Stop phaking my ape, bro
Art, centralization, and can you really have a crypto startup?
Welcome to The Late-Stage Review, a relaxed writing project from Alex, a finance and technology journalist. It’s free, comes out when it does, and is made just for you!
There’s drama afoot in the crypto world. Happily the conversation is a useful bridge to what I want to write about next, so let’s talk about it.
By now you are familiar with the NFT projects that struck magic early. You’ve heard of CryptoPunks, those weird rocks, and the Bored Ape Yacht Club, for example. DappRadar reports that the total value of the CryptoPunks and Bored Ape collections is in the billions, for reference. We’re talking about real money.
But there seems to be some disagreement regarding what art is, what decentralization is, and who is in charge of the culture. You see, there’s a derivative collection of Apes in the NFT market that is pissing off nerds with vested interests in the, er, original Ape art.
To get to the day’s controversy, I have to do a little explaining. Bear with me. We’re going somewhere, I promise.
The general NFT model appears to be as follows: Invent a theme, apply variations, and create a huge set of the resulting art.
To pick an example, there’s the Sad Girls Bar NFT series that I particularly like. It involves, you guessed it, women holding drinks. As a recovering alcoholic, a general sad kid, and a fan of heavy metal attire, I dig it.
To help explain why, here’s an example from the set:
The project intends to use some of its proceeds to record a jazz album and invest in a peer-support group for women, per its website. That’s great!
Notably, there are 10,000 images in the Sad Girls Bar collection, just as there are 10,000 images in the Bored Ape Yacht Club NFT set.
Why 10,000? It’s not an accident. The number is standard for NFT projects because the CryptoPunks NFT series — which started trading back in 2017 — has 10,000 images in it.
More simply, the Bored Apes project followed an established model for its NFT set just as the sad-women-with-drinks NFT set did.
This is to say that what the Bored Ape Yacht Club has accomplished is not very original. Well done? Sure, if the images are your jam. But original?
The Bored Ape project did manage to create some valuable IP. And with companies large and small working with the Bored Ape crew, there’s a lot more money from the original effort yet to be made.
On that theme, one thing that the Bored Ape crew has done to unlock that value is create derivative works of art based off its original Bored Apes. As CNet recently reported:
Bored Ape Yacht Club has done a few things to keep owners interested. First, it created the Bored Ape Kennel Club, offering owners the opportunity to "adopt" a dog NFT with traits that mimic those of the Bored Apes. In August came another freebie: digital vials of mutant serum. Owners could mix their Bored Ape with the serum to create another NFT -- a Mutant Ape.
Variations of variations! It’s a brilliant way to stretch a hot-streak into another huge set of images for sale that folks, wanting to taste the original gold dust of the Bored Ape set, can indulge in at lower price points.
What matters is that the Bored Ape folks set a precedent that derivatives of its original art are art, and that that art has value. Fair enough, right? After all, the Bored Ape Yacht Club did not invent NFTs, NFT image sets, or even the number of the images to release in an NFT collection. It just added apes. With hats.
So by aping its original Apes, the Bored crew showed that derivatives thereof are approved art in its eyes, right?
Consider my surprise when an independent art project put a cheeky spin on the Bored Ape set and the Internet lost its damn mind.
You see, Phunky Ape Yacht Club is doing something pretty funny, namely flipping Bored Apes to look the other direction than they did originally, and releasing them onto the blockchain.
It’s honestly a great idea: Take something that exists, put a new spin on it — literally — and fire it into the market to see how it trades. What could be more decentralized than that?
Well it turns out that the NFT market is about a decentralized as the Chinese Communist Party, as major NFT marketplaces are delisting the Phunky Ape Yacht Club images. Which is not very punk rock. It’s very lame, in fact.
You cannot look me in the eyes and tell me that the Bored Ape NFT and its allowed derivatives are Very Legit, but the flipped apes are not. It’s all just cartoon art on a slow database!
And yet. What I think the Flipped Apes Crisis of 2021 shows is that web3 doesn’t create a new man. It doesn’t really change anything at all. The same forces of greed, and complaining to centralized authorities about IP rights that we see on web2 are afoot in web3.
If you scratch an NFT believer, underneath the thin veneer of “change the world” and “decentralization is the future,” it appears you find the same “I’ve got mine, fuck you” of the rest of the business world. Just with higher transaction fees.
What would have been cool from the Bored Ape team in response would have been to giggle at the flipped apes as the gimmick that it is, and move on. Instead, thanks to the ever-pertinent Streisand Effect, attention to the flipped ape set will be higher than it would have been had it just been ignored. Whoops.
But most importantly, the Bored Ape/Flipped Ape drama shows that crypto folks will execute the web2 playbook when it can defend their capital — takedowns, shouting at folks on Twitter who break the unwritten rules of tribal engagement — and the web3 playbook when it can generate new wealth.
NFTsAnonymous @NFTsAnonymousIf you support Phunky Ape YC, you are a part of the problem. I shared my views regarding Phunks as a political statement, and something I was inspired by. More recently, Phunks has become toxic and they encourage others to behave similarly. Quit ruining the space for all of us.
Yeah but, you might say, don’t you expect companies or organizations to protect their IP and try to create shareholder value? Sure, but that’s not what web3 is all about — that’s what startups are all about.
I strongly believe that the traditional startup model and the web3 ethos are at odds with one another. The former prioritizes centralized authority, power, and wants to disrupt part of the world while preserving most traditional business rules so that value can be extracted from the market. In contrast, at least in theory, web3 prioritizes decentralized authority, power, and wants to disrupt everything.
We touched on the startup-web3 tension earlier in the week with our discussion of cryptocurrency fees, DAOs, and where crypto trading revenues are heading. The venture-backed companies in the crypto trading space are acting like the traditional firms that they are, while decentralized projects are harrying their borders; the Silicon Valley model versus the decentralized method is playing out in real-time.
Here we see the same tension, with nerds arguing that their JPGs are legit while others are not, and instead of letting the community decide what has value — the only thing that gives Bored Apes worth — are appealing to external authority to enforce a set of web2 rules.
So much for a permission-less playground. So much for a decentralized platform. So much for a trust-free ecosystem.