- Yuga Labs, the organization behind the Bored Ape Yacht Club (BAYC) acquires the intellectual property of CryptoPunks and Meebits, two large NFT collections.
- Yuga Labs will now be behind some of the top NFT projects available on the market.
- Is this a new type of monopoly within Web3?
On March 11, a Press release where the acquisition by Yuga Labs for the intellectual property rights of Larva Labs’ CryptoPunks and Meebits collections of NFTs, but, beyond that, it is important to know that Yuga Labs is the company behind Bored Ape Yacht Club. Will this be the first monopoly within Web3?
Since 2020, non-fungible tokens (NFTs) have started to make a lot of noise, especially with the success stories that have made millions of US dollars for a single NFT piece.
It is necessary to remember that “non-fungible” refers to the characteristic of being unique and irreplaceable. Is an NFT the art? Not really what makes NFT unique is not the art, but its registration in the blockchain, usually on Ethereum. In fact, an NFT can be represented by any digital asset, including music.
In NFTs there is a monopoly or decentralization
The key point is that NFTs enable scarcity, uniqueness, and proof of ownership in the digital worldclosing a gap that existed since the digital world began.
Now, the question is: Are NFTs decentralized? In theory, as the Ethereum Foundation explains, the entire NFT ecosystem running on the Ethereum blockchain would be decentralized as anyone can verify ownership of the NFT without the need to trust or give custody to a third party.
Nevertheless, within the ecosystem it is also debated whether Ethereum is really decentralized. Bitcoin maximalists in particular believe that Ethereum is indeed centralized. In fact, Morgan Stanley Wealth Management in a note titled “Cryptocurrency 201: What is Ethereum?”wrote that the Ethereum network is less decentralized than Bitcoin, with the top 100 addresses holding 39% of ETH compared to just 14% of Bitcoin.
Therefore, if the decentralization of Ethereum is called into question, that of NFTs would also be called into question. Not only because it is in a blockchain that questions whether or not it is decentralized, but because of the control that the organizations that develop the collections have over them and the little participation of the community in decision-making.
Larva Labs vs. YugaLabs
CryptoPunks it is one of the oldest and most valuable collections on the NFT market. In fact, its launch took place in 2017 with 10,000 NFT, of which 90% were claimed by users for free. The problem is that no information about content licenses was discussed or provided at the time.
Despite this, CryptoPunks became one of the symbols of the NFT market, especially after the average selling price in US dollars was up five figures in January 2021 and by August 2021, the median sales price was up six figures.
Currently the market capitalization of CryptoPunks is $1.97 billion dollars and has an average price of $129.22 thousand dollars, and they are positioned as the third market only behind OpenSea and LooksRare according to platform DappRadar.
While meebits, a relatively recent collection, has also managed to position itself as one of the most valuable with a market capitalization of $264.86 million dollars. So why would Larva Labs sell the IP rights?
Prior to the acquisition, Yuga Labs’ Bored Apes Yacht Club (BAYC) competed with Larva Labs’ CryptoPunks for the position of the most relevant collections by market capitalization.
BAYC took the concept of NFTs to a new level. Now you not only had an exclusive digital item, its ownership also gave you exclusivity in everyday life. BAYC offered its holders to be part of an exclusive social organization and that, consequently, it gave him a social status and as if this were not enough, BAYC gave holders of its NFTs the ability to market the image of the Ape they own.
Meanwhile, Larva Labs was conspicuous by its absence for some. In fact, a controversial aspect is that, during all this time, the intellectual property rights of both collections, CryptoPunks and Meebits, have belonged to the creators of the project.
We want full ownership of NFTs!
On multiple occasions, CryptoPunks holders have made their displeasure known with Larva Labs, as they largely stood by without providing clear guidance on intellectual property rights. Especially after a collector sold his NFT for 2,500 ETH claiming it was “time to move on” following frustration with Larva Labs.
All this while the value of the Bored Ape Yacht Club continued to rise.
Therefore, CryptoPunks and Meebits holders were in limbo, while Bored Ape Yacht Club holders received free NFTs and ownership of the commercial rights to the artwork.
