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Anyone talking about NFTs cannot avoid the hype surrounding the Bored Ape Yacht Club (BAYC). In addition to the overpriced NFT monkey pictures that promise access to an exclusive club, the Metaverse ambitions have now attracted new attention. To fund the Metaverse project, the company behind the Monkey Universe, Yuga Labs, has completed a sale of the Metaverse properties. For the virgin building land in the so-called Otherside the company was able to collect 320 million US dollars last weekend.
The cryptocurrency associated with the primate ecosystem ApeCoin (APE) reacted correspondingly volatile. Should mean: Before the NFT sale, the price of the cryptocurrency rose enormously, reached an all-time high of over 27 US dollars, and then collapsed again after the auction. Now noted ApeCoin at around $16.
No one really cares about Metaverse properties
Professional speculators were able to make clever use of the hype sale. Selling the 55,000 lots for around $5,800 each in ApeCoin generated huge demand for the APE coins, which drove the price up. Following the NFT auction went to the marketplace OpenSea the big sale going on.
After all, very few property buyers had any serious interest in them. Instead of further developing the virtual properties, they wanted to flip them, ergo try to cash in quickly so that the APE course could correct to the south. Looking at the Otherside NFT lots shows that the average price is downright smeared. From an average of 8.3 ether on May 1st to 3.6 ether on May 5th.
The record NFT sale from Yuga Labs has shown once again that it is currently all about speculation and less about relying on a substantial project with a long-term time horizon. In the end, those who did not jump off in time or who only stocked up on ApeCoin shortly before the auction lost.
The alarm bells should ring when it comes to the additional purchase costs
Anyone who buys an apartment, for example, has to pay ancillary costs such as an entry in the land register or brokerage fees in addition to the purchase price. Depending on the federal state and other factors, it can easily add up to 10 percent. In the case of the properties in the primate metaverse, on the other hand, the additional purchase costs were sometimes more than half of the purchase price.
The $320 million raised has resulted in over $180 million in transaction costs on the ETH blockchain. This leads to the conclusion that NFT speculators expected their land prices to increase by more than 50 percent immediately, otherwise their investment would be negative. No matter how you calculate it, the entire investment case only works out if you rely on a Ver-X-folding.
At the same time, the ancillary costs show the brutal inefficiency of the blockchain sector. Having to pay two to five ETH for a single transaction is simply absurd. No wonder some NFT investors fell victim to phishing attacks. Fraudsters advertised that the excessive transaction costs would be reimbursed if you connected your wallet to the corresponding service. The result was often empty wallets and damage in the millions.
Heavy blow for ETH blockchain
Yuga Labs excused advocated the paralysis of the ETH blockchain on Twitter and called on the Decentralized Autonomous Organization (DAO) behind it to force a change to another blockchain. After all, ApeCoin does not yet have its own blockchain, so transactions run on the ETH blockchain.
The incident shows that the ETH blockchain is not as far along as many crypto enthusiasts had hoped. The lack of scalability and the fact that hypes quickly become overwhelming proves that there is still a long way to go for mainstream commercial establishment.
ApeCoin: advance praise en masse
Lots of advance praise and no results worth mentioning. That’s what you could call Yuga Labs’ monkey ecosystem. In a very short time, the company has blossomed into a unicorn with over half a billion US dollars in firepower.
The danger that the high expectations will now be disappointed is huge. To be fair, this also applies to other Metaverse and DAO projects. Even the sandbox metaverse has yet to prove that the many billions in NFT asset value can last over time.
Due to the fact that new innovations keep coming up – the best example is the current Metaverse from the Bored Ape Yacht Club – work is actively being done to prevent a price correction. One could say cynically that an even bigger new castle in the air is placed on top of an existing castle in the air.
Otherside, Bored Ape Yacht Club and ApeCoin: Will everything work out in the end?
If the Bored Ape Yacht Club and the Otherside Metaverse manage to build an active community that does more than just speculate, but also spends time effectively in the Metaverse, then the NFT gamble could take off. Finally, the monkey ecosystem has a first mover advantage and is at the forefront as a blue chip asset, at least in terms of size. Investment funds – especially designed as DAOs – could provide long-term cash inflows for NFTs. Pars pro toto, it doesn’t have to be the end for a still very young market given the current valuation levels.
Detached from the NFT valuations, the ApeCoin in particular could benefit the most. This offers the easiest access to the said ecosystem and can be purchased through various exchanges. Just as a portfolio addition, true to the motto: “to be there”, new ApeCoin investors are likely to be added despite the correction of the last few days.
ApeCoin is one of the risky candidates among the top 50 coins (currently ranked 30th in terms of market capitalization). On the other hand, ApeCoin should be sure of a great emotional bond among small investors. A sharp increase in its level of awareness can also be expected outside of the crypto sector. Despite all the doubts and question marks raised by the project, this marketing aspect should not be underestimated.