CryptoPunks vs BAYC: The Battle of Titans in the Crypto Narrative

This article is authorized and reproduced from NFTGo, the original article titled "CryptoPunks vs BAYC, Who won the Blue Chip Battle?"

1. Last week, Yuga Labs acquired the collection of CryptoPunks and Meebits from Larva Labs. After the acquisition, Yuga Labs will own the brands, art copyrights, and other intellectual property of these two series, including 423 CryptoPunks and 1,711 Meebits, sparking discussions on NFT copyright issues.

2. Following the NFT boom last year, CryptoPunks faced a bearish crypto market and saw an average price drop of 61.40%. The floor price did not change significantly post-acquisition.

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3. Despite a significant drop in ETH, the valuation of BAYC was not greatly affected by cryptocurrency prices. The average price increased by 88% compared to three months ago, and the floor price rose slightly post-acquisition.

Leader in the PFP Market

Currently, PFP projects are one of the most popular categories in the NFT market, occupying 70% of the NFT market share according to NFTGo.io's ranking data.

Within the PFP projects, CryptoPunks and Bored Ape Yacht Club (BAYC) are the two major blue-chips. Since the NFT summer, these two projects have consistently ranked at the top, holding the first and second positions respectively.

Founded in 2018, CryptoPunks has been a standout in the NFT market. As the OG of NFT PFPs, CryptoPunks represents the identity and credentials of NFT enthusiasts. Currently, CryptoPunks hold 11.3% of the entire NFT market share.

Bored Ape Yacht Club (BAYC) is also a highly regarded top blue-chip project, with a market value exceeding $800 million and a valuation of $5 billion from a16z. In addition to BAYC, Yuga Labs also owns the MAYC Mutant Ape Yacht Club and BAKC Mutant Ape Kennel Club series, generating a total revenue of over $1.3 billion.

CryptoPunks vs. BAYC, Who Takes the Lead?

Market Performance of CryptoPunks

In the first week of October 2021, the market frenzy drove the average price of Punks to 137 ETH. It is worth noting that at that time, 1 ETH was priced at $4,151, while today it is around $2,700. Concurrently, CryptoPunk transactions broke the record for the most expensive PFP NFT transaction in history.

However, despite CryptoPunks' past impressive performance, the project has recently experienced severe price surges and drops. Comparing the price chart with the summer of 2021, the market downturn's impact on CryptoPunks has become more pronounced.

Currently, many investors believe that buying a pixelated JPEG for millions of dollars may not be worthwhile, as the market no longer exhibits the same bullish sentiment as before, and FOMO is gradually fading. Nevertheless, CryptoPunks remains a leader in the market with the largest number of OG NFT whales and is almost a must-know project for entry into the NFT space.

Market Performance of BAYC

Currently, amidst a sluggish NFT market in the past week, BAYC's trading volume has increased by nearly 88.92%.

Last week, BAYC's highest sales ranged from 120 ETH to 250 ETH. There was also a recent transaction record of 666 ETH. From high-value transactions and the entry of numerous whales, it is evident that they still consider holding BAYC as a valuable asset and are willing to continue buying in a bearish market.

By observing the historical BAYC price chart from NFTGo, it can be seen that unlike CryptoPunks, despite the sharp decline in ETH value, the ETH price of BAYC NFTs has been consistently rising, reaching high levels.

Currently, the average price of Bored Apes has risen to 88.2 ETH, with the current value of ETH around $2,700. The floor price has also risen by 41% in the past 7 days.

We can calculate the net value loss of these two top blue-chip NFT projects by multiplying the average price at the time by the ETH price and comparing the value with today's valuation. In fact, as the ETH price drops, the valuation change of CryptoPunks becomes negative, while that of BAYC remains positive. CryptoPunks led the market during the NFT summer with its groundbreaking narrative and discoveries, but faced with the crypto market downturn, its value has dropped by over 50%, correlating more with market sentiment. However, despite the significant decline in Ethereum, BAYC's valuation has not been greatly affected by cryptocurrency prices, maintaining its original value.

Below shows the floor price changes of the two projects before the IP acquisition, from mid-NFT summer to early January 2022. Both projects experienced declines, but CryptoPunks' floor price saw a larger decrease.

