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What is ApeCoin? Why Has BAYC Become the Hottest Thing in Crypto?

ApeCoin is the newest and arguably most-hyped altcoin in the cryptocurrency market right now. The native token of the Bored Ape Yacht Club NFT series, it’s an Ethereum-based ERC-20 token that grants holders governance rights with the ApeCoin DAO (decentralized autonomous organization). It started trading on March 17, rising from a starting price of around $7.40 to its current all-time high of $17.17 the next day

This represents a rise of 130% within less than 24 hours, underlining why ApeCoin has quickly become one of the most talked-about altcoins in the market. However, while an initial market surge is certainly enough to implant a new cryptocurrency into the collective (un)conscious of traders, does ApeCoin really promise long-term, sustainable returns to the investors who buy it now?

It’s arguable that the launch of ApeCoin is riding an NFT bandwagon that may run out of steam in the coming months, and that an NFT series based around only 10,000 tokens has a fixed shelf life. However, Bored Ape creators Yuga Labs are planning to expand its currently limited creations into a wider ecosystem, replete with its own metaverse. This could mean that ApeCoin does indeed appreciate in the long-term.

Bored Ape Yacht Club

What is ApeCoin? A Governance and Utility Token for the Bored Ape Yacht Club Ecosystem

A governance token with a capped supply of 1 billion, ApeCoin will enable its holders to vote on how funding is distributed by the ApeCoin DAO. As explained on its official website, this DAO will serve to distribute funds to projects building new apps, products or services for the Bored Ape Yacht Club.

“ApeCoin DAO members [will] make decisions regarding Ecosystem Fund allocations, governance rules, projects, partnerships, and beyond. ApeCoin DAO membership is open to all ApeCoin holders,” the website’s about page reveals.

What the website doesn’t reveal, however, are the voting mechanics behind governance decisions, while there’s also no detail on what kinds of projects will be opened to voting. Still, it remains early days, not least because Bored Ape Yacht Club itself launched only in April 2021.

Another important feature of ApeCoin is that it will serve as a kind of utility token. So aside from enabling holders to vote on ApeCoin DAO funding decisions, it can also be used to gain access to various perks, which again haven’t really been spelled out explicitly.

“ApeCoin is the ecosystem’s utility token, giving all its participants a shared and open currency that can be used without centralized intermediaries […] ApeCoin provides access to certain parts of the ecosystem that are otherwise unavailable, such as exclusive games, merch, events, and services,” reads the website.

Irrespective of any vagueness, the sheer standing of the Bored Ape Yacht Club was enough for ApeCoin to be listed on pretty much all major exchanges on March 17, a day before its airdrop. This includes Coinbase, FTX, eToro, Kraken, OKX, Gemini, FTX, Binance and Binance US, among others.

Again, ApeCoin (APE) rose from $7.40 on the first day of its listings to $17.17 less than a day later. It then sank to about $9.62 on March 2o, before rising back up to $12.02 (as of writing).

Source: CoinGecko

Also, for anyone interested in the ApeCoin DAO, here’s a breakdown of how the capped supply of 1 billion APE tokens is being distributed:

  • 47% will be released over time as part of the DAO’s fund.

  • 16% is earmarked for the Yuga Labs team, for development purposes.

  • 15% was airdropped (on March 18) to owners of the Bored Apes and Mutant Apes collections.

  • 14% is allocated to “launch contributors,” most likely meaning private Yuga partners and investors.

  • 8% is going to the founders of Bored Apes Yacht Club.

  • Around 1% of the total token supply will be donated to the Jane Goodall Foundation Legacy Foundation, a charity focused (among other things) on the maintenance of natural habitats for primates and other wild animals.

Put simply, the ApeCoin DAO will have a total kitty of around 470,000,000 APE to distribute to projects over the coming years. It’s also worth pointing out that, based on CoinGecko’s 24-hour volume figures, there are now around 132,671,952 APE tokens being openly traded on various exchanges.

Does APE Have A Long Future of Sustained Growth Ahead of It?

132,671,952 is an awful lot of tokens. Given that the airdrop distributed only 80,000,000 APE to holders of Bored Ape (and Mutant Ape) NFTs, this suggests that a significant proportion of the allocation to investors, founders and developers has also been sold.

Indeed, average 24-hour volumes reached as high as $5,335,156,200 at a price of $14.42 on March 18, indicating that as many as 369,983,092 APE tokens could have been sold on that day. Likewise, volumes reached as high as $1,395,894,992 on March 17, before the airdrop. This indicates that, at a then-price of $8.31, pre-airdrop holders (such as investors, founders and developers) sold as many as 167,977,736 APE.

The point of this back-of-the-envelope number crunching is to highlight the fact that a portion of initial investors have already begun offloading their bags. This doesn’t always inspire confidence as to the long-term chances of an altcoin, particularly when it’s based around something as (arguably) bandwagon-y as NFTs.

Indeed, the Bored Ape Yacht Club has risen to prominence based largely on celebrity-powered hype. Limited to only 10,000 NFTs and representing a range of cartoon apes (in boating attire), Bored Apes have been purchased by the likes of Gwyneth Paltrow, Eminem, Shaquille O’Neal, Post Malone, Snoop Dogg, Mark Cuban, Steph Curry, Jimmy Fallon and Paris Hilton.

The average price (in the last seven days) for a Bored Ape NFT now stands at around $298,000, with more sought-after sailing apes sold for $1.5 million and $1.74 million. These are eyebrow-raising sums of money that beg the question of whether the Bored Ape craze has already reached its peak. Not least when there’s nothing you can obviously do with a Bored Ape other than show off the fact that you paid ridiculous sums of money for it.

As things stand, there’s not much else to the Bored Ape ecosystem other than the Bored Ape Yacht Club and the Mutant Ape Yacht Club NFT collections. This would arguably cast serious doubt on whether ApeCoin has a long future of sustained price appreciation ahead of it, especially when it’s down compared to its recently set all-time high. I mean, there’s not much for an ApeCoin DAO to do right now, as well as no obvious way for the Bored Ape ecosystem to grow (other than Yuga Labs launching more NFT collections).

However, while cynics may have a point as things stand, it does indeed appear that Yuga Labs is extremely serious about expanding Bored Ape’s ecosystem. It has just announced a $450 million funding round led by Andresseen Horowitz, Animoca Brands, Coinbase and MoonPay, and valuing it at $4 billion. Part of the reason it has been able to attract so much funding (beyond so many celebrity endorsements) is that it has plans to launch its own metaverse, dubbed the Otherside.

Source: Twitter

While details are (unsurprisingly) scarce at the moment, Yuga Labs will build Otherside in partnership with a variety of game developers. Access to the metaverse won’t be limited to holders of Bored Ape or Mutant Ape NFTs, and it will also reportedly be open to other NFTs from other collections.

Of course, plans to expand beyond a limited set of primate NFTs and into the metaverse don’t necessarily guarantee success. Nonetheless, they at least offer hope that ApeCoin could regain the momentum it enjoyed in its first couple of days, and be more than a one-week wonder.

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CryptoVantage Author Simon Chandler

About the Author

Simon Chandler

Simon Chandler is a journalist based in London. He writes about technology, markets and politics, and has bylines for Forbes, Digital Trends, CCN, Wired, TechCrunch, the Verge, the Sun, the New Internationalist, and TruthOut, among many others. His Twitter handle is @_simonchandler_

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