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In today's episode, we dig into the demise of Bored Ape Yacht Club. The floor price of BAYC NFTs has reached its lowest point since early 2021 and sentiment among the community is at an all-time low. Can Yuga turn things around?
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Transcript
Introduction to the Decrypting Crypto Podcast
00:00:12
Speaker
Hello, and welcome to the Decrypting Crypto Podcast. It's June 20th, 2024, and this is Off Chain, your weekly recap of the biggest stories in the crypto space. I'm Matthew House-Barbie, and as always, I'm here with Austin Knight. How you doing, Austin?
SEC Drops ETH 2.0 Investigation: Political Influence?
00:00:28
Speaker
I'm well, Matt. ah The SEC has officially effed off with their investigation of ETH 2.0. I know, right? I'm all right with that. Yeah, it's it's it's great. ah The SEC calmed down.
00:00:44
Speaker
England won their first game at the Euros and all as well in the world. I actually, you know, I actually I was over in Germany.
Biden Campaign's Stance on Crypto Regulation
00:00:50
Speaker
I went to the game and saw the pictures. Yeah. A logistical nightmare. But was was very good fun. um Happy in in many ways for both England and for ah ah the SEC. finally starting to back off. We'll see, we'll see how it plays out. But I mean, it feels like this was coming ah based on, you know, them obviously approving the the first phase of the e ETFs. Seems like, you know, the S ones are going to be probably in the next three, four weeks. Something I had to give. So good news though. Good news. Although you wouldn't think it from the markets.
00:01:33
Speaker
I know. um Still, you know, to me, I think that this reinforces the theme that we were talking about a couple of weeks ago, that this is being viewed as an election issue. I mean, I think that in retrospect, um the Biden campaign has to be thinking, wow, you know, Gary Gensler and Elizabeth Warren really screwed us on this issue, and they're pulling back from it. And my question would be, you know, if Biden were to be reelected or perhaps Biden's hot swap replacement, as I predicted. I was about to say, on Polly Market, I think it was something like the odds of Biden not running were like 31% yesterday. Like high, right? I mean, if you think about it. Really high. Yeah. Which was like, really? Because for me, like if someone said to me, what do you think the odds of Biden not running are? I would put it at like,
00:02:25
Speaker
4, 5% max. But I feel like someone knows something I don't know here. and Because you know you should never never bet against the betting market, so to speak. right And it's Yeah, it's kind of shaky out there. Yeah. Regardless, I do wonder you know if that administration or some variation of it were to be reelected, if these sorts of hostile cases wouldn't be picked right back up. Because actually in the statement that the SEC put out when they dropped the investigation, they said, to be clear, you know this is not
00:03:03
Speaker
like exonerating them in any way it's not saying that we're not going to pick up investigations in the future so they really like laid it out there that like we're dropping this for now but yeah we definitely reserve the right to like come after you again in the future you know maybe after november yeah right right and i it's a good point i actually hadn't really thought about it like that but yeah i agree it does kind of reinforce the narrative around being kind of an election issue now. but yeah we well We'll see how it plays out. All right. We've got a couple of ah cool topics to to dive into.
Introduction to Symbiotic and Restaking Platforms
00:03:42
Speaker
we're gonna We're going to really talk a bit about, I guess, not just the NFT space, but
00:03:51
Speaker
the really pretty drastic demise of Baudette Yacht Club and where it is right now. um I think sentiment's at an all time low and price is not looking great. So I'm looking forward to us digging into that. And I'm gonna kick us off with um an exciting newly launched protocol in the restaking space. One of my favorite topics, restaking. So let's jump into that right now.
00:04:25
Speaker
Symbiotic, which is backed by both the Lido founders, the creators of P2P.org and Paradigm has gone live last week. So last Tuesday, and it's a restaking platform. It is a direct competitor to Eigenlayer and has already amassed. I'm just checking the chart right now. ah Yeah, about 250 million in TVL in tv out and pretty much a week. um And that is with the fact that um the staking caps are actually locked right now. People can't deposit more if they want to. So it it it feels like that TVL is going to grow pretty dramatically.
