The blue-chips are back, with this week’s leaderboard dominated once again by the Yuga Labs collections - CryptoPunks, BAYC, MAYC, Otherdeeds. Meanwhile, no-utility, no-roadmap, free-to-mint NFTs like goblintown.wtf and ShitBeast have been slipping, slowly fading into oblivion like so many past collections that dominated with their 15 minutes of fame. All is well and “right” in the world of JPEGs again, as some might put it.
Top Collections of the Week
Source: OpenSea; Snapshot taken 20 June 2022
There are a few factors at play here. As mentioned before, capital is often observed to be flowing into NFTs especially during a market downturn. The train of thought presiding over this is that traders would derisk and diversify their portfolios with blue-chip NFTs. Think of this as how the uber-wealthy would purchase traditional art or even luxury goods as alternatives to wealth preservation.
Blue-chip collections like Punks and Apes have ascended beyond being just NFTs. These two in particular have become the epitome of onchain status symbols and like the luxury market, they often defy the tenets of classic economics (see Veblen goods) - the more expensive it is, the more sought-after it becomes. Price hereafter becomes a feature, a gatekeeper to the most prestigious of clubs and without it, desires crumble. This is one of the main reasons why Solana NFTs in general pale in comparison to Ethereum blue-chips when it comes to longevity and prestige.
In a similar vein, other blue-chip projects such as CloneX and Art Blocks Curated have also picked up in volume over the last week. Art Blocks in particular have time and time again risen during times of turmoil, most likely because these generative art collections feature pieces that most resemble high art (we apologize in advance for any unintended slight against the art community), especially so in a sea of generic PFP projects.
As we all know, all of these didn’t happen in the past few weeks thanks to the overwhelming memetic force of goblintown.wtf and its throngs of copycats, but the balance has finally been restored, at least for now.
Source: CoinGecko
Yuga Labs collections are no strangers to the top of NFT leaderboards, but it would appear that there is more than just “fundamentals” at play here that restored their recent standings. The head of Christie’s NFT, Noah Davis, announced on 19 July that he would be joining Yuga Labs as the brand leader for CryptoPunks. This explains why the NFT OG collection has been leading the Ape tribe this week when it’s usually the other way, although it’s worth noting that the floor price of CryptoPunks had already started spiking prior to the announcement.
On the topic of coincidences, while the downward spiral of death exhibited by Goblintown was hardly surprising, the matter of how this unfolded was certainly debatable. The team behind the (deliberately) hideous NFT collection was finally unveiled on 14 June. In a video that was released on their Twitter account, the team revealed themselves to be Truth Labs, the group that also founded other NFT projects such as IlluminatiNFT and The 187.
Source: CoinGecko
Within hours of its sudden announcement, the floor price of Goblintown took a nosedive from 5.30 ETH to 2.56 ETH at its lowest point. Contrary to their brethren, the floor prices of IlluminatiNFT and The 187 soared within the same period of time as Truth Labs also announced that the remaining 1,000 Goblins would be set aside for the hodlers of these collections. At the time of writing, the floor prices of these collections are still riding on the high of anticipation for the Goblin mint. According to OpenSea, the average sale price of Illuminati NFT shot up from 0.2 ETH before the announcement to 0.66 ETH at the time of writing. The 187 on the other hand had several days where there was a grand total of 0 sales prior to Truth Labs’ revelation. Once the cat was out of the bag, its average sale price spiked from 3 ETH to 11.85 ETH - a whopping 4x increase.
Did Goblintown bring about their recent demise with their voluntary self-doxxing? Or was it a change in NFT preference among the masses that led to this point? The truth of the matter is that meme projects rarely pan out, especially so when a project does not even pretend to have a roadmap or plan for the future. The slumping floor price and volume do not bode well for Goblintown and if you are banging on an unlikely resurgence to the top (crazier things have happened in the cryptoverse), do practice caution and understand the risks.
And the Cycle Continues…
Source: DappRadar
The weekly occurrence of a single new Solana NFT collection breaking into the Top 10 spots continues, this time with Primates leading the charge for the ecosystem. In fact, it finally did what its predecessors Okay Bears and Trippin’ Ape Tribe failed to do - it led Magic Eden to edge out OpenSea in 7d volume. For the time ever in a week, Magic Eden successfully snatched the seat from right under OpenSea to be crowned as… the second leading NFT marketplace.
Source: DappRadar
Source: DappRadar
X2Y2 (X2Y2) was crowned for the second consecutive week as the leading marketplace by volume, spurred primarily by its 100% fee rebate program. Despite non-trivial drops in user and transaction count, X2Y2 still registered a rise in volume in a week where OpenSea’s volumes have been trending downwards. It's no coincidence that this week also saw an overall rise in the trading volume of expensive blue-chip NFTs, which reinforces our previous observation that X2Y2 is a platform patronized by NFT whales and their high-value trades, hence its dominance despite significantly lower number of users and transactions.
X2Y2 seems to have solidified its position as the go-to NFT marketplace for now, but time will tell if this can sustain against OpenSea in the long term. It does make sense currently to pick X2Y2 over OpenSea / Looksrare for your ETH NFT activities due to its superior fee structure, but is this enough to overthrow the familiarity and attachment to OpenSea?
Source: CryptoSlam
Although Magic Eden failed to surmount the new challenger in X2Y2, it can take solace in leading its ecosystem Solana to a positive week in sales. Other ecosystems notched significant drops in volume amidst market turmoil and in this sea of red, Solana still managed to come up ahead in growth, displaying growing interest and resiliency in its NFT scene. It also certainly doesn’t hurt that Magic Eden recently secured a $130M raise at $1.6 B valuation, which it will surely deploy to strengthen its position.