What additional value does ownership of intellectual rights provide? Well, the ability to use the image of the NFT to market. For example, owners of the Bored Ape Yacht Club have created merchandise with their NFT.
Patience has a limit
Amid the absence of Larva Labs, in February 2022, members of the CryptoPunks community created a Smart Contract that would allow holders to mint a ‘wrapped’ NFT separately but based on the original contract with CryptoPunks, which was abandoned due to to a mistake, and sell it as a “Wrapped V1” edition.
The project was rejected by the Larva Labs team as they were unofficial CryptoPunk, but what further upset the community was that the developers subsequently sold some of their own V1 Punks which, in theory, were not. legitimate.
This is how the community of NFTs provided by Larva Labs began to doubt the team, they even classified it as a Web2 company that was trying to enter Web3 by groping and, as is practically evident, In this market, transparency and property rights are key. Without them, then you don’t belong in the market.
Yuga Labs plans to revolutionize and fix all complaints
In a blog post, Larva Labs acknowledged not having the skills to keep CryptoPunks and Meebits growingbut, in addition, he was escaping from his objectives and precisely for this reasonhave decided to hand over the intellectual property rights to Yuga Labs.
“Our personalities and skill sets are not well suited to the community management, public relations, and day-to-day management that these types of projects require and deserve.”, they wrote.
Yuga Labs’ first step will be to grant a full commercial license to all CryptoPunks and Meebits holders.
“With this acquisition, Yuga Labs will own the CryptoPunks and Meebit trademarks and logos, and as it has done with its own BAYC collection, Yuga Labs will transfer the exclusive, commercial, and intellectual property licensing rights to individual NFT holders.“, they explained in the press release.
What is the future of CyberPunk and Meebit?
Then, now Yuga Labs is behind 3 NFT collections not counting the collections that have spun off from BAYC.
Yuga Labs emphasized on Twitter that the BAYC ecosystem will remain the center of its universe. As well as believing that they can make the cake grow in general.
Regarding the CyberPunk and Meebit collections, beyond handing over all property rights to owners, it is unclear what the team’s plans are for both collections.
However, Wylie Aronow, co-founder of Yuga Labs, explained to TheVerge that there are no plans to remodel these projects in the style of Bored Ape, nor to add royalties. Aronow pointed to the possibility of making clothes, events and games around these two collections.
Yuga Labs is certainly not the same as Bored Ape Yacht Club. BAYC is a brand within Yuga Labs and now CryptoPunks and Meebits will be as well.
Ownership of NFTs is in the hands of the community. However, Yuga Labs and the entire team behind each collection have a fundamental role in keeping the project alive with a strategy based on promoting the prestige and scarcity of the asset.
Therefore, toNow Yuga Labs will have a relevant participation in the future of 3 of the largest NFT collections on the market. However, in theory, it would not be a monopoly because Yuga Labs no longer controls the supply of NFT collections, this is controlled by each user.
But, even so, one cannot ignore the fact that these NFT collections, being one of the largest, have been merged under the same company that already embraced another large collection and, furthermore, it was a decision made by Yuga Labs without consult the BAYC community.
In the meantime, Yuga Labs has announced the creation of the token called ApeCoin that will be used in the BAYC ecosystem. The token will be overseen by a community-controlled organization.
This is not to say that the organization will be completely independent from Yuga Labs, as it will have a fairly sizable voting share. In theory, all token holders will have the right to vote on the organization’s decisions.
final thoughts
This is not a monopoly in the strict sense of the word. In the end, users of all NFT collections behind Yuga Labs will have all rights to their asset and therefore Yuga Labs does not itself control the supply of NFTs.
However, the organization undoubtedly has a considerable role in the future of the projects; it is precisely for this reason that Larva Labs gives away the collections.
So it may not be a monopoly in the sense that the term is currently used, but the future of some of today’s major NFT projects depends to some extent on a single organization.
In fact, the decision to acquire CryptoPunks and Meebits was not consulted with the BAYC community, coming as a surprise and thus demonstrating the power of Yuga Labs over the future of the project.
This begs the question: How much power do users have over the future of their NFTs? Could this be the new concept of monopoly within Web3?
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