00:05:14
Speaker
Why is this interesting? Well, I think there are a lot of the kind of liquid re-staking protocols, right, which are layers that are built on top of Eigenlayers. We've talked about those at great length, had some of the founders on the podcast like EtherFi, Puffer, and others, Kelp, etc. But symbiotic is ah the layer above those, so you know the eigenlayer competitor. And the main difference between symbiotic and eigenlayer is that
00:05:48
Speaker
users will be able to directly deposit any ERC-20 token into Symbiotic, or at least eventually. that They've just rolled out the first iteration of their rollout, but this is the way it's going to work. Whereas on Eigenlayer, you can only actually deposit ETH tokens. um Again, in Eigenlayers, like long-term roadmap, I think this is in their roadmap, um but Right now, I think Symbiotic is pushing that at the forefront of their value proposition. It makes it a bit more similar. I've talked about Karak on the on the podcast before, which is right now a competitor to Eigenlayer, much smaller scale in terms of TVL, but
00:06:36
Speaker
has the ability to, you know, you can restake right now USDC, um actually wrapped Bitcoin and a bunch of LRTs, ETH and all kinds of other assets. So I think this is interesting also because of the fact that, you know, this is backed pretty heavily by both the Lido founders and it almost feels like it's a ah part of the wider Lido ecosystem, which is important because LIDO has been losing TVL pretty dramatically to Eigenlayer over the past few months. So Symbiotic,
00:07:18
Speaker
um is it's initially opened up for deposits with the following assets, right? so um Wrapped Steak Eth, that's Lidos Eth, CB Eth from Coinbase, um WB Eth, which is Binance, REef, Rocketball, Mantle Steak Teeth, Swell Steak Deetha, and then Steak Frax and Staders Steak Deetha. So it's like some LSTs as well as just Eth. But that they've already just met their max caps for deposits already. So I think I'm just having a look at, I think there was pretty small caps on the majority of these with wrapped Lido staked ETH being the biggest one, where they had about 171 million of that, 250 million.
00:08:13
Speaker
is in Lido-wrapped state teeth. So there's clearly a push to get Lido's state teeth. In theirs, 41,000 state teeth. These caps basically filled up straight away. Why would you deposit it into Symbionic? Well, of course, there is a points program, and we love points programs, right? So I think that is going to be some airdrop in the future and people are speculating based on you know how liquid restaking, how potentially the eigen airdrop is going, ah that this could be a pretty lucrative bet to make especially to to use some of your idle eth-based assets right now.
00:08:58
Speaker
um There's also, so the caps are already met, but there are a few different ways that I've seen that you can actually restake through some of Lido's DeFi ah vaults that they've they've built together, which are actually pretty interesting. I had no idea that any of these existed before, but they've done this in tandem with um Mellow Finance. And you can earn like symbiotic points plus mellow points. I actually hadn't heard of mellow, but I dug into them in a little bit, but basically involves locking up Lidos Steak Deeth into a vault and earning yield on your Steak Deeth as well as like all of these points. And I think why I find this really interesting is as I mentioned, since the hyper round Eigen layer and it launching,
00:09:46
Speaker
Lido has been quickly, uh, kind of losing its liquid staking market share. Um, while they are still the overall kind of defy TVL leader, I can layer has now become a close second and they're clearly worried. I think about them eating their lunch. Uh, you look at Eigen layers, TVL over the past few weeks, been in and around the 20 billion mark. Um, Lido is only 33 billion. and Now it's worth going out. this time last year, I can layer TV. I was zero. So, you know, that, that, that's a pretty dramatic like rise and correct that, um, I mentioned earlier is only at 72 million. Um, and they, uh, don't have caps right now. So that was kind of the biggest so far competitor, I think to icon layer. And it's still in its infancy. I think it will pick up, especially as icon layers points program chills out a little bit, but symbiotic, I think is.
00:10:47
Speaker
probably going to, it would not surprise me if they they raised up their caps again, it will immediately kind of max out. and they'll they'll be able to get into the billions of of TVL. So I think it's one that's interesting. I'm keeping my eye on it. um For like disclosure, I haven't actually deposited any assets in Symbiotic um and mainly because I am fully allocated. ah But if I probably will do in the in in the kind of coming month, though, just if if caps open up, I just want to play around and see see what they've got going on. but
00:11:24
Speaker
The restaking narrative is not going anywhere. And it seems like that's only gonna kind of ramp up over over the next few weeks. But interesting, exciting, obviously a great team that's backing back in the project. We'll see where it goes for sure. Yeah, another player in the space.
Bored Ape Yacht Club's Financial Decline
00:11:43
Speaker
Always was good. Always was good. Well, let's talking about the numbers going up. Uh, let's talk about the numbers going down. Why don't we shift gears and talk about the, the sorry state of affairs that is, uh, board eight yacht club.
