Topics Altcoins
Bybit Learn
Bybit Learn
Beginner
2022年4月4日

What Is ApeCoin (APE): Token to Ape Into or Meme Fodder?

On March 16, 2022, there was a great deal of commotion following the launch of ApeCoin (APE). In response to the interest, this article is written to answer queries related to ApeCoin, the controversy around it, and what’s in it for holders of the coin. In this article, we'll be covering what is ApeCoin, details surrounding the ApeCoin DAO, the supposed ApeCoin controversy and considering if ApeCoin is a good investment for the long haul.

What Is ApeCoin?

ApeCoin is an Ethereum-based ERC-20 token developed primarily for the Bored Ape Yacht Club (BAYC) ecosystem. Valued highly by NFT collectors and Bored Ape NFT owners, it's also marketed as a decentralized protocol layer for community-led initiatives.

For those wondering what is ApeCoin, it’s a governance token of the Bored Ape ecosystem that has gained a huge following after its Bored Ape Yacht Club NFT project exploded in popularity. While some may discount ApeCoin as a meme coin, its utility goes much further than just being the governance token for Bored Ape investors thanks to its ties with the NFTs and ApeCoin DAO that we’ll covering later. This ultimately makes ApeCoin a potential long-term investment for those bullish on the BAYC ecosystem.

The total circulation of ApeCoin is capped at 1 billion. It's traded on some of the biggest crypto exchanges around the world. Already, celebrities such as Justin Bieber, Paris Hilton, Snoop Dogg and Serena Williams own collections of NFTs related to the ecosystem.

The ApeCoin Project and BAYC

ApeCoin is the utility token of BAYC. Since BAYC is an NFT project initiated by Yuga Labs, the coin is technically its brainchild. As of this writing, two of the four founders behind the development of the BAYC ecosystem are Floridians named Greg Solano and Wylie Aronow.

According to the official BAYC website dedicated to ApeCoin, the coin is launched, overseen and managed by ApeCoin DAO. This decentralized autonomous organization is an independent body, governed by Bored Ape NFT owners, holders of related NFTs and ApeCoin investors. In other words, whoever owns the Bored Ape NFT or the coin has the right to vote on proposed changes to the protocol, new projects, and everything in between.

Overseeing the DAO is the Ape Foundation, which ensures that ideas of the DAO community are brought to fruition. The Ape Foundation is headed by five high-profile crypto investors. Each of these board members is selected for six-month terms. In the future, members of the DAO and BYAC ecosystem will be able to select board members to the Ape Foundation.

What Is Yuga Labs?

Yuga Labs — the platform behind BAYC and Bored Ape Yacht Club — continues to seek additional pathways to integrate ApeCoin into different projects related to the BAYC ecosystem. For this purpose, it recently acquired two of the most popular NFTs, CryptoPunks and The Meebits, to expand the use of ApeCoin. CryptoPunks are non-fungible NFTs on the Ethereum blockchain which have various similarities to NFTs on BAYC. Similarly, The Meebits are 20,000 unique, 3D voxel characters registered on the Ethereum blockchain.

The acquisition of these NFTs will ensure further diversification of ApeCoin, as CryptoPunks and The Meebits retain a large following and active communities behind each project. According to Yuga Labs, the move will seed a vibrant new community in the BAYC ecosystem, which is already teeming with third-party developers and creators.

ApeCoin Prospects

The potential use of ApeCoin isn’t limited to NFT projects only. Instead, it's conceived as a powerhouse behind BAYC. In the future, the coin will be used within the BAYC ecosystem, which already constitutes games and e-commerce development projects. Benji Bananas, a popular action-adventure game based on fun physics, has already announced the use of ApeCoin for the purchase of its NFTs.

On top of this, ApeCoin is poised to be the token powering Otherside, the hotly anticipated metaverse that promises to expand the BAYC universe. From acting as the in-game currency to being used for land purchases, we’ve barely scratched the surface on how ApeCoin is going to be utilized in this Bored Apes metaverse.

