NFT Spotlight: 3 Things You Need to Know about the BAYC-CryptoPunks Merger

The non-fungible tokens (NFTs) market exploded in 2021 as art enthusiasts and crypto investors alike rushed to acquire the intellectual property (IP) rights for unique digital collectibles. Functioning in a similar way to car titles and house deeds, an NFT represents ownership of a digital asset (i.e., a music clip, GIF image, NBA highlight reel, or a randomly generated avatar). 

While it wasn't the first avatar-focused NFT initiative, the Bored Ape Yacht Club (BAYC) is one of the most popular and pricey NFT series. Justin Bieber famously spent $1.3 million on a pair of BAYC NFTs, while other celebrity owners include Shaquille O'Neal, Mark Cuban, and Gwyneth Paltrow. Yuga Labs, the BAYC parent company, cemented its status as a leader in the NFT market in March 2022 by acquiring the IP of Larva Labs' CryptoPunks and Meebits collections. 

Financial Figures 

While the exact terms of the deal weren't disclosed, Yuga Labs controlled roughly $5 billion in digital art market capitalization following the merger. Specifically, it acquired 1,711 Meebits and 423 CryptoPunks. Both are unique computer-generated avatars stored on the Ethereum blockchain. Around the time of the deal, Meebits and CryptoPunks were selling for an average of $16,100 and $177,420, respectively. The entire Meebits collection has facilitated $7.54 billion in sales since its inception, while CryptoPunks has $4.2 billion in lifetime sales. 

Transferring IP Rights to Buyers 

Despite CryptoPunks' waning popularity in recent months, one sold for almost $24 million in February 2022, and Visa purchased one in August 2021, signaling somewhat of an embrace of the decentralized finance space by traditional financial service companies.  

Yet, Larva Labs has been hands-off in its management approach to CryptoPunks, and avatar holders have been increasingly critical of the management team. Conversely, Yuga has found ways to keep buyers engaged with rewards such as access to exclusive real-life events. 

Larva Labs was also reluctant to grant buyers the IP rights to individual NFTs, but Yuga Labs announced that it will do this following the merger. 

What is the Bored Ape Yacht Club? 

The BAYC is composed of 10,000 unique digital collectibles with ownership signified by NFTs. The computer-generated apes were sold for an original price of 0.08 ETH, or the equivalent of about $244 as of April 11, 2022. Today, avatars can be sold for hundreds of thousands of dollars on OpenSea. 

In addition to being the sole owner of the unique digital asset, buyers receive access to a collaborative graffiti board known as THE BATHROOM as well as other members-only perks.