare for the issuance, a Yuga spokesperson confirmed to the Financial Times.
A further 150mn tokens were given to Yuga Labs itself, currently worth more than $2.2bn, while 470mn are to be held by the ApeCoin organisation itself and 150mn will be collected by Bored Ape NFT holders.
Holders of Bored Ape received a payout of 10,094 ApeCoin for each NFT they own from the main collection, handing tens of thousands of dollars to owners of a cartoon monkey that originally sold for about $250 and now trades for upwards of $250,000 on marketplaces such as OpenSea.
Several Bored Ape holders were able to collect hundreds of thousands of dollars worth of ApeCoin on Thursday, with one major collector claiming tokens valued at more than $20mn on Friday.
After volatile early trading that saw it swing from $39 to $7, ApeCoin’s price had recovered to about $15 by 24 hours after its launch. That price would value the Yuga founders’ stake at more than $1.2bn, while its launch partners hold ApeCoin worth $2.1bn. The founders and launch partners are currently restricted from trading ApeCoin, with lock-ups unwinding in batches over the next 36 months. Only 28 per cent of the tokens are currently available for trading.
ApeCoin represents one of a new breed of crypto-centric “decentralised autonomous organisations”, or DAOs, that use airdropped tokens as a way of divvying up governance rights, with those holding more coins given a greater sway over the project’s direction. The coins can also become speculative financial assets used to entice new users to a new platform or marketplace.
Other members of the ApeCoin consortium include Alexis Ohanian, co-founder of Reddit, Guy Oseary, a music industry veteran whose clients include Madonna and U2, and Horizen Labs, a blockchain developer.
A spokesperson for Yuga said Andreessen received coins in exchange for assisting with “overall DAO governance design”. Andreessen declined to comment on its involvement in the project.
Yuga was in discussions with investors including Andreessen about a new round of funding that would value it at between $4bn and $5bn, the FT reported last month. Yuga and Andreessen both declined to comment on the potential financing.
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Source: Financial Times