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Know Your Coin: ApeCoin
An Ape-pocalypse is here, and it's trying to revolutionize NFT-fi.
Yuga Labs, the creator of the famous Bored Ape Yacht Club (BAYC) NFT collections, has adopted APE as the primary token for all new products and services. Apart from BAYC, Yuga owns the IP of two popular NFT projects, CryptoPunks and Meebits.
Since its launch in April 2021, Bored Ape Yacht Club (BAYC) has become one of the most popular NFT collections. BAYC is well-known for having a vibrant and active community of supporters.
What is ApeCoin (APE)?
ApeCoin (APE) is the governance and utility token of the APE ecosystem. It is a decentralized protocol layer that supports the APE community.
APE is an ERC-20 token with a total supply of 1 billion tokens. It is controlled and built on by the community. The ApeCoin DAO is a decentralized organization that allows all APE holders to vote on governance decisions related to the token.
Unlike NFTs, they’re meant to be “fungible”. As with bitcoin (BTC), any ApeCoin should be worth exactly as much as any other ApeCoin. You can buy and sell them freely on what is known as a decentralized exchange, a kind of digital trading post for cryptocurrencies.
How does APE work?
APE was founded to be used within the growing APE ecosystem. It is governed by the ApeCoin DAO and supported by the APE Foundation.
ApeCoin DAO is a decentralized autonomous organization (DAO) for all APE token holders to participate in governance decisions. They can decide how to allocate the Ecosystem Fund, make governance rules, special projects, partnerships, etc. After the DAO members vote on the proposals, the APE Foundation will make community-led governance decisions.
The APE Foundation is the legal steward of the DAO. It facilitates the growth and development of the APE ecosystem fairly and inclusively. At the Foundation, there is a special council called the Board. It is tasked with ensuring that the community’s visions are implemented. The Board comprises five tech and crypto community members, including Reddit co-founder Alexis Ohanian. As a decentralized Board, the initial members will serve for six months before APE holders vote for a new board annually.
What is the APE ecosystem?
The APE ecosystem comprises the community holders of ApeCoin, and all products & services utilizing APE.
Yuga Labs is a web3 company best known for creating the Bored Ape Yacht Club. It will be a community member in the ApeCoin DAO and adopt APE as the primary token across new projects. Upon the launch of ApeCoin, holders of Bored Ape Yacht Club and Mutant Ape Yacht Club NFTs were entitled to collectively claim 15% of the ApeCoin supply (150 million tokens of the 1 billion total tokens in supply).
Let’s look at the NFT collections that are related to the APE ecosystem:
Bored Ape Yacht Club (BAYC): Launched in April 2021, Bored Ape Yacht Club (BAYC) is the first NFT collection of the APE ecosystem. It features 10,000 unique Apes on the Ethereum blockchain. Each Ape has a unique look, style, and rarity.
Mutant Ape Yacht Club (MAYC): Mutant Ape Yacht Club (MAYC) is an NFT collection of up to 20,000 mutated versions of the original BAYC Apes. Ten thousand mutant serums were airdropped to the original BAYC NFT holders, with three tiers of serums added to the rarity of traits. With the different tiers of serum they received, BAYC holders could create different types of mutant Apes. Each BAYC can only generate a single mutant from a single serum type, which disappears after use.
The MAYC was also a means to welcome more new members to the APE community. This is why 10,000 mutant Apes were also minted for public sale in August 2021 following the mutant serum airdrop.
Bored Ape Kennel Club (BAKC): Bored Ape Kennel Club (BAKC) is a collection of dog NFTs made available to every member of the BAYC. For each Bored Ape NFT they own, holders could “adopt” a random Club Dog NFT for free, only paying a gas fee. Like the Apes, the 10,000 BAKC NFTs have various attributes and rarities.
What can APE tokens do?
The ApeCoin token serves several purposes in the APE ecosystem. It allows holders to participate in the ApeCoin DAO as a governance token. APE holders can also access exclusive features of the APE ecosystem, including games, merch, events, and services.
APE is also a tool for third-party developers to participate in the APE ecosystem. They can incorporate the token into their services, games, and other projects as incentives. For example, APE is adopted as an incentive for players in Benji Bananas, a play-to-earn mobile game developed by Animoca Brands. Benji Bananas offers a Membership Pass (‘Benji Pass’), an NFT that will enable its owners to earn special tokens when playing Benji Bananas and allow those tokens to be swapped for ApeCoin.
The token will play the same role in Otherside — Yuga Labs’ upcoming metaverse game, seemingly interoperable with other leading NFT collections like Mutant Ape Yacht Club, CryptoPunks, World of Women and Cool Cats.
And beyond Yuga Labs, Time Magazine has said it will soon accept ApeCoin for digital subscriptions. In contrast, rappers Snoop Dogg and Wiz Khalifa have released eight songs that can only be bought using ApeCoin.
The Not-So-Good Parts
The distribution model for ApeCoin further complicates that question of agency.
62% of the ApeCoins are set aside for token holders and the DAO treasury. For the first 90 days of ApeCoin’s existence, anyone who held some combination of NFTs from the Bored Ape Yacht Club and its two spin-off collections, the Mutant Ape Yacht Club and the Bored Ape Kennel Club, could claim a certain amount of APE.
Because APE has a discrete value and is already trading on significant exchanges, claiming these coins is a little like claiming free money. For each Bored Ape one owns, they’re entitled to 10,094 APE. At the peak of the bull run, that was about half of what one would need to buy another Bored Ape.
The other 38% of ApeCoin is set aside for “initial contributors” and the Jane Goodall Legacy Foundation, which supports conservation efforts for (real-life) jungle primates.
Yuga Labs is getting 150 million APE, 10 million of which (“or equal value”) will go to the Jane Goodall Legacy Foundation. Next, 140 million APE goes to “the companies and people that helped make this project a reality” – an as-yet-unnamed group that most likely includes the Yuga Labs team members. And 80 million APE goes to the founders of Yuga Labs. All these coins are “locked” for the first 12 months, so holders can’t just cash out and tank the price.
The more significant idea is that ApeCoin DAO is entirely independent of Yuga Labs. Suppose Yuga Labs issued a token explicitly as a reward for Bored Ape holders. In that case, one could argue that a Bored Ape is a kind of investment and, therefore, subject to securities regulations. In how certain stocks pay dividends, part of the value of investment-style NFTs would be tied to the perks they could get you down the line.
With ApeCoin ostensibly coming just from ApeCoin DAO and not from Yuga Labs, there’s a veneer of plausible deniability – an independent entity allocating tokens to a company and its founders than that company and its founders pumping their investments.
Of course, traditional companies always do this via initial public stock offerings. The difference is the ApeCoin offering is essentially unregulated because, in the U.S., the Securities and Exchange Commission still doesn’t oversee NFTs.
The distinction between ApeCoin DAO and Yuga Labs probably also involves the Hinman Test. It’s named for former SEC official William Hinman, who now works at Andreessen Horowitz; Hinman’s idea was that if a governing body is “sufficiently decentralized,” it’s free to issue a token without registering it as a security. ApeCoin DAO is (at least nominally) decentralized; Yuga Labs is not.
Again, Yuga Labs claims zero responsibility for ApeCoin – it’s just taking a significant chunk of the profits.
With Yuga Labs adopting ApeCoin as the fundamental token, the community expects more utilities to be added. For example, a staking function for APE HODLers to earn passive income, more GameFi applications, or collaborations with the other NFT IPs Yuga Labs owns.