00:12:01
Speaker
Whatever happened to board ape yacht club? Obviously it hasn't gone anywhere, but you've probably noticed a lot of the hype has done died down. You've been hearing way less about it. Well, you'll recall in early May, Ugo Labs announced a new round of layoffs and their CEO said, quote, to put it simply, Ugo lost its way. Getting ourselves centered and on the right path means being a smaller, more agile and crypto native team. Kind of a standard statement there, but certainly indicative of the state of affairs at Ugo Labs, the parent company behind board AP Yacht Club and many other projects. Now these NFTs.
00:12:41
Speaker
They were a huge deal a couple of years ago. They sold for millions in 2021. But since then, if you've been tracking it, you've dropped over 90% in value. The current floor price is nine ETH, roughly $32,000. That's still a good amount unthinkable. yeah It's actually kind of um like if someone said to me, because even through the whole bear market, right? Like I think. I may be slightly off on this, but I'm pretty sure the like the very beginning of last year, they were still around 60 ETH or something like that. like they They were they were like high ah still a high floor price, and everyone was freaking out that they were that low, right? 90 ETH. You would not want to be a back holder there.
00:13:30
Speaker
Yeah. I mean, I think just a month ago, it was in like the low forties, you know, uh, it's, it's been quite, uh, as in, uh, like 13 East is what I'm saying there. Like low, yeah yeah low low 40s USD. Um, yeah. So the current floor price is, is, is 90, $32,000. That's, uh, I think that that's the the lowest it's been since its growth cycle. I mean, still a good amount of money. for an NFT, but think about it, I mean this is probably the most significant NFT project, um and if you compare that to their peak floor price back in May of 2022,
00:14:12
Speaker
It was 128 East, which was $354,000 at that time. So, well, yeah. And it was high. It was high then, right? Like even I would, I would imagine probably similar price point to where it is right now, right? In this current cycle. Yeah. A lot. Yeah. A lot of money. um And then in September 2021, we covered this on the podcast, a board date was auctioned by Sotheby's for over $24 million. dollars um So this was a significant project. It still is a significant project, but the economics have changed.
00:14:52
Speaker
And so it begs the question, what happened? Well, there was an excellent thread on axe from Kilano that broke this down And I want to go through some of the points that he brought to the table plus a few additional things ah That tell the story behind the rise of board a biot club and how they ended up in the current situation that they're in so you'll recall that Boarded Yacht Club was minted in May of 2021. They sold out all 10,000 units at .08 ETH, which was $220 at the time.
00:15:30
Speaker
so ah Yeah, 32K is still better than that. But nevertheless. Well, I know a bunch of people that were in that mint and still hold their original apes, right? So they've round-tripped. I mean, never has 32K felt so bad, you know? it it's it's kind of crazy. I mean, you've got to keep perspective, but yeah, man, the the heights of 2021. Wow. Imagine. What a roller coaster ride that is. I i feel like, you know, back in 2022, Matt, it felt like there was no stopping this, you know? yeah um So you imagine getting in at $220 and then seeing one of these things auction in late 21 for over $24 million. dollars I mean, it's absolutely life changing.
00:16:24
Speaker
um But what caused this run-up? Well, the mint process for Bordev Yacht Club was pretty unique at the time. ah Most mints were on a bonding curve pricing, meaning the last NFTs were more expensive to mint. But Bordev Yacht Club established a fixed mint price and reinforced their 10,000 unit model. That was a differentiation. then celebrities got involved and it started to take off. You may even say it went a little parabolic. Gary Vaynerchuk bought his first three apes on June 8th of 2021. Then he bought three more in December of that year. And then we saw the likes of Jimmy Fallon, Paris Hilton,
00:17:07
Speaker
Justin Bieber, many other influencers and celebrities bought in, and in very public ways, by the way. Like I'm pretty sure that Paris Hilton went on Jimmy Fallon's show and talked about this. Do you remember the, um, so like Eminem and Snoop Dogg, didn't they do like, is it Coachella or somewhere? They literally like did like a whole video, like there was with that board eight. I remember that feeling like to to your point where you were like, Oh, this is, one of the highest profile, probably the highest profile, like NFT project out there, right? The the crypto diehards are publicity. No, like crypto punks are, but no, like, you know, for inside the crypto space, sure, like crypto punks are more desirable assets. I genuinely think that if you ask, did like a survey kind of globally, right, of just everyday people,
00:18:06
Speaker
Which have they heard of? Ethereum or board eight yacht club. And I genuinely think you'll have more people that will have heard of board eight yacht club than Ethereum. Uh, because it hit the mainstream in, in crazy ways. And it was like super sexy for a long time. And I think it's really shifted, uh, since yeah FTX implosion and the bear market. Yeah. So. Uh, you go lab, they, they ended up creating a new market here, you know, uh, and they were pretty uncontested for a while because they pioneered several important concepts like this culture and this community that they built around the board APYOT club. There's an entire law. You could even say they had all of this celebrity endorsement. And then they did have a differentiated product and some good innovation for some time, as we mentioned earlier.
