Digital art is having a renaissance moment thanks to “non-funtible tokens”, or NFTs as you may have heard them called. At the forefront of the NFT hype train is the Bored Ape Yacht Club, a series of algorithmically generated images of monkeys with varying facial characteristics and accessories. These attributes vary in “rarity”, with some combinations appearing less often than others.
Bored Apes (BAYC) and other NFT projects have been in the news a lot lately due to the obscene prices they've been selling at. Is it easy to make money with Bored Ape Yacht Club though? With my blog One More Cup of Coffee I look at lots of different ways to earn money with online projects, and frankly, I'm tired of looking at opinion surveys and pay-to-click websites.
Let's see if there's actually income generating opportunities with BAYC NFTs, or if it's a rabbit hole even worth going down.
Table of Contents
3 Ways To Cash In On The BAYC Trend
1. Buy & Flip An Ape
The most obvious way to make money money with Bored Ape Yacht Club is to buy an ape and flip it. The problem here is that you need at least $200,000 to get started. The floor price (price of the cheapest apes) is currently listed at Ξ68.
You could potentially pool together money with friends, but then again, you'd enough friends who trust you enough and are rich enough to afford a fraction of an ape.
Assuming your Ape does go up in price, don't forget to factor in Eth gas prices and taxes when you calculate profit.
How do you price an Ape?
There are 10,000 different apes, each with their own price. Price can be derived from actual rarity, e.g. a “bored dagger mouth” is quite rare, and cheetah fur is really rare, but more often than not, the price of an Ape seems to be linked to its aesthetic value.
2. Sell BAYC Swag
If you can afford a Bored Ape, then you may want to start selling some custom swag with your ape's image. Surprisingly, this is allowed with BAYC, and this is one of the main distinction from Punks, which do not allow you to use the image in any way.
According to Yuga Labs, you can use the image of your own ape for profit – but just your image. The intellectual property related to Bored Ape Yacht Club still belongs to Yuga. The trouble with this is where the line is drawn, and whether you want to be the person who takes it a step too far.
For example, you can use your ape image to create a hat, but can you write the words “Bored Ape” on the hat as well? The apes do appear bored, after all. Maybe you are just stating a fact, that this a bored ape (lower case), and not necessarily a Bored Ape (capital, proper noun). I don't know – I'm not a copyright lawyer.
I do know, however that these types of details are what makes or breaks a case once lawyers get involved. Oh, do you have enough cash on hand to defend yourself in court? Do you think copyright lawyers accept bored apes in exchange for services?
3. Start A BAYC NFT Resource
Though the BAYC brand is registered and copyrighted, there's still profit potential in the “community” aspect. For example, there are YouTube channels dedicated to customizing and working on Mac OS, even though those channels are not run by Apple themselves. There are meetups and events for Walking Dead fans, even though they are not run by AMC, Netflix, or the creators of The Walking Dead.
If you're really into BAYC, then maybe you could create something like that for the BAYC community. Of course, there's supposedly going to be real life resources for the apes available at some point in the future, but those haven't materialized. Even if they actually do, they won't be accessible to everyone. How many people are actually going to fly to NYC to attend a BAYC party more than one time in their life?
It might seem a little odd that you're not an Ape owner, but running an an Ape program, but there are some cheap Mutant Apes (Ξ18) and even cheaper Kennel Club (Ξ4) NFTs out there.
Even something like a blog or YouTube channel could be a source of income.
Real World Risks To Web3 Apes
Before you jump on the Bored Ape Bandwagon, it's important to understand that Apes have only been around for a few months, and there is massive risk involved – both of time and money. Not only can the value of the NFTs go down, but the whole “Bored Ape community” is not guaranteed to survive into the future.
So before you go mortgage you house to buy an Ape, or dedicate the next year of your life to developing Ape-centered resources, consider some of the very obvious risks.
The Road To Success IRL
Part of the value of owning an ape is supposed to be the IRL (real life) benefits of ownership. TBH, this is a pretty cool idea. An NFT signaling that you are part of an exclusive club of some kind is not only a great way to get clout on social media, but also actually derive real value from NFT ownership.
