ApeCoin DAO is a hot topic in the crypto community.
Launched on March 16, the coin is the crypto extension of the fabled Bored Ape NFT collection built on the Ethereum blockchain.
Just six days after being listed on major global cryptocurrency exchanges, the media reported that the coin became a favorite among crypto whales, reaching a holder count of over 36,500 wallets.
Described as a “token for culture, gaming, and commerce used to empower a decentralized community building at the forefront of web3”, its white and blue logo depicts the skull of a monkey, reflecting the Bored Ape’s design concept.
Here is a round-up of the project.
Apes taking over
In 2021, the Bored Ape Yacht Club, owned by the YugaLabs, launched the Bored Ape NFT collection, a series of automatically generated profile pictures of cartoon apes with a twist.
Each monkey wears a unique outfit and has a distinct element (signs, accessories, etc) to it. All Bored Ape NFT owners are part of a private online club, exclusive in-person events, and intellectual property rights for the image, all of which shed light on why the project became wildly successful.
According to estimates, it has generated 145,000%+ profits for anyone who bought at the minimum price less than a year ago, a rare return in the world of cryptocurrencies.
Celebrities like Eminem, Snoop Dogg, Steve Aoki alongside the famous investor Mark Cuban, who once compared Bitcoin with bananas, are among those who own the Bored Ape NFTs.
Madonna has recently joined their ranks, becoming the proud owner of a Bored Ape Yacht Club NFT — Bored Ape No. 4988. She is estimated to have paid a whopping 180 ETH for the NFT, i.e. around $600,000 at the time of writing.
To expand its success, YugaLabs is already working on other projects and has recently bought the rights to CryptoPunks, Meebits, and others and raised $450 million in equity funding from a16z’s crypto fund and others.
ApeCoin’s nuts and bolts
The coin also has an extensive description of the ApeCoin’s gist and mode of governance on its site, noting that “the ApeCoin community governs itself via the ApeCoin DAO, the decentralized governance framework that supports the Ecosystem Fund. The DAO follows a proposal process to vote on how the Ecosystem Fund will be distributed by the APE Foundation to promote a diverse and self-sustaining ecosystem. This governance guide is an overview of the proposal process. It’s a living document that will evolve and improve with the DAO community’s input.”
Being a community-led project, it also has a proposal process, based on the one implemented and proven out over time by Ethereum’s EIP system. The community may submit a structured Ape Improvement Proposal relating to three categories: Core, Process, or Informational. Core proposals have two subcategories, Brand Decision and Ecosystem Fund Allocation.
Each proposal is subject to vote, with ApeCoin spelling out the procedure in detail while also stating that ApeCoin DAO’s consensus mechanism aims to make placing votes fair, transparent, and low-cost so that ApeCoin holders can participate in the decision-making of the DAO.
It also promises to transition the proposal and voting mechanisms into a full, on-chain platform in a form determined by the community over time.
Value and use cases
Like its parent NFT project, ApeCoin looks like a promising venture.
Although ApeCoin’s value decreased since its release (it hit the market at a value of just over $40), it is still trading at a solid price of $14.76 with a market cap of $4,099,141,302.
ApeCoin’s total supply stands at 1 billion tokens. The number is fixed with no burning option available. Minting beyond that number is likewise unavailable.
Considering the limited supply and popularity, ApeCoin has a good chance of increasing its value over time as the crypto market evolves.
The Bored Ape Yacht Club is also on its way to creating the first use cases for the ApeCoin, increasing its utility. Recently, it has teamed up with the Hong Kong-based Animoca Brands to develop a play-to-earn blockchain game featuring ApeCoin with built-in play-to-earn mechanics.
The trailer is available on YugaLab's official Twitter handle.
But how decentralized is it?
ApeCoin prides itself on being a decentralized project built on DAO, essentially a group of people pursuing a shared goal, using a blockchain to make decisions transparently and efficiently.
However, that claim is yet to be fully verified as there seems to be some trouble in ape paradise.
Following its launch, ApeCoin received critique for its decision to allocate 38% of the supply to reward all of YugaLabs’ earliest backers, including YugaLabs, YugaLabs’ founders, and the VCs who backed the project, including Andreessen and Horowitz, and Bored Apes owners.
This decision might spell trouble for ApeCoin, especially since these 38% allows its holders to potentially impact the coin’s price, which undermines the concept of decentralization.
Some media outlets took a step further, describing it as “awfully” centralized. Not least because the holders seem to be relying very heavily on “the efforts of others.”
Other reservations pertain to regulatory issues.
The crypto-verse is no stranger to the Security and Exchange Commission’s (SEC) continuous scrutiny of crypto projects big and small. Just ask Ripple Labs which has been fighting off the SEC for over two years with the lawsuit's end nowhere in sight.
So ApeCoin may yet to prove that it is not a security in line with Hinman’s test.
Per the test, “if the network on which the token or coin is to function is sufficiently decentralized — where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts — the assets may not represent an investment contract.”
Accordingly, if there is no investment contract, it is not a security. But some other factors and nuances need to be taken into consideration.
Simply put, ApeCoin has to make sure that its launch is not regarded as a veiled IPO, a big no-no for every coin looking to become a major crypto player.