A Hong Kong-based game software company, Animoca Brands, is also working with Yuga Labs to integrate ApeCoin in its portfolio of blockchain-based games, traditional games and other products. There are a lot of other uses of ApeCoin. For instance, music lovers can purchase Snoop Dogg's exclusive soundtracks on Ape Drops. These four music tracks by the hip-hop legend are only available for purchase using APE.

ApeCoin DAO

Now that we understand what is ApeCoin, it’s time to delve deeper and find out what is the ApeCoin DAO. Simply put, ApeCoin DAO is the governing body behind the BAYC ecosystem and ApeCoin. It’s widely perceived as an independent establishment that makes its own decisions based on the wishes of its members. All APE holders are members of the ApeCoin DAO, and share voting rights. Accordingly, anyone can become a member of the DAO by purchasing an Ape NFT.

As a responsible governing body, the DAO is also in charge of the day-to-day organization, bookkeeping, management and decision-making. It ensures that community ideas and proposals get the desired support for the successful implementation of approved projects in the BAYC ecosystem.

According to its founders, the main purpose of the ApeCoin DAO is to give power to its members by respecting their wishes. Based on the community guidelines and wishes of the wider BAYC community, the DAO proposes a variety of projects. Usually, these proposals are submitted on a dedicated page, as members decide what they want to do with the proposal and how to allocate the capital for successful proposals.

Ultimately, DAO members, including Bored Ape NFT owners, make final decisions on future projects, partnerships and funds, while the APE Foundation ensures that ApeCoin DAO carries out its duties as mandated by the rules.

The Future of ApeCoin DAO

While ApeCoin is not the first token to use a DAO for governance, it certainly offers hope to its members for a truly decentralized government. The concept of the DAO is based on managing cryptocurrencies efficiently through an active online community. As such, members of the ApeCoin DAO may never meet each other in real life, but the DAO tries to ensure that they follow a rigorous set of rules and targets set by the APE Foundation.

Just like other decentralized communities, ApeCoin’s DAO has the potential to play an integral part in the future of the BAYC ecosystem and the cryptosphere. Presumably, this is the beginning of a flourishing ecosystem based on one of the most popular NFTs. If ApeCoin continues to gain traction, there’s little doubt that more cryptocurrencies will follow the model.

ApeCoin Controversy

After investors read up on what is ApeCoin, its interest has steadily gained in the crypto world as investors poured their money into the supposed meme coin. Despite positive price predictions and plenty of potential catalysts, there are quite a few things that serious investors should watch out for. These include technical, ethical, governance and privacy concerns.

Launch Day and Coin Distribution

The controversy behind ApeCoin management and responsibilities of the ApeCoin DAO stem from its launch, when nearly 14%, constituting 140 tokens, were distributed to launch contributors. These contributors were Bored Ape NFT owners who supported the ApeCoin initiative.

On the day of the launch, the price of ApeCoin spiked up to $40 per share, due to its relative popularity among potential investors. However, the immediate sell-off at the founding exchange brought the value back to $8 per share because many Bored Ape NFT owners sold the coin to benefit from the spike. Since the opening day, the price has once again risen, but critics argue that the practice of airdropping free tokens to NFT holders is a potential rug pull.

The term “rug pull” refers to a type of scam attributed to the crypto industry, in which developers create a new crypto token, then extract as much value as they can before dumping their share, leaving the coin dead. This is also known as a dump-and-pump scheme, where a sudden spike in price is followed by a massive sell-off.

Besides price action and freebies, investors also criticize the ApeCoin distribution structure. For instance, the distribution favors insiders and the founders of BAYC, who will eventually get 22% of all the tokens. Similarly, Yuga Labs will receive 16% of all the proceeds.

Such a distribution structure may be counterproductive to the concept of fair distribution, because the public hasn’t received any freebies. Instead, investors have to buy tokens on the exchange. However, most NFT holders and early entrants in this case were people with deep pockets who got richer through this process.

