On March 11, 2022, we experienced a monumental shift in the NFT world, unbeknownst to many. The big players finally merged into one, and with it came a whole host of possibilities to revolutionize the space and continue pushing NFTs as mainstream digital assets.
So what happened?
The creators of Bored Ape Yacht Club (BAYC) bought the rights to CryptoPunks and Meebits from its respective creators, Larva Labs.
BAYC (deemed one of the most exclusive communities of the NFT realm and often marked as the “Mom, I finally made it” trophy for NFT enthusiasts) is now part of the CryptoPunks and Meebits family.
Basically, they’re all living under the same umbrella.
And this umbrella is called Yuga Labs, the team behind the development and creation of BAYC.
But why did Yuga Labs do this? You’re probably reading this and thinking to yourself: Isn’t this the same as a web2 company acquiring a competitor? This won’t be good for the web3 space, right?
Wrong. Yuga Labs is bringing CryptoPunks and Meebits holders the rights they’ve been asking for years. You know, the commercial kind. The IP rights that let you sell branded merch of your NFT or any sort of derivative product you wish to monetize.
Ok, this is getting confusing. What do I mean by this?
Think of Larva Labs as creators and innovators. They are–hands down–the pioneers of the NFT marketplace. In their words, “rather than looking at becoming a large company and doing a deal with the NBA… [they’re] more just looking forward to kind of just continuing to explore the tech possibilities.”
Larva Labs isn’t a business. It’s a collective of developers and artists on a mission to continue breaking the status quo.
And because of this, they’ve always been stern about IP rights given to the holders of CryptoPunks and Meebits. They believe in protecting the works of creators, and quite frankly, it looks like they don’t care too much about the money.
The previous licensing under Larva Labs works like this: it’s primarily non-commercial, with few limited rights. These include:
- Commercializing your own merch up to $100k a year
- No digital collaborations
- No brand collaborations
So if you’re a CryptoPunk holder and wanted to create a sustainable business selling merch with your branded NFT, you were out of luck under the Larva Labs regime.
On top of all this, Larva Labs’ only source of revenue came from periodically selling off 434 punks since the onset of the collection. These punks were stored in the dev wallet upon mint.
Their DTC marketplace is also fee-less. As stated by the dev team, “users should have choices, we just want to ensure that among those choices is the zero-fee direct interaction with the Cryptopunks smart contract.” In short, they don’t actually have a solid recurring revenue.
Yuga Labs, on the other hand, does things differently. Think of it as a business-oriented group with the web3 ethos as top priority. They’re all about giving full rights to BAYC holders.
The IP rights entail an unlimited, worldwide license to use, copy, and display BAYC for derivative works like merch. As a holder, you can build a sustainable business without worrying about a $100k revenue cap.
Unlike Larva Labs, the team never stored any BAYC NFTs in the dev’s wallet. Instead, they charge royalties for each secondary transaction. This is why Yuga Labs is more business-oriented, as they have a steady recurring revenue stream.
All in all, Larva Labs made the right move. They made a hefty bag off the deal while delegating IP rights to a more-than-competent team.
NFTs and their future
As NFT enthusiasts, this game is positive-sum. The NFT kingpins worked together by focusing on their strengths and outsourcing their weaknesses. As a result, the most sought-after collections are now commercially licensed for holders, and Larva Labs, the innovators of the NFT world, can keep on doing what they do best: Build.