BAYC Creators Interviewed as NFT Lending Crisis Looms

Yuga Labs founders, Greg Solano and Wiley Aronow, also known by their respective pseudonyms CryptoGarga and GordonGoner, recently sat down with the Full Send podcast team for their first long-form on-camera interview.

The Bored Ape Yacht Club (BAYC) creators recount in the nearly one hour and a half long video how they grew the brand into a $4 billion company, which now accounts for 63% of the implied market cap of the top 100 NFTs.

This interview follows changes in the terms of service of the newly acquired Yuga Labs collections CryptoPunks and Meebits to offer expanded commercial rights use to their owners. 

“We weren’t the first project to give away a license to NFT holders. But I think we were the first project to do it with IP that actually felt like you would want to utilize, for products and branding or TV shows,” according to Aronow, who said that people were already creating derivatives of their Bored Apes within a week of launching in March 2021. 

They admitted that the first NFTs they purchased were CryptoPunks and CryptoKitties back in 2017, but not as an investment and more as something fun. Solano called CryptoPunks the Mona Lisa of NFTs. 

The moment they knew “we’ve kind of made it” was when Golden State Warriors point guard Stephen Curry entered the BAYC Discord chat and former NBA player Shaquille O’Neal bought a Bored Ape. “This is real now, on a whole other level,” Aronow said.

At launch, BAYC broke the trend of bidding tiers or bonding curves by selling all equally at around $200. All Apes are also equal in utility — a gold ape has the same utility as an Ape at floor price.

“We never look at the floor price ever. I don’t care,” Aronow said.

Solano added some advice to any founder that is stuck to not focus on floor price, but rather “go take mushrooms in the forest and think about something cool you can do with the project instead.”

What they do care about is the unique wallet holder count. That’s also why each founder only owns one Bored Ape. 

“We’re trying to create this egalitarian club. We want as many club members as possible” to be as distributed as possible, Aronow said. 

When it comes to the Otherside Metaverse, the virtual world connected to the BAYC ecosystem referred to as their “passion project,” they were inspired by the video games they grew up playing like World of Warcraft. 

They believe that the metaverse doesn’t have to be as dystopian as it is often depicted, but it could be fun and “primarily a platform for experimentation and games,” according to Aronow.

NFT lending crisis may be looming

This interview comes at a time when many NFTs that were used as collateral in the BendDAO lending platform have defaulted without any bids. The BendDAO contract has run out of Wrapped Ether (wETH) and as a result now has 0 ETH left to pay lenders, at the time of publication.

Researcher NFTStatistics.eth pointed out in a Twitter thread that the platform’s NFT borrowers should expect to pay 100% interest on the ETH they borrowed, while the debt positioned against the NFTs is “rising quickly.”

Ok. Long thread on the BendDAO situation:

1) They’ve run out of ETH. There is just 12.5 WETH in the contract.
2) What does this mean? People who lent money to others via BendDAO to buy NFTs on leverage can’t pull their money out. About 15,000 ETH was lent.

(1/9)

— NFTStatistics.eth (@punk9059) August 21, 2022

BAYC and Mutant Ape Yacht Club (MAYC) are among the collections with many NFTs that have defaulted due to a lack of bids and are approaching liquidation. 

NFTStatistics lists that the main reasons there are no bids are that BendDAO requires bid amounts to be more than the debt the borrower owes and above OpenSea floor prices. To open a bid, in the first place, the user has to lock up ETH for 48 hrs, which can be risky.

While the BAYC floor price has been on the decline since a May 1 peak at 153 ETH, sitting at 67 ETH at the time of publication, it remains in the top ten collections with the highest floor prices.

The DAO will need to decide on the best course of action to take. A proposal is currently under discussion. The DAO uses the off-chain voting system Snapshot, and pending the outcome of a 24-hr voting period, the core team would have to implement changes to the dapp.

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