Crypto investors were extremely excited when ApeCoin dropped on March 17th, but their excitement quickly turned to confusion and dismay as the launch encountered a plethora of issues. ApeCoin’s volatility is only part of the story, and a number of observers are now asking questions about this fiasco. What exactly went wrong? Why are investors concerned? And what the hell is an ApeCoin, anyway?
ApeCoin spawned from the Bored Ape Yacht Club NFT ecosystem, one of the most popular non-fungible token collections on the market today. Bored Ape is in turn powered by the Ethereum token. Created by Yuga Labs, each of these tokens sell for hundreds of thousands of dollars, and the lifetime sales of Bored Apes have exceeded $1.5 billion.
As a way to reward those who hold Bored Ape NFTs, the decision was made to issue ApeCoin – a new cryptocurrency on the Ethereum blockchain. 15% of all ApeCoins was issued to those who currently hold Bored Ape NFTs, while a further 38% went directly to Yuga Labs. If you owned a Bored Ape Yacht Club NFT, you received a total of 10,094 free tokens, while a Mutant Ape NFT would provide you with 2,042 tokens.
How Did The Launch Go?
ApeCoin’s price rose dramatically immediately after the launch, skyrocketing to $39.40 per token before plummeting just as quickly, down to about $10 per token. Prior to the launch, the token was hyped up beyond belief with an expansive marketing strategy. The token was listed on FTX, Coinbase, Binance, and many other exchanges. The sale of Bored Ape NFTs also rose dramatically in the days leading up to the launch because people wanted the free ApeCoin that was now guaranteed for all Bored Ape holders.
Volatility wasn’t the only issue, however. Yuga Labs quickly took to Twitter to warn investors that “scammers were out in full force,” and flashloan attacks soon took advantage of the airdrop’s lackluster DeFi lending protocols.
Why Are People Angry?
Some observers are concerned about the way the ApeCoin launch seems to have rewarded insiders rather than “spreading the wealth.” They point out that cryptocurrencies are supposed to be decentralized in nature, but this latest ApeCoin fiasco seems to have kept the wealth securely in the hands of Yuga Labs and early Bored Ape investors – a very select few. In the words of Ethereum founder Vitalik Buterin:
“[U]ltimately the goal of crypto is not to play games with million-dollar pictures of monkeys, it’s to do things that accomplish meaningful effects in the real world.”
In response to this criticism, Yuga Labs pointed out that the first Bored Ape NFTs cost just $220 to mint, and early adopters included “teachers, writers, and regular folks.”
At the end of the day, it’s too early to tell whether ApeCoin is all hype, or whether it will become the next DogeCoin. We’ll have to wait and see.