Yuga Labs’ Response

In response to these allegations, Yuga Labs has clarified that the airdrop and free distribution of tokens is a normal induction process, which seeks to encourage loyal members of BAYC. In its official statement, the firm also commented on opening day, suggesting that there was nothing wrong with the price fluctuation because the price pattern has been consistent with price discovery and the cooling period frequently seen in crypto markets. In addition, the highly volatile nature ar first was due to a lack of liquidity in pools and exchange book orders.

While it is true that a lot of new crypto coins gain initial momentum via investors with deep pockets, this often causes outrage in the community — suggesting that such business practices are contrary to the concept of decentralization. In short, it makes the rich richer.

Regulatory and Privacy Issues

In the future, the ApeCoin management may also come under the scrutiny of SEC officials. Since the coin is issued by the ApeCoin DAO, and not by Yuga Labs, the relationship between the governing body and the parent organization, Yuga Labs, can raise eyebrows. The SEC may want to look at the regulatory vacuum concerning NFT classification and guidance, and it remains a concern for investors who do not want the SEC to regulate future aspects of the cryptocurrency.

Future SEC intervention is also a possibility if the SEC were to conclude that the profits were solely generated through the BAYC ecosystem, instead of the governing body, ApeCoin DAO, which introduced the coin.

Investors should also be aware of privacy concerns. ApeCoins, worth millions of dollars, are thought to have been stolen by hackers on the day of the airdrop. The belief is that hackers used flash loan attack techniques to trick the system into believing the loan was repaid in full — when in fact it wasn't.

Is ApeCoin a Good Investment?

Taking into account all this information, it begs the question – is ApeCoin a good investment? Since its inception, ApeCoin has gained significant traction, making it one of the most valuable cryptocurrencies by market cap. In addition, the coin is backed by a very well-known brand in the NFT sector. However, the future of ApeCoin rests upon its utility in the larger marketplace.

It seems that the current management is already looking to forge strong partnerships which will offer token holders utility beyond the coin's market value. The acquisition of two prominent NFT competitors, CryptoPunks and The Meebits, is the first sign of things moving forward. Just a few days later, Yuga Labs hinted at creating a massive metaverse game called MetaRPG, which will involve the sale of 200,000 plots of virtual land.

Besides giving investors voting rights over the funds in the ApeCoin DAO’s treasury, ApeCoin will be used to buy almost anything under the Bored Ape umbrella. From buying NFTs to acquiring memberships in exclusive clubs and invitations to VIP events, there is a lot that new investors should expect from holding ApeCoin.

From an investment perspective, ApeCoin has plenty in its favor. First, it’s backed by a reputable brand that’s overseen by prominent founders who have a history of managing crypto projects. Secondly, investors have shown a keen interest in the coin, as evidenced by its current value after the cooling-off period. Thirdly, the coin is backed by an active community which includes celebrities.

Perhaps the most important factor is the positive utility of the token. The initial blueprint, business goals and upcoming projects all point to a good investment for the long run.

Where Can Investors Buy APE?

Anyone can buy APE from reputable crypto exchanges like Bybit. If you already hold a cryptocurrency, chances are that it will be listed with your broker. New investors can also buy it by creating an account with their preferred brokers, and buying it using a fiat currency such as the U.S. dollar and the euro. Once bought, make sure to save your APE in a noncustodial wallet for maximum security.

The Bottom Line

Recently, ApeCoin has attracted a lot of attention from both the general public and crypto experts. Within a few days, the market cap of ApeCoin has increased significantly. A strong community backing and a transparent government structure are also in place. This is why various independent websites rank ApeCoin among the most desirable cryptocurrencies in which to invest. That said, while ApeCoin is a good investment for those looking to get into the exclusive Bored Ape ecosystem, investors must take caution because of its meme coin reputation and massive price fluctuations.