00:19:03
Speaker
And then the airdrop started. Mutants, Kennel, Apecoin were all given to Board Ape Yacht Club holders for free. And in fact, the total value of a Board Ape Yacht Club mint plus airdrops peaked at about $800,000 by May of 2022. That's just a year after the minting occurred. What a run up. Yeah, it's phenomenal, really. like I remember when mutants dropped and it was just like the craziest shit, right? you know They were like running up. This is a free airdrop you got for just owning a board ape. And I mean, mutants ran up, I think at their peak. um I might be a little off here, but I think they were like,
00:19:50
Speaker
2528 ETH floor price, something like that, was like for just a single mutant. Then you had all these crazy derivatives as well, like mutant serum and people would break off and there was like um whole other derivatives and new projects that were not directly affiliated with the board at your club. that would just airdrop stuff. You've got so many things for holding an ape if you held it at the right time and it keeps the momentum of, and I think this is why a lot of people didn't sell at the peak because they like, you know, you're getting all these stimmies and they're like, well, even if the value goes down a bit, if I keep getting these airdrops and stuff, why not? And like, ape coin came a bit later, right? So people holding out for that. And it's, it's interesting.
00:20:33
Speaker
Yeah, that's what I'm talking about. I mean, the momentum around this was just remarkable. It really seemed unstoppable. And it's it wasn't the type of momentum, you know, that that you would see on a usual hype train where it's like just a bunch of people talking about it. But then you start to question like, well, what's actually backing this up? I mean, yeah because of these airdrops because of these ah the community, the celebrities, um the auctions, there were real factors at play that could be used to describe the run-up. And I think that that was all pretty legitimate. And then- It became a status symbol, right? Yeah, it really did. It legitimately became a status symbol. And you know also, I mean, the just you talk about recognition, Matt. Yeah.
00:21:22
Speaker
ah the The PFPs that that came out of this, that were, you know, everybody had their profile photo, certainly on Twitter, but, you know, across the space as they' their board ape that they acquired, obviously the same thing happened with CryptoPunks. You see it everywhere and people, even, you know, people that aren't in the space start to question like, what is that? Right. Yeah. um And so it it had ah legitimate backing. And then the acquisitions started.
Yuga Labs' Pivot to Gaming
00:21:52
Speaker
Crypto punks, the launch of HVM TL 10 KTF. Other side was a huge release with yeah a hundred thousand unit units. And then it started a downward spiral. I think that was the turning point for sure. Yeah. Other side and that the pivot for it's funny. My, my general take on the NFT space is.
00:22:17
Speaker
The moment, so it almost became a meme, right? That people wanted like utility, right? For their like tokens, their NFTs, and especially like for their profile, like PFP NFTs, there was nothing more bearish for an NFT collection than giving it utility. like it sounds so counterintuitive but you know if you are just a status symbol if you're a symbol of access like what this was similar privilege right and like uh you know the the the groups that they were targeting are not the same groups of gamers that they're pivoting towards yeah and this really started to become apparent i think in the the dawn of of other side
00:23:09
Speaker
Yeah, we dove into some of these mechanics in our recent episode that had a deep dive on gaming. But I would say that it's fair to say that other side was the start of the downward spiral. And then the original founder had to step down for health reasons. And he was replaced with the ex CEO of Activision. And it was clear that Daniel, the new CEO, wanted to turn Yuga into a gaming company. Makes sense. That's probably- It was massive news as well. Yeah. And I'm so excited. Ex-activation, like it was going to be, you know, the next AAA studio, right? Well, how did that go? It turns out not very well. Yeah. A first look at the other side game was shared in June of 2022.
