Why Larva Labs sold CryptoPunks NFT IP to Bored Ape creators

Briefly

• Larva Labs sold IP CryptoPunks and Meebits NFT to Yuga Labs, creators of Bored Ape Yacht Club.
• Creator CryptoPunks has faced criticism for its lack of guidance on intellectual property rights and community engagement.

Just last week, CryptoPunks and Bored Ape Yacht Club were the top two contenders in the NFT profile image space. They now have a common owner following Friday’s news that Larva Labs sold the CryptoPunks IP to Bored Ape creator Yuga Labs.

However, despite being the two largest NFT avatar projects in the space, they take very different approaches. The 2017 Larva collection had OG status in the Ethereum space, but the creators have mostly stayed on the sidelines as the overall market surged last year. Meanwhile, Yugi’s booming project operated as a membership club with significant benefits and growing celebrity profile.

It’s a stark contrast that has only intensified in recent months. Larva has now sold the rights to the CryptoPunks and Meebits properties to Yuga Labs, along with many of their NFTs from each collection. And the makers of Bored Ape are planning to shake things up in response to longstanding complaints from some CryptoPunks owners.

Following the announcement at the end of the week, here’s what led to Larva Labs’ decision to step down from running CryptoPunks, and what both firms said along with the deal.

Giants NFTs

The Larva team of two people, Matt Hall and John Watkinson, created CryptoPunks in 2017, offering 90% of a total supply of 10,000 Ethereum NFTs to anyone who can mint them for free. Gradually, Punks gained value and prominence in the still nascent NFT space and became a huge success when the market exploded in early 2021.

CryptoPunks quickly became a prominent status symbol in the NFT space as the average USD selling price rose to five figures in January (according to CryptoSlam) and then six figures in August as the NFT market soared to new heights. Almost $680 million worth of CryptoPunk has been sold on the secondary market this month alone. Even Visa bought one.

Bored Ape Yacht Club is much newer than CryptoPunks, which launched last April, and borrowed the premise of launching 10,000 NFT avatars with random traits. But she took the concept to the next level by branding the so-called yacht club as a kind of exclusive social organization that provides additional and permanent benefits to those who share her vision.

In the months following the launch, Bored Ape owners received two additional free NFTs – the Bored Ape Kennel Club and the Mutant Ape Yacht Club – which also proved to be valuable. In addition, they were able to purchase exclusive merchandise and attend a free concert last fall in New York City featuring The Strokes, Chris Rock and other stars.

But for some holders, the jewel in the crown of BAYC’s value proposition is the ability to commercialize images of the monkeys they own. Bored Apes can be used to market and package products, original merchandise, and even create virtual bands – just like producer Timbaland and Universal Music Group do separately.

Yuga Labs is also working on a play-to-earn game based on Bored Apes and plans to launch a potentially valuable Ethereum token in the near future.

Various approaches

While some CryptoPunk owners have stated that their origins made them valuable and attractive, and that the creators didn’t need to be given extra perks or benefits, others have begun to complain about the lack of attention Larva Labs is giving to the project.

For example, during the NFT NYC event last fall when Yuga hosted the Ape Fest 2021 event, including the aforementioned concert, some CryptoPunks holders speculated on Twitter that Larva Labs had done nothing about the conference. No parties, no perks.

But a bigger issue that has proven to be a wedge for some holders has been the unclear guidance on CryptoPunks commercialization rights, as well as Larva’s increasingly contentious take on NFT derivative projects – or those clearly inspired by the original CryptoPunks.

A well-known collector going by the pseudonym Punk 4156, for example, sold his avatar to CryptoPunks for more than $10 million in December after he was fed up with Larva Labs’ apparent reluctance to clarify the rights to the collection. He was also annoyed by the duo’s attempts to obtain derivatives from marketplaces such as CryptoPhunks (not Punks).

In February of this year, another situation infuriated some CryptoPunks holders. Members of the NFT community created a smart contract that allowed holders to mint a separate “wrapped” NFT based on the original CryptoPunks contract that was abandoned due to an error and sell it as a “wrapped version of V1”.

Larva Labs has spoken out against the project, stating that they are not “official” CryptoPunks. But all the while, the duo started selling some of their own V1 Punk, which they claimed were illegal. Ultimately, Larva Labs apologized for the issue, with Hall calling their actions “stupid”. At the same time, the duo teased a possible legal action against the V1 project, which was removed from the leading marketplace OpenSea shortly after.

All the while, the Bored Ape Yacht Club was attracting celebrities like Eminem, Snoop Dogg and Steph Curry, and the value of NFTs was rising – the cheapest monkeys on the market were more expensive than the cheapest cryptopunks for most of the market. last three months.

Among the bugs and lack of connectivity, some saw Larva Labs as a Web2 company trying to break into the booming Web3 market, struggling to satisfy owners who expected more transparency, collaboration, and rights from expensive NFT investments.

New way forward

They will receive at least some of this now under the ownership of Yuga Labs, which has acquired the intellectual property of CryptoPunks and Meebits, as announced on Friday.

From the outset, Yuga Labs has stated that it will grant full commercialization rights to NFT holders from both collections, meaning they can use their CryptoPunks and Meebits avatars for products, services, marketing, and other initiatives. Yuga will also reportedly not comply with any of Larva Labs’ previous DMCA removal requests for derivative projects.

In a Friday blog post, Larva Labs acknowledged that the growing demands on modern profile picture NFT (PFP) projects are beyond their goals and capabilities.

These projects now need a steward with a different set of skills to keep growing, which is why we trust them to the South. We know their team will honor the history of the Cryptopunks and Meebits by guiding them into the big world they are building.

— Larval Laboratories (@larvalabs) March 11, 2022

“Our personalities and skill set 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.

Larva Labs and Yuga Labs have been linked through music industry veteran Guy Osiri, who represents Yuga in its growing entertainment endeavors. Larva Labs wrote that they considered collaborating with the creators of Bored Ape, but ultimately felt that Yuga could better support CryptoPunks and Meebits IP in the future.

“We found a lot in common, but we also saw in them a set of skills and experience in this area that we lacked,” wrote Larva Labs. “In many ways, Yuga is an innovator of the modern PFP project model and the best people in the world to manage and develop these projects and the communities around them.”

We are not in a hurry to do anything, but we give people full commercial rights, we see what they are building, and we listen. Find out more here: https://t.co/4bL603nKG3

— Yuga Labs (@yugalabs) March 11, 2022

Larva Labs has sold the intellectual property, but will continue to experiment and launch new projects, which the duo say is their strength rather than maintaining existing ones. It also maintains the NFT generative art project, Autoglyphs, which predates the similar (but separate) Art Blocks NFT project.

Aside from opening the commercialization rights, it is currently unclear how Yuga Labs plans to use the CryptoPunks and Meebits IP. Co-founder Wiley Aronov (aka Gordon Goner) told The Verge that Yuga has no plans to convert these projects into Bored Ape-style membership clubs, nor does it intend to add royalties to current free collections. However, according to him, we could see things like streetwear, events and games around the new IP.

“We’re not in a rush to do anything, but we’re giving people full commercial rights, seeing what they’re building, and listening,” the firm said. wrote on Friday.

https://decrypt.co/94973/why-larva-labs-sold-the-cryptopunks-nft-ip-to-the-bored-ape-creators