Imagine an idyllic yacht club where thousands of cartoon apes mingle, discussing the latest science fiction they’ve read, or sharing tips on (crypto) art collecting. This is the newest world magicked into being by some combination of wishful thinking, Adam Smith’s invisible hand, and cryptographic tokens. Welcome to the Bored Ape Yacht Club.

Bored Ape Yacht Club is the latest NFT project that’s starting to gain traction in crypto circles. Since its launch six weeks ago, it has seen $60 million in trading volume and is ranked tenth among collectibles projects by data site DappRadar. Over 5,000 people are trading Apes. 

The way it works is not unlike existing hit NFT projects. There’s a limited supply of tokens, in this case, 10,000 unique Bored Ape NFTs. It does bake in a few features that have percolated in other corners of the crypto verses. For instance, owners of Bored Ape NFTs get access to special features, like a digital graffiti wall called The Bathroom. This notion of “token gated access” has featured prominently in so-called social or personal tokens projects, where members hold a certain balance of tokens to gain access to a special Discord server or Telegram chat group. 

The Apes also come with some potentially fundamental changes. For instance, Ape owners also get to do what they like with the intellectual property associated with the token - meaning they can create T-shirts or other merchandise with the art linked to the token they own, and no one is going to sue them for it. 

The success of Apes and other token projects like it raises the question: Is it possible for genuine communities to form around speculative financial assets? NFTs after all are tokens that are bought and sold on the open market. Why would people feel attached to these artefacts of the market and make them part of their identity? 

I spoke to a well known Bored Ape community member to hear his story. Josh Ong is a former tech journalist turned communications strategist and operator. He’s also been in crypto since the last bull market and weathered crypto winter. He collects sports cards (like, actual pieces of paper) and sneakers, as well as crypto collectibles, from CryptoKitties onward. Basically, he’s seen a lot of NFT projects come and go. So what makes Bored Apes special?

Ong talks about Apes the way someone might speak about their local football club, or best mates from uni. “I was there from day one. There was a magic in the community where everyone was just connecting,” he says. “As Apes, we started changing our profile pics. We started following each other [on social media], like ‘Ape follow Ape.’”

According to Ong, the route by which an NFT project gains traction is as follows: Astyle of art is chosen by the project’s originators to convey a particular vibe and thus attract a specific crowd. In the case of Apes, it’s a 90s look that’s a little bit more high-fidelity than the retro and super successful pixelated CryptoPunks. Think classic Sierra Online adventure games.

Aliens [an NFT project] came out with a style that attracted a certain type of person and they became this really fast connecting community,” Ong says. “There’s room for thousands of these clubs. There’s dogs and cats and llamas.”

Once the art has seeded a group of fans-slash-investors, the next task is to build up the structures of community. In the past, this was left to chance: CryptoPunks fans could create their own chat rooms to talk about the project with one another. Or developed their own ways of signalling their membership, like changing their social media profile to that of a CryptoPunk they owned (which Jay-Z recently did). But as NFT projects evolve, they start building these features from the beginning, like the Apes token-gated chat.

Once that’s in place, a project needs stuff for people to do. This was the promise of “composability” on blockchains like Ethereum. The idea is that since all the software is open source and the smart contracts live on a blockchain for anyone to interact with, in theory people could create new projects that worked with these smart contracts, creating a world of “composable” software. This for example, is how DeFi took off, creating a bewildering economy of smart contracts lending to other smart contracts which act as collateral for yet more smart contracts. 

But the notion of composability is also changing as NFTs mature. It’s not just the smart contracts that are composable these days, it’s also the humans standing behind the wallet addresses. With Apes, Ong reckons there’s overlap between collectors from the Top Shot world and early Apes buyers, leading to a flow of investors from one NFT project to another. 

“In some sense, it was incubated in the Top Shot culture. There were groups in Top Shot, and I was part of some private Discord, where Top Shot collectors aped in together. They carried over some seeds from Top Shot,” he says. 

In the case of Apes and NFT projects in general, the idea is to find things for users and investors to do with their tokens. So partnerships are struck up to extend the capabilities of a token. For the Apes, this meant working with Sandbox, a 3D world on a blockchain where Apes can turn their cartoon selves into three-dimensional avatars. There’s also an official Yacht Club plot of land in the world. 

The integrations with other crypto projects, and the circulation of investors from one project to another, marks a maturation of the NFT space. As the NFT ecosystem of artists, programmers, collectors and speculators matures, new projects can be ever more self-referential and “crypto native” to attract attention. Even the Bored Ape name itself is an exercise in recursion: the DeFi world often uses the verb to “ape in” to mean ploughing capital into a project just because others are doing so, to avoid missing out on the next hot thing. 

Suppose a project is lucky enough to get traction and become a success. Prices skyrocket. What happens next? For anyone familiar with subcultures that cross the chasm into mainstream adoption, it’s easy to guess the outcome: Cries of ‘sellout!’ promptly follow. As big money is minted from Ape collections, this is what worries Ong. Will the tongue-in-cheek naming of the project — elite apes gathered at their yacht club — be prophetic? 

Ong takes a dig at CryptoPunks, which have become accessible only to the wealthiest crypto collectors. The “floor” for CryptoPunks stands at about 16 ETH, which is worth about $32,000 as I write this on June 28. “I look at CryptoPunks: it’s not very punk right now. It’s extremely elitist right now. It’s unavailable to most people, and is in the auction houses and things like that,” Ong says. “Is [Bored Apes] going to become the new CryptoPunks? Maybe.”

Ong talks about how fortunes are being minted overnight on Bored Apes, raising the specter of greater inequality and elitism. A recent airdrop, or gifting, of Bored Ape Kennel Club tokens to existing Ape holders meant that some people were making life-changing amounts overnight, he said. Each Kennel token was worth about $3,000 when they were released. “Apes are watching fortunes made from the Kennel Club airdrop. Those who bought multiple have been able to watch their lives change for the better.” he says. 

Those concerns may be unfounded, at least for now. As the price of Ether has halved from its peak of just over $4,000 in May, the wealth effect and attendant inequality generated by the money may evaporate naturally. How does a token community stay together during a bear market? Ong echoes a theory that the economist Carlota Perez has put forward in her seminal book, Technological Revolutions and Financial Capital—that financial speculation often accompanies and enables innovation. “Often, the ups and downs help sort out the rent-seekers versus the creators.” Ong says. 

As prices rise and fall, communities continue to strengthen or are washed away by the market’s wave. In this regard, Bored Apes and NFTs are no different from any other class of collectibles, whether they’re baseball cards or bottles of rare wine, and, increasingly the once rarified space of publicly traded equities. It’s the mapping of asset to collectible, and investor to fan that’s blurring the boundaries between finance and fun. As Ong sees it: “What a community is worth to anyone, that’s an interesting equation. What does it mean to find your closest friends over something as silly as a cartoon avatar?”

For Apes and their ilk, they’ll find out soon enough.

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