The trouble is in the details.
As an “investor” in Bored Apes, you need to be willing to look at all the potential downsides to this project, and the first thing I considered is that the organization creating these events doesn't have a long history of actually delivering on them. Everything on the roadmap is a plan which hasn't materialized yet. Plans are great, but remember how cool Fyre Fest was going to be?
So have you looked into the company issuing Bored Apes and any past projects they launched?
True, there was a party in NYC where you had to be an Ape owner to get it, but it really wasn't that exclusive.
What I'm interested in, is where is the money coming from? If this is going to be a sustainable business model, to throw expensive yacht parties, develop games, create 3d models, etc whatever else is on the roadmap, they need money.
Is this money coming from investors, and if so, does the value of your Ape change based money from outside investors? Do insiders get access to exclusive benefits not given to Bored Ape NFT holders, or are they on equal footing? Is there a board somewhere that can decide if new, dilutive Bored Apes can be issued?
The whole thing just doesn't seem very sustainable to me. They either need to be bringing in money, which means they'll need money from Ape holders or outside investors, and then, well, they'll be a corporation, not an immutable blockchain.
You Can't Put Apes On A Blockchain
While I do think the whole Bored Ape Yacht Club thing is a cool idea as a club, personally, I don't think you really need a blockchain for it. The whole point of a blockchain is to have an immutable ledger outside the hands of 3rd party control. With an exclusive club, you absolutely would want 3rd party control!
What if some crazy person or murderer buys an Ape? Are they still legally bound to be provided access to Bored Ape events? What if you get your Ape stolen or lose it, are you then banned for life from the club because you can't produce the proper verification of ownership, even though you invested $200,000 into the club?
Being unable to be changed, even by brute force, is a property of (true) blockchain technology. With BAYC, it sounds like they just need to create a Bored Ape Yacht Club website and sell memberships.
You can still have events and club benefits, without there being an immutable blockchain involved (which isn't really that immutable if you dig into it). So right off the bat, the whole blockchain and NFT thing seems like a gimmick.
So now you're basically buying a club membership, but also a club membership that will gain value over time because of… why? From the NFT side, perhaps Apes will keep getting more desirable over time, and will maintain or increase their value. From the IRL club side, perhaps they will come up with member benefits that will make club membership even more valuable than the NFT itself.
Can The Price Go Up Forever?
If you're buying a BAYC image as an investment, as opposed to just for appreciation of the art, then you should have an investment thesis. What would make the price of an Ape rise over time? How long can an Ape go up in value, by how much, and do you have an exit strategy?
Personally, I see that value is declining in the community, not rising.
Serums were dropped that could mutate your Ape, and the new Mutant Ape floor price isΞ18 compared to theΞ68 of the original. Then, they airdropped the Kennel Club NFTs, with a floor price ofΞ4. These Kennel Club NFTs are truly ugly and low effort. Could the next airdrop be a unsuccessful as the rogs for Pudgy Penguins?
For the time being, Ape holders have been satisfied with “free money” airdrops, but how will they react as the value of their investments stagnate against the unlimited sea of NFTs being minted daily? Can club benefits take over as Ape value languishes. Will the endorphin rush of owning an exclusive product last for decades, or months? Are the Bored Ape Yacht Club images even that rare?
Are Rare Apes Really Rare At All?
Of course, anything popular online is going to get memed, and the great thing about memes is that the best memes use humor to reveal truth.
With the popularity of BAYC, two competing projects launched which display the exact same images as BAYC, except that they are facing the opposite direction. Meant as a joke, these Apes are actually selling, of course, at a huge discount to the right (correct) facing images. Knockoff apes are like fake Gucci bags – they look close enough and perform their basic function well enough to satisfy the poors.
These apes were subsequently banned from OpenSea, the largest NFT marketplace, and probably many other NFT marketplaces after that.
Then, the truth was revealed.
Not only are Bored Ape Yacht Club NFTs not really rare at all, they are not immutable either. The whole value prop of owning a BAYC image went down the toilet. Of course, there's still a chance that IRL benefits could be coming in 2022, but I'll be sitting on the sidelines for now.