Bored Ape and Beyond: Part 2
The intersection of brand, community, and intellectual property: lessons from Yuga Labs.
by Vish BR, strategy and operations lead
Exploring the intricate layers of the Yuga Ecosystem, we delve into the recent milestone celebrated by Yuga— the second anniversary of the Bored Ape Yacht Club (BAYC) launch. This momentous occasion highlighted the crucial role played by intellectual property (IP) in propelling the project to new heights. Yuga's strategic approach was a resounding success, making it difficult to replicate.
The BAYC token holders had a strong bond because community members saw the value of owning a recognizable brand IP. This unique asset provided them with a valuable resource to leverage. Despite facing relentless attacks on platforms like Twitter, and experiencing conflicts with Meebits and Punks, the ape community grew even more resilient.
The BAYC Flywheel: The IP Part of the Puzzle
NFT projects, at their core, strive to establish themselves as recognizable brands. However, they differ from traditional brands as we know them. Allow me to elaborate on this distinction. In the realm of Web2, brands are typically characterized by a central Brand IP and Brand Identity, which are exclusively owned and controlled by the Brand Owners.
For instance, well-known brands like Nike, Supreme, and Adidas have trademarked their core brand IPs, encompassing elements such as their names, logos, designs, and other product-related insignias like Nike's iconic Jumpman logo.
These brands maintain sole ownership over their IPs, and any modifications or extensions to the IP must originate and be executed exclusively by the brand owners. This top-down approach results in consumable end products.
Within the realm of Web3, projects enjoy the freedom to harness technology to develop innovative and unconventional methods of engaging with users, as well as devising novel business models that were previously unattainable in Web2.
The Legal Perspective
To comprehend the viability of these business models within Yuga's framework, let us examine the legal perspective surrounding the IP aspect.
Yuga Labs owns all rights, titles, and interest in and to the Art including any and all copyrights, trademarks, and other intellectual property rights therein (“IP”)
However, they grant you the License to use the Art associated with Your NFT for as long as you hold Your NFT.
The License grants you an exclusive, universe-wide, royalty-free, sublicensable license to reproduce, distribute, prepare derivative works based upon, publicly display, publicly perform, transmit, and otherwise use and exploit.
The License is intended to be broad, enabling you to make commercial and non-commercial uses of Your Art, in any and all media, whether existing now or invented later. They are subject to restrictions such as the owner can use the art in its entirety and not selectively use individual traits.
Understanding the legal aspect is paramount as it lays the foundation for fostering a mutually beneficial relationship between the user and the brand, where the NFT serves as an intermediate good for the user. This empowers the NFT holder to leverage the IP license and create their own brand within the existing ape community, capitalizing on the existing brand value and distribution facilitated by Yuga's platform. As the NFT holder's brand gains traction and achieves critical mass, it contributes value back to Yuga's collection, further augmenting its overall worth.
The new brand brings creates brand awareness for Yuga among non-Web3 users.
Displays the potentiality of the Yuga IP and its ecosystem to the market, thus creating demand for the assets.
The NYC Taxi Medallion
When we look at the BAYC Collection as an intermediary good, the closest resemblance is the New York City Taxi Medallion.
The taxi medallion, also known as the CNPC (Certificate of Public Necessity and Convenience), is a transferable permit to drive a taxi in New York. Ring a bell? NFT, blockchain.
Let's dig a little deeper. In February 1937, Councilman Lew Haas proposed a bill to limit the number of licenses or medallions to the 13,595 taxicabs that existed at that time. The law did not pass on its first attempt, but in March of 1938, it was approved. The current number of taxi medallions is 13,587, which is very close to the initial number of licenses approved.
Limited Supply
Legally speaking, a finite number of licenses were made available within the framework. The concept of limited supply is not only applicable in terms of the law but also in the case of the 721 standard. According to the laws of code, the set is inherently restricted in nature.
Let's see how the price behaved historically. According to historian Graham Russell Gao Hodges, author of the book “Taxi! A Social History of the New York City Cabdriver,” after the passage of the Haas Act, “no one expected the medallions ever to be worth more than the ten-dollar license fee.” By 1950, the medallions cost $5,000 on average. This price continued to increase until 2014 when a medallion cost $1.3 million dollars. (Post which it crashed due to the rise of Uber and competing services) But why do the assets behave similarly?
Opportunity for Holders
When we analyze the core fundamentals and human behavior, we find that both licenses offer the potential for holders to earn. The Medallion, for example, granted owners the ability to earn a living either by personally driving a taxi or generating income through its use.
Likewise, NFT projects featuring well-established brand IPs present a similar opportunity for holders. They can directly monetize the IP itself or lend it to others, enabling them to earn a passive income from their ownership.
This scenario unfolded within the Bored Ape Yacht Club (BAYC) Ecosystem. During the early stages of the NFT space, many initial buyers of BAYC were artists who recognized the demand for the artwork and sought to infuse their unique signature style before selling it. The market repeatedly placed value on the intellectual property (IP) associated with these artworks. However, the value of the Moonbirds collection plummeted when they decided to change their IP rights to a Creative Commons Zero (CC0) license.
Sewer Passes
The IP aspect lies at the core of the Yuga ecosystem, working in tandem with delivering value to its members. Each NFT collection within the Yuga system behaves uniquely, as exemplified by the recent Dookey Dash competition and its sewer passes. The Sewer Passes, tied to Yuga's membership aspect, generated $44.6 million in trading volume, with 10,561 NFTs sold in just two weeks.
These skill-based mints granted access to play Dookey Dash, an “endless runner” game reminiscent of classics like Temple Run. This innovative approach enabled gamers to monetize their skills either by winning prizes themselves or by offering services to Yuga Sewer Pass holders. The minting process for the sewer passes was intricately linked to the membership component of Yuga collections, aligning with the unveiling of Yuga's Roadmap 2.0. These sewer passes were categorized into four tiers, and here is an overview of how they were acquired.
By pairing a Bored Ape Yacht Club (BAYC) NFT with a Bored Ape Kennel Club (BAKC) NFT, participants could mint a Tier 4 Sewer Pass and so forth. Each tier carried a distinct score multiplier, which not only impacted the current tournament, but also held significance for future activations. The ultimate winner of the tournament managed to sell their prize for 1000 ETH, amounting to a value of $1.6 million at that time.
The tournament was open to approximately 26,000 Sewer Pass NFT owners and took place from January 19th to February 8th, 2023. Throughout this period, players dedicated an average duration of nearly 28 hours to their Dookey Dash endeavors, resulting in a cumulative playtime of over 80 years. The players collectively completed an astounding 7.5 million rounds of the game.
ApeCoin
Moreover, over 8,000 participants leveraged ApeCoin, the governance token for the ApeCoin DAO community, to acquire in-game power-ups. The players collectively spent around 425,000 ApeCoin, which roughly translates to $2.2 million in value.
“Our pack of weirdos has gotten bigger and weirder,” Yuga Labs said in a blog post. “During Dookey Dash, our BAYC ecosystem grew by 40%. Love to see it.”
Yuga has successfully fulfilled its promises to users, solidifying its position as one of the most reputable and renowned NFT clubs in existence. It has consistently achieved this by welcoming new members without diluting the value of existing memberships. The ecosystem's growth stems from two fronts: Yuga's dedicated efforts and the endeavors of NFT holders.
The BAYC NFT is a statement, it has a culture, a history, a narrative, and man does this space love a good narrative.
I guess we have a part 3 coming where we’ll talk about:
ApeCoin DAO
Gaming
Metaverse
Let's discuss where Yuga can go from here.