Are CryptoPunks in Trouble?
Throughout the craziest year in NFT history, there has been one constant: when it comes to generative PFP projects, there are CryptoPunks, and there’s everybody else. Created by LarvaLabs in 2017, they have the historical significance of being the first 10k mint generative project on the ETH blockchain, and for years, anyone using a Punk as his or her avatar signaled membership in an exclusive club of those that are either a) extremely early b) extremely wealthy or c) both. Now, however, some shine has started to come off of Punks. Is this a temporary dip, or a sign of changing times?
An Industry Leader
Looking at a chart of the average selling price of CryptoPunks is like looking at a history of NFT sales: years of near zero value, followed by an astronomical run up beginning in late 2020. Even as recently as 2019, Punks were selling for under 1 ETH. As the NFT market picked up, money and attention naturally gravitated to the OG project, and the Punk floor got to well over 100 ETH earlier this year. They were featured in live auctions, and received plenty of mainstream coverage.
In addition, LarvaLabs created huge buzz in the spring when they announced the launch of Meebits, which were intended to be a 3D complement to the 2D Punks. Owners of CryptoPunks and Autoglyphs (Larvalabs’ first NFT project) were entitled to free mints, with the rest of the 20,000 Meebits made available to the public via dutch auction.
A Question of IP
Among the many headlines for CryptoPunks this year, one offers a window into the cause of some recent stir around Punks. Over the summer, LarvaLabs signed a deal with United Talent Agency, for “representation across film, TV, video games, publishing, and licensing.” They were able to do so because, unlike most new NFT projects, Punk owners do not gain intellectual property rights to their Punks.* Rather, those rights stay with LarvaLabs. In fact, one of the ways in which the Bored Ape Yacht Club differentiated themselves at time of launch was offering owners full rights to market and license their Apes as they saw fit. Now, of course, this transfer of rights is standard in generative NFT projects, but at the time, it hadn’t been done before.
As NFTs have begun to gain mainstream popularity, and top tier projects receive celebrity attention and mainstream press, having the right to control the rights associated with NFT property now feels more important than ever. And for the first time, some Punk owners are expressing doubt.
CC0 in the tweet above refers to Creative Commons, or the right to waive protection of rights and release the property to the public domain for free use by anyone. Some projects, like Nouns and Cryptoadz, have been created with this model from the start, believing that value is retained through the ownership of the token itself and that property rights should not be relevant to that value.
Whether CC0 is the way of the future or not, some Punk owners have begun to express frustration with the centralized control of a project that is supposed to represent decentralization. If Web3 is supposed to be about control over your assets, a project that doesn’t allow for that can seem like a relic.
This centralized control can also cause controversy, as when LarvaLabs sent a cease and desist letter to Opensea for listing Phunks.
Phunks are simply mirror images of CryptoPunks, and have raised questions about what constitutes art or creation. Phunk owners have also shown themselves to be a strong community, positioning themselves as underdogs that represent a true Web3 philosophy.
Some Punk owners have embraced Phunks, while others view them as effortless ripoffs. Whichever view is correct, the fact that LarvaLabs finds themselves in the middle of the debate does not bode well for their reputation or appeal.
Where Do We Go From Here?
It’s long been a personal belief of mine that if Punks died, it means NFTs have died. I could not imagine a future for avatar NFT projects without Punks being at the top of the pyramid. Many Punk owners still place the historical significance above all else.
However, some doubt has started to creep in. CryptoPunks launched before anyone spoke about roadmaps, utility, or tokenomics, and LarvaLabs has never pretended to try to keep up with those trends. Will that stubbornness continue to distinguish them, or will it cause them to fall behind?
Some Bored Ape holders have begun to speculate, and hope for the floor for Apes to flip Punks.
Certainly Yuga Labs, the company behind BAYC, has been in many ways the opposite of LarvaLabs, firing on all cylinders and delivering everything from a mobile game to companion airdrops to merchandise, with many more ideas on the horizon.
That said, the history is massive. CryptoPunks were not only the first generative project, they were the ONLY project for YEARS. It won’t matter much five years from now if a project launched in April of 2021 or May of 2021, but launching in 2017 will remain significant. Whether that’s enough to keep Punks on top will probably come down to how much NFT value is derived from the meme of ownership vs. the utility derived from it. Is it valuable in the same way that the Mona Lisa is valuable (i.e. because of its cultural significance), in the way that traditional media is valuable (i.e. because the associated rights can be monetized), or in the way that a country club membership is valuable (i.e. because of the access that it provides)? Over the long term, it’s likely that one of these categories will prove the most important, and whichever project leads in that category will be the one that generates the most wealth for its holders. Personally, I don’t wish for any project to fail, and I hope anything that you own today is worth more tomorrow. But recent events have been a good reminder of how short our time in NFTs has been, and that the future history that we experience might be unlike anything we’ve ever seen before.
*CryptoPunk owners do have commercial rights up to $100,000 per year.