Brand Effect and Narrative Style

The BAYC team emphasizes membership, granting BAYC membership to holders and gradually improving exclusive member-only content around BAYC, including a member-exclusive BATHROOM for creation, graffiti, and interaction, with merchandise such as T-shirts and hats being exclusive physical privileges for members.

In addition to BAYC, Yuga Labs has expanded its products horizontally to include BAKC and MAYC, where the pets in BAKC are free for every BAYC member, only requiring gas fees, demonstrating mutual value support among Yuga's IPs.

Commercial usage rights for BAYC NFTs are also given to specific holders. On December 22, 2021, 33 BAYC holders collaborated with a Taiwanese e-commerce group to launch 3D figurines, fashion clothing, and other businesses. This opens up more possibilities for the commercial value realization of BAYC.

Yuga Labs signed an IP co-development agreement with renowned music manager Guy Oseary. Additionally, they collaborated with Jimmy McNiles and even partnered with Universal Music to form a virtual band with his four apes, expanding into the music market. BAYC's development is inseparable from the decentralization of NFT commercial copyrights and the increasingly sophisticated ecosystem built around commercial copyrights.

On the other hand, CryptoPunks' positioning is more akin to a collectible in the NFT realm, with its value support coming from its pioneering narrative elements, resembling an antique waiting to be collected, leaning more towards a means of value storage.

The relationship between rarity and price of CryptoPunks and BAYC is shown below. It can be observed that the value of collecting CryptoPunks is positively correlated with rarity, the rarer, the more expensive. On the other hand, the collecting behavior of BAYC is primarily driven by membership, thus the relationship between price and rarity is less pronounced compared to the former.

Copyright Issues under Strong Collaboration

Historically, Larva Lab has been silent about the development of CryptoPunks, with no clear explanation on commercial applications and copyright issues. In August 2021, Larva Lab handed over the exposure rights to various film, entertainment platforms to Hollywood agency UTA instead of selling them to holders. The ambiguity surrounding the v1 CryptoPunks copyright after the substantial profits from selling v1 CryptoPunks has sparked dissatisfaction among holders.

In their statement post-acquisition, Yuga Labs emphasized that their first priority is to grant full commercial rights to CryptoPunks and Meebits NFT holders, which can be traced back to Yuga Labs initially granting ownership and commercial usage rights to BAYC and MAYC owners. Yuga Labs also plans to further integrate these two NFT series with Web3 alongside community members.

Typically, NFT copyrights do not belong to buyers. However, Yuga Labs grants ownership and commercial usage rights for BAYC, which are transferred to buyers upon transaction. BAYC grants Bored Ape NFT holders complete commercial usage rights to use, copy, and display the purchased collectibles, as well as create creative derivative works with them.

Digital native asset copyright protection has always been a challenge, as "copy and paste" is too easy, making digital rights protection very difficult, and the definition of NFT copyright issues consequently arises.

In 2018, Cryptokitties creator Dapper Labs released the NFT License, explicitly stating that NFT holders cannot arbitrarily alter the artistic image of the NFT they hold, use it for commercial marketing, or produce it for third-party products. Additionally, NFT holders cannot associate with improper images or register trademarks or acquire other intellectual property rights. This standard essentially eliminates most of the holder's commercial interests.

But is this beneficial for the ecosystem?

Savvy project creators understand that it is only when the influence of the entire IP grows that it can truly benefit every holder. Yuga Lab's case is a prime example. The crypto movement advocates for an open, transparent, and sharing world, with its fundamental unit being an open community. Any copyright restrictions seem incompatible with the values of the crypto world.

If the outcome of the copyright war is like a spectrum, with the far left representing completely closed old-world copyright standards and the far right representing fully open CC0 copyright agreements. It is noteworthy that the final direction of NFT copyrights depends on the attitudes and initiatives of the community and projects.

Conclusion

Punk creators have expressed online that they are not "very suitable" to support the project. The merger of these two most powerful NFT projects also indicates that some projects can build a better community through complementary advantages.

The responses of the owners of both projects also hint at future growth prospects. Fans initiated the #ApesandPunksTogetherStrong campaign on Twitter, expressing their interest in this acquisition.

The current slowdown in NFT growth may also indicate that the market will become more mature, and as the market gradually expands, there may be more similar copyright trading scenes in the future. This collaboration may be a milestone event in the NFT ecosystem, as the power generated by these two top blue-chip NFT projects is enough to change the development trajectory of the NFT market and bring more valuable opportunities to all NFT Hodlers.