GM frens,

It’s been another interesting week in the Web3 World with the price of ETH climbing back to $1,700+ as the transition from proof of work to proof of stake fast approaches.

Staying on the topic of technology, in this week’s edition of The Ground Floor we are breaking down our non-consensus outlook on the mistake Yuga Labs is about to make.

Bored Apes Biggest Mistake?

Breaking down if Yuga Labs are on track to make a giant mistake...

Yuga Labs, the creators of Bored Ape Yacht Club have been one of the biggest drivers of NFT sales increasing over 200x from 2020 - 2021.

By intent, by chance, or through a combination of the two — the team behind this now famous NFT collection have built a globally recognized brand in less than 2 years.

How have Yuga Labs experienced all of this success in such a short amount of time?

• Artwork fit for a purpose: Profile picture NFT projects are now a dime a dozen, however, back when Yuga Labs created the Bored Ape Yacht Club collection, this approach was many multiples more unique.

• The right place, at the right time: NFT sales increased more than 200x from 2020 to 2021, and as the leading project in the Web3 World, BAYC naturally became one of the biggest benefactors of the exponential increase in demand.

• Celebrity adoption: Building a brand in 2022 is no easy undertaking, and it requires immense resources to build global brand recognition. With celebrities such as Neymar adopting Bored Apes as their profile pictures, BAYC were able to build global brand awareness within 2 years.

• A strong community: Alongside the support of well known celebrities, BAYC also had a very active community on Twitter during its early days, with a number of most well known NFT collectors such as Pranksy actively endorsing the project since day one.

Money, Money, Money

In April we broke down the business Bored Apes — a collection that provided Yuga Labs with 55,887 ETH ~ $165,633,000 at the time.

With this money + the money they raised, Yuga Labs is now making moves to become a metaverse company with the launch of the “otherside”, however, it’s unclear what it means for Yuga Labs to be a metaverse company.

This uncertainty hasn’t prevented Yuga Labs from making enormous amounts of money on this loosely defined metaverse…

Over $320,000,000 to be more specific selling land in this metaverse.

(The “Otherside” as depicted by Yuga Labs)

A Race To Rule The Metaverse

For Meta (formerly Facebook) being a metaverse company means improving the hardware consumers have access to create a more immersive digital experience.

While the term “Metaverse” has only recently been added to many of our vocabularies, this has been on Mark Zuckerberg’s radar for close to a decade with their acquisition of Oculus back in 2014 for $2 billion USD — the companies second largest acquisition to date, providing Meta has a very large head start in this race to rule the Metaverse.

While Meta may have a head start, they are by no means the only horse in this race, with both Apple (valued at $2.8 trillion dollars) + Microsoft (valued at $1.95 trillion dollars) also having ambitions to dominate this new digital world.

Yuga Labs Metaverse

Yuga Labs are making a big bet on the creation of an immersive digital experience for their token holders, and the company doesn't lack the capital required to pull it off.

We commend Yuga Labs willingness to push the envelope of innovation in Web3, and there's no denying that this is a step in the right direction, however, as a fan of Yuga Labs it's difficult to envision how adults will interact with this platform based on the information available in their litepaper.

Will this experience compete for the time people spend playing games such as Fortnite, the time we spend on social media, or perhaps the time NFT collectors spend on discord?

Looking Forward

It’s our perspective that Yuga Labs' success is built on the basis of employing the greatest innovation in content marketing we have seen in a very long time — the ability to have consumers adopt a piece of branded content as their profile picture.

Never before was it conceivable that thousands of consumers would willingly adopt a piece of branded content (a BAYC) as their profile picture on social media, however, this subtle shift in what consumers were willing to do has allowed BAYC to build a globally recognized brand in record breaking time!

Yuga Labs doubled down on this strategy in August 2021 when they released their 20,000 Mutant Ape Collection which further enhanced their ability to build brand awareness, however, this latest move from Yuga Labs to become a metaverse company has left us with more questions than answers. 

3 Things You Need to Know

1) Minecraft Bans NFTs ❌

Microsoft may have ambitions of building its own Metaverse, however, this week the trillion dollar tech giant banned NFTs from Minecraft.

This move to ban NFTs from Minecraft appears to have come in response to one company (NFT worlds) making money from selling NFTs that were compatible with Minecraft.

In the time since this announcement was made, the floor price of the NFT Worlds has fallen from 3.3 ETH to 1.35 ETH at the time of writing.

2) Snap Sees An Opportunity 👀

Snapchat is experimenting with the use of NFTs for their AR filters.

They’re set to start this experiment with a limited set of creators in August 2022 where they will be able to create and mint NFTs on other platforms and then import them into Snapchat as Lenses.

Another bullish sign for NFTs?

3) The Most Expensive Joke 💸

A bad joke can sometimes cost you a moment of embarrassment, however, for Franklin — one of the largest BAYC collectors, a joke cost him more than $155,000.

What started as a way to mock the people who are bidding 100 ETH offers on .ETH domains they own did not go according to plan.

After celebrating his success selling a .ETH domain for 1.891 ETH, Franklin soon realized that he failed to rescind his 100 ETH offer and before he could undo this error the opportunistic trader had already accepted Franklin’s offer.

Update: Franklin has tried to retrieve the 100 ETH he lost here by sending the wallet who purchased this NFT 1.9 ETH ~ the cost they incurred to purchase it, however, based on the recipient's response — a refund doesn’t look likely.

Food For Thought 💭

While many have tried, and many have failed — we are very bullish that given enough time there will be project(s) that succeed in developing high quality games that offers user the ability to own in game assets (that they can re-sell) without the need for ponzinomics to sustain the games success.

If you’re interested in learning more, this short thread from our friends Loopify paints a great picture of what has to happen to develop such a blockchain based game.

The Ground Floor Feedback 

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Thanks for the read,

See you next time! — OB1 & Pet & Corwin

This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.