LooksFair
Source: CoinGecko
LooksRare might not be able to compete against the likes of X2Y2 and OpenSea now in terms of user activities, but the same does not apply to its token, LOOKS, especially not when Arthur Hayes had described LOOKS’ fundamentals as “STRONK” in his latest essay.
Immediately after Arthur’s article went-live on 17 June, LOOKS price shot up from ~$0.20 to ~$0.44 (+120%) at its most recent peak. This came as no surprise considering the sheer influence of Hayes and how many in CT treat his analysis and words as gospel. In fact, a similar phenomenon was also observed in ENS and GMX which also featured heavily in Hayes’ writing.
Source: Token Terminal via Arthur Hayes
It is true that LOOKS has an “amazing valuation” currently with a ~2.6x P/E ratio at the moment (based on trading fee rewards accrued to LOOKS holders), but there is something to take note of here…
As many have pointed out, ~33M LOOKS from the strategic round (a round which also includes Hayes) are scheduled to be unlocked at block #15147012, currently slated to be 17 July. An influx of new tokens into circulation naturally translates to increased sell pressure as well as anticipation/speculation ahead of the unlock as well. LOOKS may be fundamentally sound but it would be prudent to take into account its tokenomics especially when trading in the short/medium term.
All in all, DYOR and practice caution.
DAO Votes > Legal Contracts?
Play-to-earn gaming took the crypto world by storm last year, with many calling it revolutionary and some even taking to playing these games as a full-time job. However, the barrier to entry for these games could be substantial, sidelining players without the financial means to purchase in-game assets.
That’s where scholarship guilds appeared, whereby players could join these scholarships and be loaned in-game assets. In return, the guild will receive part of the players earnings. Soon, these guilds went from managing players to investing in games and other guilds thus becoming Gaming DAOs (Decentralized Autonomous Organization). One such investment took place between Yield Guild Games (YGG) and Merit Circle. YGG invested in Merit Circle’s seed round, and in-return were granted an allocation of Merit Circle tokens (MC) at a discount.
Source: CoinGecko
With the popularity of play-to-earn games tanking in recent months, guild related tokens have taken a severe beating. YGG and MC are down 96% and 93% respectively from their all-time highs. The relationship between both parties was put in serious jeopardy recently when a member of the Merit Circle DAO published a proposal asking the community to vote on refunding YGG’s initial investment in Merit Circle. This meant that if the vote went through, Merit Circle would have to return $175,000 to YGG. HoneyBarrel, the author of the proposal reasoned that YGG failed to provide any value to Merit Circle, unlike other investors such as Mechanism Capital, Maven Capital, and DeFiance Capital.
Overwhelmingly, the community voted in favor of the proposal, with only a couple of comments mentioning that doing such a refund would be in breach of the contractual agreement signed between the two gaming DAOs. Soon after, YGG published a statement saying that they were never obligated to provide value added services, but merely to provide initial capital. Furthermore, there was no provision in the contract which permits Merit Circle to refund their stake.
This led the team at Merit Circle to submit a counter proposal which would see the company buyback its tokens from YGG at $0.32 for a total of $1.75 million. Ultimately, YGG accepted the offer, allowing them to lock-in a 10x gain on their initial investment. However, this is far from the market price of MC at the time the proposal went through, which would’ve netted YGG a 30x gain instead.
While in this matter both parties reached a mutual settlement, it’s hard to see anybody coming out smelling like a bed of roses from this. Business activities are fundamentally based on trust, and this ugly precedent is sure to plant seeds of doubt when it comes to collaborating or working with DAOs moving forward. If DAOs can’t be expected to honor previous agreements, what more legal ones, it becomes challenging to build any sort of long-term trust or collaborative relationship. This will impact not just relationships between traditional companies and DAOs, but also between DAOs as well, when you have to second guess everything and whether DAOs will just renege on prior agreements with just a vote. In the worst case scenario, collaborations will devolve to be purely transactional, and this will definitely hurt the industry in the long run.
What else are we paying attention to
Bored Ape Nazi Club?
Earlier this year, accusations of BAYC carrying racist undertones and subliminal anti-semitic, pro-Nazism messaging surfaced. A brief uproar ensued, along with several BAYC advocates jumping to its defense against such “outrageous claims”. The hullabaloo surrounding BAYC simmered down after a few days and eventually faded into obscurity as these things normally do, that was until 13 May 2022.
On that day, Ryder Ripps reworked a BAYC-spinoff called RR/BAYC, a collection that is designed to use “satire and appropriation to protest and educate people regarding The Bored Ape Yacht Club”. The collection launched to a lukewarm reception but interest in it spiked after the recent release of an hour-long video titled “Bored Ape Nazi Club”.
I think it’s time for @ApeMarketplace @opensea and @BoredApeYC cannot stop us now!
— RYDER RIPPS Bored Ape Yacht Club (@RR_BAYC) June 21, 2022
For days, RR/BAYC was the top traded collection on OpenSea, that was until OpenSea deemed it as in infringement upon BAYC’s intellectual property, resulting in its removal from the marketplace. Users who are interested in trading RR/BAYC can still do so via LooksRare, X2Y2 or wait patiently for the arrival of ApeMarketPlace.
This article was written in collaboration with Shaun. You can follow him on Twitter at @ShaunPaulLee.
Dillon is an Operations Associate at CoinGecko with a weakness for 3-digit APYs. As an ex-consultant, he now finds joy in laughing at consulting memes unironically.
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