A deep dive into ApeDAO Are these Ape NFTs overpriced or still a steal?

PART 2: The first detailed price analysis of this famous IOTA ecosystem DeFi DAO.

TL;DR:

ApeDAO NFTs have already experienced a significant increase in value and were able to defy the bear market in crypto. This is due to high licensing revenues and initial earnings, as well as high trust in the creators combined with great artwork, which additionally makes Ape NFTs sought-after collectibles. Even though the market has already accommodated exponential DAO growth, further price increases are to be expected, but after Shimmer EVM, new sources of revenue must be tapped and growth must be increased even further.

From 100 MIOTA to 8,300 in less than a year. That’s something to be proud of. Since the start of the NFT Collection of the ApeDAO until today, the NFTs representing shares of the treasure chest of the Investment DAO have multiplied, and that in a hard raging bear market. Reason enough to take a look at whether and how much potential, if any, is still in the committed monkeys.

Apart from the fact that the NFTs linked to the shares are in general opinion also from the artistic design very well done (thanks to @BingoBongo_Ape with his awesome artwork ! ) is the essential reason for participation in the DAO that one wants to secure a part in a treasure chest. Because the goal of the monkey community is to fill this as quickly and vigorously as possible, in order to distribute everything to the shareholders after a certain time.

I already discussed how the treasure should grow in Part 1.

Today we will deal with price theory and how it can be used to classify NFT prices. I will address the following question in more detail and try to find an answer that you can understand:

• How should the current price be classified? Is it expensive or are the Apes even bargains?
• How do you determine a “fair price?”
• What is the PTR and what role does it play in pricing?
• PTR and P/E ratio in comparison
  Value of the voting right in the DAO
• My personal forecast (I know, they want it :)

Since I assume that some non-financial experts are here, the professionals may forgive me if I clarify some terms at the beginning and put them in context, so that in the end really as many as possible understand this post.

I’ll pull up a stock as a comparison for this. I chose Apple. Not to make size comparisons, but because it is a name with which everyone can associate something.

So this is purely about comparing terms and valuations.

Let’s get started:

What is market capitalization?

Apple:

Multiply all shares by the last traded price.

15.91 billion shares x $142 (last traded price on exchange) = $2,259.22 BN (2.2 TN) $

Ape:DAO:

Multiply all Ape NFTs by last traded price, makeshift lowest bid:

8,300 MIOTA x 1074 = 8,914,000 MIOTA ($1.9 MN).

It does NOT mean that everyone can sell your shares at that price. The market cap is a snapshot and changes with each new trade that occurs.

Price/Earnings ratios (P/E ratio; P/E ratio) :

Share price divided by earnings per share

Apple P/E ratio 2023 was 25

This puts the stock well ABOVE the average market valuation. Reason: Apple is considered to have strong growth and earnings).

ApeDAO: 28

Again, this reflects the strong growth of the treasure chest so far (doubling in less than a year) So we find a first similarity with valuation rules of the stock market.

Since the DAO consists exclusively of a treasure chest and the acting persons this number is only conditionally comparable. I have therefore adapted and renamed the term P/E ratio. In price-treasure chest ratio, in short PTR.

What do these numbers mean?

P/E ratio and PTR are basically similar, as can be seen above.

It aims to put the company value in relation to its earning power. It gives you a sense of how long it takes to pay back a company or share purchase through steady profits.

If I own all the shares, I own the whole company.
If I own all the NFTs, I own the whole DAO.

Assuming I wanted to buy Apple and (for the sake of simplicity) got an interest-free loan that I repaid exclusively with the profits from the Apple business, then (see above) it would take me 28 years (!) to pay off the purchase.

Same with the DAO:

If I were able to buy all 1074 NFTs at today’s price and wanted to pay for the purchases with the earnings from the DAO, it would take — watch out — a whopping 28 years to pay off the DAO: Each year (as in 2023) the DAO would have to bring in about 300,000 MIOTA (bring additional into the treasury, through DeFi etc).

Or to put it another way, their NFT bought today for 8,300 MIOTA would only be worth about 300 MIOTA if the DAO stopped working tomorrow and distributed the existing balance to the monkey owners.

So we have almost answered question 1.

We can see that the market has already priced in a very good future development of the ApeDAO. It already expects exponential DAO growth in the future. But we do not want to be satisfied with that here. I will tell you WHAT EXACTLY the market has priced in:

“The market” expects a little more than a doubling of the value in the treasury, every year for the duration of 6 years before the DAO is dissolved and the fund’s assets distributed to the shareholders.

Would they have expected such a precise definition? Isn’t it fascinating how well even in such a small market as monkey trading, markets in collective consciousness shape prices?

Now please take a close look at the following table, first at scenario I. The interpretation follows below…

You see here, how the DAO grows over a period of 6 years from 300 Gi (we calculate from now on in 1000 MIOTA units:

1000 Miota = 1 Giota, short Gi, 1000 Giota = 1 Terra-IOTA, short Ti)

to 9.600 Gi (left in the table, bold and BLACK).

Look now at the column with the RED numbers At the beginning the market price is clearly above the intrinsic value (i.e. what each shareholder would get if the DAO would be dissolved TODAY and the treasure chest would be divided), because here the expectation of future profits in the following years is included in the price. The more I fill the chest, the lower the “pending loss”, red in the table or the premium to finally change after 6 years into the green area.

In PINK the PTR is listed.

You can see how this multiplier moves down over time and will be at 1 by the time the DAO is liquidated. CAUTION: This is NOT a forecast, it is a FACT!!! At the end of the term, the factor is always 1. Because then it is about the cash. And the assets can only be dissolved and distributed ONCE. And after dissolution, logically, no future profits can be priced in.

Therefore, the PTR is one of the most important key figures.

