ApeCoin

One of the most famous web3 projects is the Bored Ape Yacht Club (BAYC), a collection of whimsical NFTs created by a company called Yuga Labs.

The DAO’s website lists four vague benefits of owning tokens, but mostly it appears to be a mechanism for keeping “the community” as far away from the governance of Yuga Labs itself as possible. On Thursday, the DAO gifted a healthy chunk of the 1 billion total ApeCoin tokens to Yuga Labs, Yuga Labs’ founders, and the VCs who backed the project. A core idea of web3 is that it is more open and inclusive than what came before. ApeCoin began life as a Yuga Labs project; it’s part of the pitch deck that leaked this month. But the rewards of ApeCoin are not just financial for investors; their tokens grant them governing privileges over the DAO as well. So far, ApeCoin DAO has decided to use the IP to reward all of Yuga Labs’ earliest backers. Yuga Labs gifted ApeCoin DAO a one-of-one NFT featuring a blue version of the Bored Ape Yacht Club logo. More often, the value is correlated to the collective belief that the project’s backers have in it, and both those beliefs and the tokens’ value can be manipulated as part of the startup’s growth. (Bored Apes’ lifetime sales exceed $1.5 billion.) This week, Yuga Labs announced that it had raised a fresh $450 million in capital, valuing the company at $4 billion. A downside of this arrangement is that companies can take a very long time to arrive at these exits. The arrival of blockchains over the past decade created a new option for impatient VCs. Companies in the Web 2.0 era produced only goods and services, whose value was always denominated in dollars or other national currencies. For a long while now, the basic deal in venture capital has been simple.

On March 16, people associated with the Bored Ape Yacht Club launched a cryptocurrency called ApeCoin. The pitch to investors was vague: support projects ...

Ultimately, the ownership and funding structure behind the Bored Apes project isn’t all that different. The APE Foundation, a separate entity, executes the decisions of the DAO. Reddit co-founder Alexis Ohanian is one of the foundation’s board members. Despite the talk of decentralization, centralized companies like Yuga Labs, which owns the Bored Apes, have done well. But the SEC has also been reticent about declaring precisely when a crypto asset qualifies as a security. It’s akin to a company with a foundation and a fan club. Insiders behind the Bored Apes could be getting very, very wealthy on the deal.