The NFT Market Could Be Shaken Up By This Mega Deal

The NFT Market Could Be Shaken Up By This Mega Deal
Reda Farran, CFA

almost 2 years ago5 mins

  • Yuga – the creator of Bored Ape Yacht Club – acquired the IP of the CryptoPunks and Meebits NFT collections in a deal likely worth more than $110 million.

  • The deal will likely benefit all three collections and boost the wider NFT market, making Yuga the clear leader in the growing market for NFT profile pictures.

  • While the deal shows that the NFT market is professionalizing and consolidating, it also raises questions about decentralization.

Yuga – the creator of Bored Ape Yacht Club – acquired the IP of the CryptoPunks and Meebits NFT collections in a deal likely worth more than $110 million.

The deal will likely benefit all three collections and boost the wider NFT market, making Yuga the clear leader in the growing market for NFT profile pictures.

While the deal shows that the NFT market is professionalizing and consolidating, it also raises questions about decentralization.

Mentioned in story

Last Friday, Yuga Labs – the creator of Bored Ape Yacht Club (BAYC) – acquired the intellectual property of the CryptoPunks and Meebits NFT collections from Larva Labs. It’s not every day that the hottest two projects in an explosive asset class merge, and it’ll probably have implications on the wider NFT market. So, here’s a look at what the deal could mean.

Tell me more about the deal

CryptoPunks is one of the oldest and most valuable brands in the NFT world, and Meebits quickly joined the list of most valuable NFT collections after launching last May. The deal means that Yuga now owns the brands, art copyrights, and other IP for both collections – along with 423 CryptoPunks and 1,711 Meebits.

While the terms weren’t disclosed, we can guess the minimum amount Yuga paid based on the value of the NFTs it received. When the deal was announced, CryptoPunks’ and Meebits’ average selling prices were about $200,300 and $15,800 respectively. So the deal was likely worth more than $110 million.

As part of the deal, Yuga’s transferring the full commercialization rights to CryptoPunks and Meebits holders for free. These are the same rights that BAYC holders have.

What are the implications of the deal?

1. It’s probably good for CryptoPunks and Meebits holders

Larva has been criticized for not giving the two projects enough attention. But now the collections are in Yuga’s hands, and it’s one of the savviest marketers in the space, which could help the two collections become bigger and more valuable brands. What’s more, granting full commercialization rights to NFT holders means they can use their CryptoPunks and Meebits avatars for merchandise, games, marketing, and other initiatives – all of which could make those NFTs more valuable.

2. It helped reverse the bad media attention BAYC’s had lately

The day before the deal was announced, BAYC invited users to apply to an upcoming project. While no details of the project were revealed, BAYC required users to be KYC-verified. KYC stands for “Know Your Customer” – a banking compliance requirement that’s not very popular in the decentralized and anonymous world of crypto. Needless to say, BAYC asking people for passport details, real names, addresses, and even selfies was met with heavy backlash.

Now, everyone’s talking about the deal instead – and the fact that Yuga now owns three of the most valuable NFT collections on the market. What’s more, in announcing the deal, Yuga explicitly said that it plans to keep BAYC as the “center of the universe”. That means whatever Yuga does next – including any synergies or collaborations with its newly acquired CryptoPunks and Meebits collections – should be good news for BAYC holders.

3. It could boost the NFT market

This deal is coming right as the NFT market has cooled off a bit. After a big rise in sales volume and value throughout much of last year, the market began to dip around the holidays – and it’s yet to pick back up. Average selling prices have been declining as well. But the deal is grabbing headlines, bringing renewed attention to the NFT market and the value of individual collections – all of which can help boost the overall market. This is not too dissimilar from the stock market, where a big deal in a particular sector increases the trading volumes and prices of the other stocks in the sector.

4. It shows the NFT market is professionalizing and consolidating

Most NFT projects are small-scale and operated out of Discord channels. But Yuga is starting to act like a real professional company: it’s making acquisitions and consolidating, like any company trying to take share in a growing market would. It now owns the largest and most culturally significant NFTs in the space, after all. And Yuga’s expanding into the metaverse too, announcing plans for virtual land sales, a gaming project, and more.

On the back of all that, Yuga’s projecting revenue of $455 million this year – up around 260% from last year – and it’s looking to raise fresh funds at a valuation of up to $5 billion. Raising VC capital from heavyweights like Andreessen Horowitz is another sign that the NFT market is professionalizing. This could all be good for the BAYC collection too: some people will probably buy Apes simply to bet on Yuga as a company.

5. It makes Yuga the clear leader in the growing market for NFT profile pictures

The NFT market for profile pictures – like BAYC and CryptoPunks – was worth $14 billion last year, and Yuga’s set to be the clear leader here after the deal. Plus, the firm’s well-established, sought-after collections are only expected to have more scarcity value as metaverse adoption increases. More people means more demand for the most established and valuable digital avatars: they’re an important way to express your digital identity, status, and credibility in the metaverse, after all.

6. It raises an interesting question about NFT decentralization

How decentralized are NFTs, really, when their IP can be exchanged between corporations? If Larva can sell CryptoPunks’ IP to Yuga and change the whole future of the project, what’s to stop Yuga from selling it on to Universal or Disney and changing the future of the project again?

NFTs are far from decentralized when their IP rights and project direction keep switching corporate hands. One potential solution is zero copyright (known as CC0) NFTs – but these are very difficult to monetize. It’s an interesting debate with no right answer as of yet.

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