Its trajectory is largely determined by the maturity/forecasted life of the DAO. We can make the following statements about the PTR:

The shorter the term, the faster the PTR approaches 1.
The longer the runtime, the slower the PTR decreases.
The more dynamic the growth of the DAO, the higher the PTR will be.
Thus, for the PTR to continue to increase for the ApeDAO, the rate of growth must continue to accelerate.

The “fair” PTR is reached when the current multiple is divided by the growth multiple per annum (e.g. 2x or 3x). Divide the result by the planned or estimated life of the DAO. If the number is > 1 the PTR is too high, if the number is < 1 it is fair or favorable.

Current Ape Price : Current Treasury Value per Ape

(Current treasury value per ape : DAO treasury total : 1074)

DAOs generally live shorter lives than public companies.

You may have guessed from looking at the table that another difference between DAO NFTs and shares is of considerable importance here:

While stock corporations are established for an indefinite period of time and ideally operate for decades or even longer, the initiators of a DAO pursue a specific goal. This can be, for example, to raise the value of the treasure chest to a certain level (perhaps 10 Ti) or simply to get the best possible out of a certain time to then distribute the profits and treat themselves to something nice.

Maybe one Ape NFT will be enough to buy a banana plantation. Who knows.

So scenario 1 lets us make the following statements:

• Someone who buys an Ape for 8 Gi today will just barely break even, even with exponential growth, with an annual doubling of DAO.
• The price will NOT continue to increase as long as it appears that the DAO will maintain this rate of growth.
• The 10 Gi limit for Apes is only temporarily exceeded by enthusiast buying. 9 Gi remains a sell wall.
• The sooner growth picks up, the more the price goes up.
• The ApeDAO is currently fairly valued at just under 8 Gi per Ape if the DAO’s activity period is at least 6 years at the current growth rate. (Intrinsic value reaches purchase price by liquidation date. Investor makes profit).

Where does the assumption in scenario 1 come from that the life of the DAO is 6 years?
I am initially assuming that the DAO is designed to last about 6 years. That is slightly above what I could gather from chats and comments from members (some hope for only 3 years. I doubt a bit that this expectation will be fulfilled). You have to know that — unlike stock corporations, which are founded for an indefinite period of time and ideally exist for many decades or even longer — DAOs usually have shorter terms. Assuming a maturity of less than 6 years, Ape NFTs would currently be massively overvalued, unless the exponential growth picks up again significantly.

One of the key “takeaways” from this article should therefore be: Don’t underestimate your voting power associated with apes!

Here is why:

The monkeys call the shots, dissolve DAO or move on:

The community votes on everything important together. OG Apes have more voting power than Lil Apes. Keep this in mind if you fall in love with a Lil Apes and trade an OG Ape for it.
Significant and sudden price effect due to DAO decisions (here: term extension):
A decision to extend after 6 years would lead to an immediate increase in the PTR and cause the value of apps to jump. This is an interesting speculative aspect that could cause price movement especially in the last 1–2 years when the PTR is already low:
In scenario 1, it would provide a jump in valuation au 15–20 Gi ( =15,000–20,000 MIOTA).
Scenario 2 would see prices for OG Apes above 53 Gi (= 53,000 MIOTA).
Now that we have dealt extensively with the valuation criteria and the current value of the apes, we come to the fun part.

I hope you haven’t jumped to the conclusion that the monkeys are boring and have no potential. Maybe you have already initiated the sale of your only ape or thrown the PC out of the window. I can only say: mistake, big mistake! You´ll miss the best part…

So let’s move on to scenario 2:

Why a “scenario 2”?

So far we have only taken into account the CURRENT DEVELOPMENT and forecast that highly. But what we have completely disregarded so far and what I would like to deal with now is the fact that the DAO has not even been able to start its work properly. As a reminder, the goal of the DAO is to increase existing Treasury funds through DeFi.
In my opinion, it is legitimate to assume that growth will increase strongly if not only license revenues feed the DAO, but numerous new revenue sources are found: Workrage, Lending, Liquidity Providing, farming etc. So we are still in the starting blocks. In one to two months, with the launch of Shimmer EVM, things will finally get going and we should quickly notice that the DAO will shift up a few gears.

This said, I think it is fair to say the following scenario 2 is more likely:

In this scenario, a 200% growth rate is calculated for the next 3 years after the introduction of Shimmer EVM. After that, it is expected to level off. The impact would be threefold:

• The price of NFT no longer stays the same, but picks up significantly to decline somewhat in the last 2 years, but at a high level.
• Best time to sell for our investor who entered today would be here after about 3 years.
• Even waiting until the final dissolution of the DAO after 6 years still brings over 26 Gi.

A decision to extend the DAO to 10 years would here have a significant price impact: The PTR would rise instantly again, to over 7. Price for an OG Ape would then be around 54,000 MIOTA (54 Gi) .

Fun Fact:

If the IOTA price reaches its old record high of around $5.70 by then, the value of an OG Apes would be around $300,000 USD, which would make the Primate the most expensive in the NFT space and could overtake even the “Bored Apes” in terms of price.

Until then we have to be patient, but I’m really looking forward to seeing the steamer once it has left the water.

Scenario 2 therefore also shows a completely different performance:

30 Gi should be achievable (at least) in the next 2 years. When things are going well, my models also show prices well above 50 Gi. I therefore feel extremely comfortable in my coat as a gorilla. It would be great if you applaud, share and so on spread this article. If you want to join our monkey horde: There are enough bananas for everyone and you are most welcome. However, if the price for one of the “OG” Apes is too high for you at the moment, just wait a bit until the “Monkey Split (Lil’Apes) and the introduction of ApeIN tokens. Then you can finally profit from DeFi even with small amounts.

Happy Apeday!