00:24:02
Speaker
Uh, it was basic. It was clearly very early, but I would say at the time it still showed some potential. agreed And then the delays began. And in January of this year, a new teaser was released. And honestly, it it didn't seem to have progressed that much. It was clear that the game still wasn't near completion. The, the, the preview was like low frame rate, just wasn't there. And then more questionable decisions were made. Moonbirds was acquired in February of this year. that and I don't think anybody really wanted that acquisition. It was full of insider trading. I have no idea what the hell that is about.
00:24:42
Speaker
like
00:24:44
Speaker
i've I've seen a lot of crazy shit in crypto over the years, and I've seen even more bad decisions. This one makes literally no sense to me. um None at all. i I just don't get it. And it couldn't have been worse timing for them buying this as Ethereum NFTs have just declined in, I guess, overall volume, especially with ordinals kind of hitting the scene. So ah this one will baffle me. and i and i If I had to wager that something will not turn around to end up being like a great decision in the future, it will be this. I just never see an outcome where this is good. Yeah. And then a new collection of crypto punks was released in collaboration with artist Nina Chanel. And suffice it to say, it didn't go over well. It was largely considered an unwo are unwanted, even woke collection is what it was characterized
00:25:43
Speaker
ah People didn't like it and then they began losing faith in Yuga itself Plus we've had all of these external factors in the NFT market in the bear market in general that haven't been great ah Blur season 3 is coming to an end and the biggest point farmer CBB pulled the plug on all activity for now He's not at fault for this, but it has sent the entire NFT market into a spiral And or at least has right now the eth NFT market, right? That's correct, yeah. As of right now, all Yuga assets are down 25% this week. It's not good.
00:26:21
Speaker
And I think also if you're ah if you're and if you're a UGA owner, and actually I think, ah sorry, not a UGA owner, um well, a UGA asset owner to be honest, but like if you're an ape holder or a punk holder, but this kind of applies for any what you would class as a quote unquote blue chip NFT in the Ethereum ecosystem. You're looking around and you're saying like, What's going on here, right? Solana been having a monster run in NFTs. Okay. It's kind of cooled off as meme coins have taken over, but that explains things. The liquidity is going over there. Ordinals has continued to be on a tear. Okay. Like past few weeks, like all the markets have been a bit down, but generally speaking, um there's been a lot back to be, throw out all of this.
00:27:09
Speaker
efts pretty quiet, not a lot going on. And ah they've failed to capture the meta, I would argue, so far. Now, it doesn't mean to say that, you know, this couldn't turn around for Ethan FTs. We've seen this story before, all time low capitulation, and then, you know, things go up. But I just don't see a catalyst right now for for for why people will do this with Ethan FTs, especially um with all the other alternatives out there. Yeah, it's true. So where does this leave Yuga? Well, they were a huge innovating force in the NFT space, but it's a pretty crowded and competitive space. I would say that their celebrity endorsements and mainstream coverage, plus this really strong community that they built, it grew not only Bode Biak Club, but it kind of grew the space in general, but also,
00:28:05
Speaker
It killed its momentum when they began to pull back, when the celebrities started to pull out, when the community started to get criticized. And let's be honest, there was a lot of cringe in that entire process anyway. I mean, there were events that were highly cringe-worthy. They did get some pretty bad press. um I think I do question whether having Paris Hilton talk about your NFT on Jimmy Fallon's show is like a positive thing or like the cringiest thing ever. It's, you know, I i think, you know, short term, long term. Right. And so my my kind of take on this is.
00:28:47
Speaker
Crypto punks, sorry, board apes were, as we mentioned, an important status symbol within the crypto community for the longest time. They started to become a status symbol outside of the crypto community, right? With, you know, all of the celebrity endorsement and they were categorically, um, in popular culture, seen as a cool new thing. I would say the sentiment around that today could not be further away. The first thing, this is my opinion, right?
00:29:27
Speaker
First thing I think of when I think about Boredeep Yacht Club and the image is cringe. yeah it It's almost become the poster child for the stereotypical crypto bro that is like for non crypto people when they think about crypto bros. if If actually I would go out on a limb and say, if you had to describe what the typical crypto bro looks like online to non-crypto natives. They probably say that they would have a crypto, um like a board ape kind of ah profile pic. So I just think that it's kind of lost that and I just don't see that getting better. It's like, it doesn't have the same allure. I do believe on the other hand that crypto punks, despite its UGA ownership, it still maintains that because
00:30:22
Speaker
Some of the shine's been taken off, but it hasn't kind of been through the cycle of cringe celebrity endorsements and nor does it need it. It's almost like, you know, born apes are like the tryhard younger brother, right? That's like not quite cool, but they want to be cool. And crypto punks were there first and they are just inherently cool and they don't need to try to be cool. It's a little bit like that. And i um yeah We were talking a little bit before this. I've been looking at kind of the price of punks for a while. And while I'm not really someone that like is big into like having things as my PFP and stuff, purely from a trade perspective, I feel like punks are at this stage right now where it you know i think what are they I think they just sold some for 23 ETH or something, which is unthinkable to to me that they would go lower than even 50 ETH.
