The world’s hottest NFT project just got even hotter by giving away free money

There ain’t no such thing as a free lunch.

In fact, if there were ever any universal truth in economics, it might just be that: There is no such thing as a freebie without a cost attached somewhere. The rule has been repeated throughout history for so long that it’s even one of the book titles from Nobel Prize-winning economist Milton Friedman.

But mama also once said that rules are made to be broken. And this past week, crypto may have just broken yet another pillar of long-standing economic theory. Maybe there is such a thing as a free lunch. (Or at least a free banana.)

In this particular instance, I’m talking again about the famed non-fungible token project Bored Ape Yacht Club, and the huge news that broke over the weekend: The powers that be behind the project orchestrated a huge kickback to their community to the tune of potentially billions of dollars.

Bored Ape Yacht Club NFTs are much more than just digital cartoons of primates. They are the face of the most powerful NFT project that's now scooping up the competition and launching its own native cryptocurrency.

For those who missed the earlier Crypto Uncomplicated post on what NFTs are, think of them as digital collectibles and keys to a community. In this case, Bored Ape Yacht Club is the most expensive NFT project in the world by market cap, with the cheapest drawing of a digital ape in the collection now asking for a minimum of $286,000. Yes, now more than a quarter of a million dollars each, or nearly $3 billion for the whole collection of 10,000 Bored Ape NFTs.

As I also highlighted earlier this month, the group behind Bored Ape Yacht Club, Yuga Labs, has been acquiring the intellectual property to all of the other top NFT projects, including Crypto Punks. Some were wondering what they might be planning by consolidating all that power in the NFT space. Well, now we have our answer.

Last week, Yuga Labs released a teaser video of all of their NFT brands in a fancy cartoon animation. Alongside that release came the news that there would be a new coin — dubbed ApeCoin — that would be powering the entire functionality of this brave new world. (The earliest use case for ApeCoin appears to be for in-game purchases in a similarly primate-themed game called Benji Bananas.)

But in releasing ApeCoin, the team dropping the new crypto didn’t charge anyone in their community to get it. Actually, it didn’t cost anyone who already owned a Bored Ape NFT (or an NFT of the derivative off-shoot collection Mutant Ape Yacht Club) anything. Community members got it for free. Did I just say FREE? Milton Friedman would never!

The Mutant Ape Yacht Club (right) is a separate NFT collection derived from the Bored Ape Yacht Club. They don't cost as much, but are similarly managed under the Yuga Labs umbrella.

Yet, in crypto, the idea of giving away freebies to your community isn’t new at all. They are called “airdrops” and have existed for years. They are made possible by the core tenet of blockchain tech that we’ve covered before – the fact that the wallets holding a certain token are publicly viewable on any blockchain. Therefore, if someone wanted to gift a new crypto to anyone's wallet holding a certain NFT (which is really just a one-of-one token) it would be entirely easy to do so: Usually, there is a cutoff date for people looking to participate in an airdrop. At that point in time, a “snapshot” of the network's wallets would be taken and all the qualifying wallets would be recorded (this is extremely similar to an “ex-dividend date” for stock dividends — only recorded shareholders by a certain announced date in time are entitled to receiving dividends from a company.)

Interestingly, the ApeCoin DAO, the organization shepherding the airdrop of ApeCoin, didn’t choose to airdrop tokens after taking a snapshot. Instead, anyone who had a Bored Ape or a Mutant Ape in their wallet could claim ApeCoins. As laid out in the announcement, owners of Bored Ape NFTs were entitled to claim 10,094 $APE tokens. Owners of Mutant Ape NFTs were entitled to claim 2,042 $APE tokens, respectively.

What’s also interesting is that unlike normal airdrops that feature little-known tokens that usually only trade on decentralized exchanges, $APE token immediately launched on Coinbase and other major centralized exchanges. That is not something that just happens overnight, and even though from a securities law perspective Yuga Labs has made clear it was not directly responsible for the airdrop (ApeCoin DAO was) it seems likely there was a centralized push to get it listed so quickly (I’ll leave that one to the SEC and lawyers more qualified than me to debate.)

Coinbase shows ApeCoin peaking around $16 early after it was listed on the exchange. It's since fluctuated around $10 per coin.

In any case, when you consider the fact that ApeCoin has stabilized this week to trade around $10, that’s some serious money. That’s more than $100,000 instantaneously gifted to people who gambled on buying a cartoon monkey! When Bored Apes first went live in April of 2021, the mint price was just below 0.1 ETH, or about $200. As I said, the floor price is now $268,000 and on top of that, owners just got a free bag of tokens worth $100,000. It’s an insane return on investment. If you can find anything better in history, I want to know: A 183,900% return in less than one year.

It’s stupid. It’s genius. It’s … perfectly summed up by this video on Twitter of a guy mocking the idea of a cartoon monkey creating generational wealth.

Now, if you were in the position of receiving an airdrop like that — after a run like that — you’d probably take some chips off the table, right? Sell the $APE tokens you just got for free to start cashing in on your investment while still holding your NFT? WRONG (says my friend who bought two Mutant Ape NFTs last year.)

I won’t use his real name (let’s call him Odysseus) but after paying 2.75 ETH (~$5,000) each for two Mutant Ape NFTs that now fetch about 21 ETH (~$60,000) each, Odysseus says the airdrop still doesn’t make him want to sell. By holding two Mutant Apes, he claimed more than 4,000 ApeCoins, or $40,000 as of Monday’s price.

“My head was thinking of all the utility that will be derived from this,” he tells me. “It hit the major exchanges, so it has much, much, much more exposure than most any other coin right now to be picked up by people. I’m very sure that the folks will use this coin as utility and it will be in demand, and that because it’s accessible, people will actually be able to buy it and partake in that utility.”

Now, historically I’ve found it best to take a little profit by selling tokens you receive in airdrops if they appreciate significantly in value. Generally, it’s very difficult for projects to live up to their own hype. And, despite the fact that Bored Apes have been able to attract celebrities to their ranks, including Justin Bieber and Jimmy Fallon, there are still only 10,000 of them and so many other projects in the Yuga Labs umbrella. That could limit the idea of ever achieving mainstream adoption.

Then again, to Odysseus’ point, Yuga Labs and the Bored Ape Yacht Club have defied all economic logic thus far — including, perhaps, that one tenet so many have held true for so long: There ain’t no such thing as a free lunch.

Where they sit (up hundreds of thousands of dollars) there are probably a few apes who might dare to disagree.

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*Bonus interesting point: Because the ApeCoin airdrop didn’t rely on a snapshot, an incredibly smart person worked the loophole to scoop up five Bored Apes on the open re-sale market in order to immediately claim the tokens and then re-sold the NFTs back. It was a flash sale that netted the person more than $1 million worth of ApeCoin, and frankly, I’m impressed.