I’m not one to pass up a chance to dunk on BAYC. And, usually, they’ve lowered the basket enough for me to stand on my tippy toes and reach it. But for some reason, last weekend, those tacky, oligopolistic, quite possibly fascist bastards decided to alley-oop it to me themselves. It’s a bold strategy, guys, but I appreciate the assist.
On April 30, Yuga Labs — the company behind the Bored Ape Yacht Club and the brewing a16z web3 monopoly — dropped their latest NFT collection. It consisted of 55,000 ‘Otherdeeds’, aka parcels of land in a sandbox metaverse (read: rebranded MMORPG) they’re supposedly building called Otherside. Despite a 305 ApeCoin floor — almost $6,000 at the time of launch — the sale set a single day trading record on OpenSea, who totally coincidentally decided to accept Yuga’s native token hours in advance of the launch.
It also put the entire Ethereum blockchain in a cobra clutch, driving gas fees up as high as 5 ETH for a transaction, or over twice the cost of the actual NFTs. For reference, $320M was generated by the sale. $123M went to gas fees alone. Worse, because the highly-hyped release operated much the same as a Yeezy or Supreme drop, with whitelisted wallets essentially competing to check out the fastest, a significant portion of those fees were paid by buyers who didn’t even wind up with an NFT to their name. And those who did soon discovered all an Otherdeed actually is: yet another cripplingly expensive passcode to ‘participate in prototype builds, demos, and tests’ of a game with no user demand or clear reason for existing.
The extortionate gas fees, turns out, were totally avoidable — most smart contracts optimize for them. Yuga’s contract, on the Otherhand, appears almost purposefully inefficient. Which it may well have been, as the Ethereum crash was soon used by Yuga Labs to justify leaving the blockchain. (ApeCoin is an Ethereum sidechain, and all previous BAYC properties had been minted in ETH.) This move was described in a viral thread as ‘dark manipulation techniques’, and supposedly made the OP, Mark Beylin, ‘physically sick’ — although he’s an Ethereum developer, so take it with a copium hit. The point is, even among degens, the tide toward the bluest NFT chip out there is shifting. Didn’t see that one coming.
Nevertheless, the little inspirational quote attached to my DeTox tea bag is reminding me the essence of life is to communicate love. So, instead of ending on yet another eviscerating beatdown of my favorite horse corpse, I’ll go ahead and shine the spotlight on a take from friend of the newsletter @NFT_nom. Totally coincidentally, it just so happens to be another BAYC beatdown.
Nom pointed out to us that the Yuga Labs drop shafted buyers in more than just the smart contract. A closer reading of the Otherdeeds licenses reveals the IP rights of the NFTs don’t even go to the buyer — one of the only tangible perks of owning a Bored Ape, even if all to come of it so far is a yet-to-materialize Gorillaz knockoff and an ill-advised fast food franchise. The license is also wrought with under-edited risk aversion clauses (including one laughably outlawing a secondary market for the NFTs) and all around smacks of VC influence. Which is exactly the problem.
A handful of venture capitalists hold dominant shares in not only Yuga Labs, but the company developing Otherside, and OpenSea, as well. Despite the degen ideals lip serviced by Marc Andreessen, Guy Oseary, and friends, a VC-funded web3 will never materialize. The incentives don’t align. Blockchain technology cannot support mass adoption. Scalable Layer 1 solutions with production quality experiences built for the masses simply have yet to exist, and building them requires a high level of innovation and a lot of time. Meanwhile, the mindset in VC for the last 10 years has been to sell exciting ideas in slick packaging before you even know how to execute on them. This tends to mean releasing underdeveloped products capitalizing on current trends and designed to maximize return on investment. With the amount of money they have to throw around, any project the major firms invest in will dominate the discourse. And yet, said projects will almost certainly be centralized, half-baked, and all around a finger in the face of the web3-friendly consumers whose demand for decentralized innovation ironically drove VCs into the space in the first place.
In other words, late stage capitalism bad, Nazi con artists badder. What to do with this groundbreaking information? Nothing, really, aside from assuming the next Yuga Labs drop will be even more complex and inefficient, to distract from the fact that the $4B company has yet to deliver a product with any functional utility.
In the meantime, however, we’ll join @punk6529 in drawing a distinction between web3 and web2.5. (A term I’m pretty sure our own El Prof coined.) A genuinely decentralized web3 may be as far off as the flat Earth’s edge. But the centralized crypto solutions we’re already starting to see will, for better or worse, define the journey there. Whether we’re lemming marching to the promised land or world’s end remains to be seen. But, until then, boo ya H0Rs — welcome to the News2.5.