00:31:17
Speaker
um But it feels like if there was an NFT trade to be had on ETH, it's probably that. I could be proved wrong about this, but I feel like punks always always have that time. I just, even though apes are down at 9 ETH, I still just, I just wouldn't feel worth it to me. I just can't see a major recovery here. It just, it feels like, you know, the momentum in the air has gone out of it. Yeah, it really does. I mean, let's not forget, Yuga has more money than any other NFT project. Yeah. And that that can go a long way, you know? I think, you know, if they can make... I think there's two ways Yuga goes.
00:32:06
Speaker
They either get back to their roots and I think with Gaga coming back, like maybe in it seems from a lot of the messaging that he's been sharing, it feels like they're trying to get back to their roots. That's what a lot of the layoffs were about moving away from this, selling off like heavy metal and a few other things, bits of assets. If they can do that and they can restore the image of apes and not destroy the image of punks, maybe, maybe they can get back to things. The other path they take is they just accept the fact that they're going to be something new and they really make gaming work. And for that to happen, they have to cannibalize their own audience. It has to be a new audience. I think they have to get off of the obsession that previously happened, which was they want to get their existing eight folders. Right. The bear in mind, as you mentioned, ah people pen several hundred thousand dollars to buy and turn them into gamers.
00:33:04
Speaker
Like, you know, the two different markets here. One is after a status symbol, luxury goods. The other is after an exciting gaming experience, which just couldn't be further away from the two. And I don't, and while there is some overlap in the van, not big enough to to to become like, you know, a sole sustaining driver. And I, I would quite like them to. actually figure out the gaming piece. I think that we've been talking about gaming and crypto for a while and they have the war chest, as you mentioned. But I just, I think the way they fail, the most likely way they fail is they try to be two things at once. And, yeah you know, you're, you're kind of jack of all trades then, right? And a master of none. So it's, it's a tough spot to be in. It feels to me like if they really leaned into gaming further and
00:33:57
Speaker
I do think it's possible that they could figure that out. I agree. It would be a huge cannibalization of their audience. Honestly, I think it would be more of a donation that they're making to the space than a maximal upside for Yuga. I don't think that they would realize the same gains by leaning into gaming than they would by getting back to their roots or even some other form of like luxury goods oriented innovation, you know? I agree. So while I think you know there could be like a general market benefit to such a huge player with such great talent like Yuga figuring out gaming, I don't think that's going to be in their best interest. And I don't think there are any guarantees that they even could figure that out without depleting all of their war chests.
00:34:46
Speaker
Yeah, for sure. Right. Like this is for seasoned, established, non-crypto game studios. Having like a major hit of a game is, you know, is a moonshot. So it's, it's really, really difficult. It takes a huge amount of time. I mean, how long have people been waiting for the latest GTA game? Right? Isn't it like 10 years, right? You know, like, hi trust me yeah, I count every day, Matt. ah And you know, like this stuff is huge time horizon. and If there's one thing that people in crypto don't have, it's patience. So that's really challenging. The other thing I think that we actually just didn't really talk on the last point I'll make on this that I think is really hard for them now.
00:35:27
Speaker
in going back to their old model. And I agree with your points that going back to the old model, if they can make that work, will be much more economically lucrative, is that they were born out of the era of creator royalties. And they made their primary mint, as you mentioned, 0.8 something ETH, right? 200 bucks, 10,000 K collection. It's not a lot, right? you know It's not a lot of cash that they made from as the the mint sale. They made millions upon millions from secondary sale royalties. Now, what has been a major theme over the past few few years?
Yuga Labs' Revenue Challenges
00:36:04
Speaker
Royalties have been disappearing. Blur. Getting rid of like the majority of royalties. so And most marketplace have. That's a huge revenue stream. Gone.
