What if you could take Fortnite’s V-Bucks or Roblox’s Robux and exchange these “virtual currencies” for hard cash? Both currencies are locked to gaming accounts without blockchain networks and smart contracts. This means they are not even virtual currencies but arbitrary representations of value to be used in a specific venue and nowhere else.
Furthermore, Fortnite’s dev team could decide that 100 V-Bucks is worth something else the next day.
ApeCoin (APE) departs from this monetization model by being a real virtual currency. So, what is ApeCoin, and where can you spend it?
What Is ApeCoin?
While V-Bucks are effectively akin to coupons, blockchain tokens are virtual currencies in the true meaning of the word:
- They can be exchanged for other tokens used by other blockchain platforms.
- Their price moves organically based on the market’s law of supply and demand, not arbitrary company policies.
- Because blockchain tokens are convertible to the dollar, the virtual economies they facilitate are real and dynamic. In contrast, token-like economies such as Roblox are isolated and static.
- Based on demand and supply price swings (volatility), trading in blockchain tokens can be profitable, using the classic buy-low, sell-high method.
Yuga Labs, the creators of the expensive Bored Ape Yacht Club NFT collection, launched the ApeCoin (APE) token to fulfill all of those roles, specifically to monetize its Otherside metaverse platform that goes beyond PFP (profile picture) NFTs.
Otherside aims to be more than just a blockchain game, similar to the mega-popular Axie Infinity. Instead, it is a gamified metaverse platform where users can use their NFTs from other collections as playable avatars.
The “metaverse” bit in that equation just means that people can use their MetaMask wallet to import their NFTs. At least for those NFT projects that Yuga Labs will support. As for the Otherside gameplay itself, not much has yet been revealed (at the time of writing), except it will be “immersive and supported by AI and physics.”
The Importance of APE Token Distribution
In the previous section, it is important to take the second point with a grain of salt. While the company that launches blockchain tokens does not directly affect its price, it does so indirectly. For example, Yuga Labs’ development of the Otherside platform increases ApeCoin’s utility value.
In turn, greater utility translates to increased token value because it can be used for more things, increasing the demand for the token, which increases its price. Additionally, token issuance itself affects its value.
You may have noticed that the Federal Reserve increased its balance sheet by $ 4.6 trillion since 2020. Such unprecedented money supply increase triggered the current out-of-control inflation. The same principle applies to blockchain tokens as well — higher supply dilutes the demand, which devalues the token.
For this reason, ApeCoin will be gradually released, following a preset unlock schedule that started on March 17, 2022. Over a period of 48 months, a total of one billion APE coins will be unlocked as a circulating supply. Even more importantly, that one billion is a hard token supply cap.
Meaning, further ApeCoins cannot be minted or burned. Consequently, there will never be a situation in which an oversupply of tokens dilutes their value, as with fiat currency. In charge of APE distribution is the ApeCoin DAO, a decentralized autonomous organization.
ApeCoin Airdrop Hiccup
Airdropping tokens is a common marketing tactic to get new blockchain projects into people wallets. This attracts public scrutiny and triggers the FOMO instinct — fear of missing out. After all, we have seen multiple times how token appreciation can mint millionaires overnight based on wild price swings.
When ApeCoin first airdropped on April 30, mostly to existing BAYC NFT holders, it gained up to $ 40 value on some exchanges, only to drop by 80%. This is not surprising, as people count on an initial price boost to immediately sell it for huge profits. Of course, the selloff pressure created then has a domino effect on suppressing the price.
Unfortunately, this race for profits also attracted scammers, including a flashloan attack explained in detail by the BlockSec cybersecurity firm. To cut the technical minutia short, it appears that Yuga Labs omitted to register how long someone held BAYC / MAYC NFTs before claiming the airdropped ApeCoin.
By doing this, Yuga Labs expanded the access to the coin but also created a code exploit. Suffice to say, the end result was a shadow on the team’s competence for future projects.
What Can ApeCoin Be Used For?
As an Ethereum-based token (ERC-20), ApeCoin is yet to grow to its full potential. The key point to remember is that APE is both a governance and a utility token for the upcoming Otherside metaverse platform. The governance part refers to token holders’ voting rights on the direction of the ecosystem and partnerships.
The utility part refers to using APE coins for whatever utility new projects demand. For example, ApeCoin will be used for a play-to-earn mobile game, Benji Bananas, owned by nWay.
Just as Axie Infinity players earn tokens in tactical arenas, so will they earn APE coins for all upcoming games within the APE ecosystem. It will then be up to Yuga Labs to forge partnerships with other companies to integrate their coin, alongside developing their own Otherside experience.
Speaking of which, all NFTs released by Yuga Labs in the future will be minted with ApeCoins. This already happened with Otherdeed NFTs — land plot NFTs costing 305 APE a piece when launched.
On top of all that, ApeCoin holders gain exclusive access to merchandise, social events, and upcoming services and games. So far, Yuga Labs has collaborated with a number of other NFT projects. Therefore, one can expect to see them supported for Otherside:
- World of Women
In fact, those interested in becoming a part of the APE ecosystem can take advantage of Otherside’s upcoming SDK (software development kit).
Is ApeCoin a Meme Coin?
Lastly, it bears keeping in mind that Yuga Labs raised $ 450 million thanks to the a16z venture capital firm. That is a solid foundation to create competent blockchain games and rich metaverse experiences.
However, it is yet to be shown if Yuga Labs knows how to manage that money properly. On this lies the future value of ApeCoin more than anything else. With that in mind, calling APE a meme coin would be incorrect.
Neither BAYC NFTs nor upcoming concrete software constitutes social media vaporware, which meme coins revolve around.