Why Larva Labs Sold the CryptoPunks NFT IP to the Bored Ape Creators
Just last week, CryptoPunks and the Bored Ape Yacht Club were the two leading rivals in the NFT profile picture space. Now they share an owner, following Friday’s news that Larva Labs sold the CryptoPunks IP to Bored Ape creator Yuga Labs.
Despite being the two largest NFT avatar projects in the space, however, they’ve taken very different approaches. Larva’s 2017 collection had O.G. status in the Ethereum space, but the creators were largely hands-off as the overall market swelled last year. Meanwhile, Yuga’s surging project acted like a membership club with sizable benefits and growing celebrity cachet.
It’s a stark contrast, and one that has only amplified in recent months. Now, Larva has sold off the rights to the CryptoPunks and Meebits properties to Yuga Labs, along with a trove of their owned NFTs from each collection. And the Bored Ape creators plan to shake things up in response to longstanding complaints from some CryptoPunks owners.
Following the late-week announcement, here’s a look at what led up to Larva Labs’ decision to bow out of CryptoPunks stewardship, along with what both firms said alongside the deal.
The NFT giants
Larva’s two-man team of Matt Hall and John Watkinson created CryptoPunks in 2017, offering 90% of the supply of 10,000 total Ethereum NFTs for anyone to mint for free. Gradually, Punks gained value and notoriety in the still-nascent NFT space, and broke out in a huge way when the market blew up in early 2021.
CryptoPunks quickly became the prominent status symbol in the NFT space as the average sale price in USD popped into five figures in January (per CryptoSlam), and then six figures in August as the NFT market soared to new heights. That month alone, nearly $680 million worth of CryptoPunks were sold on the secondary market. Even Visa bought one.
The Bored Ape Yacht Club is much newer than CryptoPunks, launching last April, and it borrowed the premise of launching 10,000 total NFT avatars featuring randomized traits. But it pushed the concept to another level by branding the so-called Yacht Club as an exclusive social organization of sorts, providing added and ongoing benefits to those who bought into its vision.
In the months that followed the launch, Bored Ape holders got two additional free NFTs—the Bored Ape Kennel Club and Mutant Ape Yacht Club—that likewise proved to be valuable. On top of that, they were able to purchase exclusive merchandise and could attend a free concert last fall in New York City that featured The Strokes, Chris Rock, and other stars.
But for some holders, the crown jewel of the BAYC value proposition has been the ability to commercialize the Ape image(s) that they own. Bored Apes can be used for product marketing and packaging or for original merchandise, and even to create virtual bands—as both producer Timbaland and Universal Music Group are doing, separately.
Yuga Labs is also working on a play-to-earn game based on the Bored Apes, with plans to launch a potentially valuable Ethereum token in the near future, too.
While some CryptoPunks holders attested that their provenance made them valuable and compelling, and that the creators didn’t have to provide additional perks or benefits, others started to complain about the lack of attention that Larva Labs was paying to the project.
For example, during the NFT NYC event last fall—when Yuga held the Ape Fest 2021 event, including the aforementioned concert—some CryptoPunks holders mused on Twitter about how Larva Labs did nothing around the conference. No parties, no perks.
But the bigger issue that proved to be a wedge for some holders was the unclear guidance on commercialization rights for CryptoPunks, plus Larva’s increasingly litigious outlook on derivative NFT projects—or those clearly inspired by the original CryptoPunks.
Notable pseudonymous collector Punk 4156, for example, sold his CryptoPunks avatar for over $10 million in December after becoming fed up with Larva Labs’ apparent unwillingness to clarify the rights issue around the collection. The duo’s attempts to get derivatives booted from marketplaces—such as the CryptoPhunks (not Punks)—also irked him.
In February of this year, another situation riled up some CryptoPunks holders. Members of the NFT community created a smart contract that allowed holders to mint a separate “wrapped” NFT based on the original CryptoPunks contract—abandoned due to a bug—and sell it as a “Wrapped V1” edition.
Larva Labs pushed back against the project, claiming that they weren’t “official” CryptoPunks. But all the while, the duo started selling some of its own V1 Punks that it claimed were illegitimate. Ultimately, Larva Labs apologized for the matter, with Hall calling their actions “stupid.” At the same time, the duo teased potential legal action against the V1 project, which was removed from leading marketplace OpenSea shortly thereafter.
All the while, the Bored Ape Yacht Club was pulling in celebrity buyers like Eminem, Snoop Dogg, and Steph Curry, and the NFTs were gaining value—the cheapest-available Apes on the market were more expensive than the cheapest CryptoPunks for much of the last three months.
Amid missteps and a lack of communication, some saw Larva Labs as a Web2 company trying to fumble its way through a rapidly evolving Web3 market, struggling to satisfy owners who expected more transparency, collaboration, and rights from pricey NFT investments.
A new path forward
They will get at least some of that now under the ownership of Yuga Labs, which acquired both the CryptoPunks and Meebits intellectual properties, as announced on Friday.
Right off the bat, Yuga Labs said it will grant full commercialization rights to holders of NFTs from both collections, which means they can use their CryptoPunks and Meebits avatars for products, services, marketing, and other initiatives. Yuga will reportedly also not pursue any of Larva Labs’ previous DMCA takedown requests regarding derivative projects.
In a blog post Friday, Larva Labs acknowledged that the growing demands on modern-day NFT profile picture (PFP) projects were outside of their aims and abilities.
“Our personalities and skill sets aren’t well suited to community management, public relations, and the day-to-day management that these kinds of projects require and deserve,” they wrote.
Larva Labs and Yuga Labs got connected through veteran music industry executive Guy Oseary, who represents Yuga in its growing entertainment endeavors. Larva Labs wrote that it considered collaborating with the Bored Ape creators, but ultimately felt like Yuga could do a better job of sustaining the CryptoPunks and Meebits IP going forward.
“We found many things in common, but we also saw in them the skill set and expertise in this space that we were missing,” Larva Labs wrote. “In many ways, Yuga is the innovator of the model for the modern PFP project, and are the best people in the world at operating and growing these projects and communities around them.”
Larva Labs sold off the IP, but will continue to experiment and launch new projects, which the duo wrote is more its strength than maintaining existing ones. It also keeps the generative art NFT project, Autoglyphs, which predates the similar (but separate) Art Blocks NFT project.
Beyond opening up commercialization rights, it’s currently unclear how Yuga Labs plans to use the CryptoPunks and Meebits IP. Co-founder Wylie Aronow (a.k.a. Gordon Goner) told The Verge that Yuga doesn’t plan to reshape those projects into Bored Ape-style membership clubs, and also that it doesn’t intend to add royalties to the currently royalty-free collections. We could see things like streetwear, events, and gaming around the new IP, though, he said.
“We're not in a rush to do anything but give people full commercial rights, see what they build, and listen,” the firm tweeted Friday.