00:36:13
Speaker
for for these. you know That's why they've been building custom marketplaces. People just don't want to pay it anymore. i and yeah whether Whether we like that or not, that's the case. You guys had to shift from this model of having huge amounts of revenue coming in from the the secondary sales and creator royalties. and then being able to give away these assets, like mutants and the other derivatives, like Bullock Kennel Club and you know other side assets, stuff like that, where they could give those things away for free. And they would still make tons of revenue, on the and the community loved it. They're getting these like huge, like, STEMI packages feeling they're getting real value from being a member. And this is where Otherside changed things, because Otherside, I think, when they sold their land,
00:37:01
Speaker
It was the first time when they said, OK, we need to change our model a bit here. We need to make money from the mints. And now everything feels extractive. I'm a board eight holder. And for me to continue to participate in this ecosystem, it requires me to invest further into it versus them investing in us. And this is a negative cycle that they're in right now. And there is no way out of it. You want to continue driving revenue? Well, in the PFP space and in this space that they're in right now and their roots, it's primary mint sales. That means increasing the mint price, which is tough, and extracting from your existing user base to further monetize them. Really difficult. So I think it's a challenging spot they're in. I think it's going to be really interesting to follow this as like a case study over the next few years to see where it nets out. but
00:37:54
Speaker
Ooh, they're in a tricky spot. Make no mistake about it. You brought up the GTA example ah you know as an as an anecdote, but I actually think it's an interesting example to juxtapose with this space because the expectation for the quality the production quality of gaming, hey it's it's it's a hockey stick curve over the course of the past decade or two. right Um, think about this. So you mentioned GTA grand theft auto three, which was the first like 3d proper, you know, modern grand theft auto game that came out in 2001 vice city. nico Yeah, that was that long i ago. Vice city, which was the second 3d game that came out in 2002, it came out a year later, like literally a year. Yeah, that was my childhood. Yeah, I know.
00:38:50
Speaker
I'm actually playing it right now. You can get the real ones on PlayStation, and it's actually pretty fun. That was great. Okay, so Vice City was 2002. San Andreas was 2004. Grand Theft Auto IV was 2008, so it seems like every time they're like... It's like a reverse Moore's Law instead of... Instead of doubling a transistor capacity on chips, it's like just doubling the time frame to get there now, right? Yes, exactly. So Grand Theft Auto 4 is 2008. Grand Theft Auto 5 is 2013. Grand Theft Auto 6 is expected in 2025, but there's no guarantees. You're looking at, like I said, 12, potentially 13 years
00:39:35
Speaker
between Grand Theft Auto 5 and Grand Theft Auto 6. Now, when GTA 6 comes out, the expectations are going to be extremely high. And I know that there are a lot of gaming studios, Ubisoft, et cetera. I'm not a gamer, but you know you hear about it. theyre like yeah They crank out games using like the same game engine, and they've kind of put together a production line. But I do think that this shows, to your point, Matt, like the reverse Moore's law yeah um that is happening in gaming, and the the increasing expectations, and also just the change in monetization. right like Back when GTA 3 and Vice City and San Andreas were coming out, the way that these studios would make money was off of ah releasing a new game and and meeting gamers expectations for like what that new game was going to be. Now, you know, you can milk a game for years and years and years, but it requires a significant upfront development effort. A hundred percent. And I think, you know,
00:40:26
Speaker
That's kind of the bet they're trying to make with other side. I think it's just expectations being met properly and in a very new space and figuring out new monetization models. Really, really challenging.
Future of Yuga and NFT Projects: What's Next?
00:40:37
Speaker
But yeah we'll see how it plays out. I think the that one thing's for sure, the near-term future is very precarious for Juga and the Juga assets overall. And we'll have to keep track and see you know if things turn around during the more bullish stages of this current cycle.
00:40:57
Speaker
It's going to be interesting to see. But let's wrap things up. It's been a super interesting convo. We'll we'll definitely do a bit of a recap. Maybe we'll do a deep dive on punks at some point as well soon. So I think that'd be another good one to do. But um we've got a super exciting interview next week with Max Chamberlain from Bitfinity, a Bitcoin layer 2 project that we're really excited about. ah So that'll be dropping and next week for everyone to tune into. Until then. I'll chat to you soon Austin Talk to you then Matt
00:41:50
Speaker
The contents of the Decrypting Crypto podcast should not be used and are not intended as investment advice. Please do your own due diligence before making any investment, cryptocurrency or otherwise.