Is It The End Of The Apes? (Emerging Tokens - 10th May 2022)

Red candles everywhere. BTC marked 7 consecutive red weekly candles and ETH marked 6. Some ultra hyped projects like Apecoin and Moonbirds made NFTs seem uncorrelated to the general crypto market downturn, however, now we see massive floor price drops of bluechip NFT projects alongside the crypto market doomsday. BAYC’s floor price went down by 23%, Moonbirds 34% and Doodles 26% in the past 7 days according to NFT Price Floor. 

The market sentiment towards the NFT place is negative across social media platforms, and the controversial land NFT mint of BAYC’s metaverse “Otherside” is still making headlines. Another NFT topic of the day is that Azuki’s pseudonymous founder Zagabond has revealed his past involvement some abandoned NFT projects including Tendies, CryptoPhunks and CryptoZunks. The floor price of Azuki dropped dramatically 49% in the past 7 days.

This week, we review popular NFT and metaverse projects.

Apecoin (APE)

Launched by the Apecoin DAO, APE is a token for web3 culture. 15% of the 1 billion total supply has been airdropped to BAYC and MAYC holders and 16% is allocated to Yuga Labs, the company behind the household NFT collection Bored Ape Yacht Club. 47% is allocated to the community fund and APE token holders can vote on the fund usage. Soon after the token launch, Yuga Labs dropped a teaser video hinting at the ‘Otherside’ featuring not only BAYC but also Meebits, World of Women, Cool Cats and Crypto Punks. The price of APE had been volatile during the initial price discovery phase. APE was trading roughly in between $11 - $15 in the first month of launch. Read our previous post to learn more about the Apecoin launch here. 

Although most of the Apecoin trading happened on centralized exchanges, some smart money investors headed to decentralized exchanges to earn trading fees by providing liquidity. The most widely used DEX for APE is Uniswap V3. 

Source: Novum Insights Uniswap APY calculator

In the first month since launch, for the majority of days, the APY easily exceeded 100%. 

Then, Yuga Labs officially announced the Otherside metaverse on the 24th of April and APE quickly hopped on the momentum train. After the announcement, the price of APE increased by more than 60% until it reached its ATH of $26.70 ahead of the much anticipated the Otherside land NFT (Otherdeeds) mint. Following the high demand for APE as APE was required to mint the NFTs, the trading volume on DEXes spiked that during its peak, the trading fee yield in terms of APY went up as high as 1100%! This is an easy 3% return in a day (althought here, impermanent loss was not taken into account). However the chaotic mint process - that clogged the Ethereum Network causing the gas price to literally skyrocket and left some investors in the bloodbath of thousands of failed transactions - led everything to take a downturn. While the team behind Apecoin integrated Polygon for better user experience and refunded gas fees (90 ETH) for failed transactions, it seems like there is a long way to regain outraged investors’ trust. Read a detailed rundown here.

APE is currently trading at $9.63, more than 58% below its ATH hit two weeks ago, the floor price of BAYC has declined by 43% and the floor price of Otherdeeds has fallen by 60% since the launch of Otherdeeds. The handsome APYs of the APE pairs on Uniswap could absorb the price dip of APE until two days ago, but now the price has plummeted so much that the trading fees cannot offset the price fall anymore. The RSI and RVI reading of 38 and 31 point towards bearish market condition and APE is trading below 5, 10, 20-day moving averages. Yuga Labs raised $450 million at a $4 billion valuation two months ago, and the Otherdeed land sale contributed another $320 million. This certainly is a huge amount of money that allows a generous dev time for the Otherside metaverse and APE is still exceeding the market cap of that of MANA and SAND. Is it the end of the APEs or will they come back with a bam?

Illuvium (ILV)

There is another much anticipated metaverse gaming project that is about to hold a landsale - Illuvium. Illuvium is a fantasy RPG game built on Ethereum. Gamers go on a journey to complete quests to hunt creatures called Illuvials. Founded by Kieran and Aaron Warwick, brothers of Synthetix co-founder Kain Warwick, Illuvium is the first AAA game built on Ethereum. Illuvium integrated Immutable X to offer users zero gas fees for P2P trading with instant transactions. Although the game is not live yet, Illuvium has been able to attract a lot of attention in the blockchain play to earn game space. Notable gaming guilds such as Yield Guild Games and Merit Circle added Illivium’s gaming NFTs to their inventories. 

The private beta was released in Q1 2022. The community expected a land sale sometime in January 2022 however, this has been pused to June 2nd 2022. 20,000 land plots will be made available the land mint is set to be launched via a Dutch auction to avoid a gas war. The land sale will have a duration of 3 days and 278 new plots will go on sale every hour. The NFTs will be minted on Immutable X, an NFT scaling solution for Ethereum. The goal is to distribute 5% of the revenue generated from in-game purchases to the landowners.

ILV has a low token supply of 10 million. 30% of the total supply is allocated to yield farming and is scheduled over a 3 years period. 20% of the total supply is allocated to VC investors from whom Illuvium raised $5 million. Also10% of the supply was made available to public via Balancer Launchpad. The initial price for this was $50. ILV is currently trading at $394. While this price is way below its ATH of $1911 hit back in November 2021 following the metaverse boom across industries, it is still up 7-8x compared to its Balancer IDO price. We have seen a lot of NFT, metaverse projects that garnered tremendous attention but are now trading below their IDO price. Following the general market downturn the price of ILV is down 17% in the past 7 days. Compared to BTC and ETH that went down by 17.4% and 16.4% respectively, ILV didn’t do too poorly. The RSI and RVI are at 33 and 42 showing neutral sentiment, while ILV is trading below the 20, 50, 100, 200-day moving averages. The game is not live yet, ILV is considered a risky investment and users will need to monitor how many gamers the platform can attract for the project’s long term future.

Before finishing up I leave a question to think about. How should we value metaverse lands? At this point, the speculation and the hype are mostly driven by the scarcity. But first of all, one place that doesn’t have to be ‘finite’ is the metaverse. More metaverse platforms, less scarcity. Secondly, there is no such thing as ‘strategic location’ in the metaverse. In the real world, we pay more for rent if the location can save me time to commute for work everyday. But in the metaverse, we teleport ourselves. 

Otherdeed NFTs were so demanded that they got sold out within 3 hours, and Illuvium wants to share 5% of the revenue with the landowners. They all sound sweet but investors need to do their research on these lands of various metaverse projects to really justify their worth before they put money in. 

Written by Jessica Kang for Novum Insights.

The Emerging Tokens Alert and the Novum Blog are based on entirely estimated historical returns which provide no guarantee, promise or calculation of potential future returns or losses. In addition, all of the assets displayed and shown on the website are highly volatile and risky.