ApeCoin, the token built on Ethereum for the Bored Ape Yacht Club NFT ecosystem, came out in March to a lot of attention (and significant payouts for BAYC holders). Now that some of the project’s backers will get more than $115 million in APE tokens as a reward, the token’s owners are wondering how this will affect the price of the token.
On Saturday, the ApeCoin DAO treasury will release 25 million APE tokens that were set aside for “launch contributors.” According to the website, “launch contributors” are unnamed “companies and people that helped make this project a reality.” Six months after ApeCoin’s launch on March 17, the 25 million tokens will be for sale.
At the current price of $4.61 per token, that means just over $115 million worth of tokens are entering the market. This adds about 8% to the total number of tokens that are in circulation. ApeCoin was made with a fixed supply of one billion tokens, and there are currently 318 million APE in circulation. The rest will be unlocked over the next four years, starting in March when the game comes out.
There is no way to know who the launch contributors are. A new report from crypto industry research firm Delphi Digital, on the other hand, says that the list could include investors in Yuga Labs, the company that made the Bored Ape Yacht Club and raised $450 million at a $4 billion valuation in March.
Andreessen Horowitz, Animoca Brands, and FTX Ventures were all named as possible winners by the research firm. Decrypt tried to get more information from Yuga Labs, but did not hear back right away.
It’s important to note that Yuga Labs isn’t listed as the company that made ApeCoin. This is likely because of regulations. The ApeCoin Foundation is the “steward” of the token, and it is run by the ApeCoin DAO, or decentralized autonomous organization. This is basically an online group with token-based membership that works toward a common goal.
It’s not clear yet if these contributors will keep their tokens or sell them on the open market, but an increase in the number of tokens in circulation makes people worry about how the market will react to the token unlock.
According to data from CoinGecko, the price of APE has dropped by almost 9% in the last 24 hours. In the last 30 days, it has gone down 26%.
“The million-dollar question is whether the launch contributors will sell their tokens once released. This will lead to significant sell pressure on APE,” the Delphi authors write. “No one knows, but we can postulate that if they are long-term investors in Yuga Labs, there is a reasonable chance that they will hold on to most of the unlocked tokens.”
Given that ApeCoin staking seems to be coming soon, there may be a big reason for people who contributed to the launch to keep their tokens.
In May, ApeCoin holders voted for Horizen Labs to build the staking system, which will give token rewards to users who stake (or hold) APE or Bored Ape/Mutant Ape NFTs in the network. Horizen Labs recently gave a sneak peek at how things are going with development. They plan to hold a Twitter Spaces next week to talk about the details of the project.
Teng Yan, an NFT analyst at Delphi Digital, said that the first ApeCoin staking rewards were “pretty juicy,” and he suggested that eligible NFT owners could buy a lot of APE to take part in staking. The price of the token could go up if more people want to buy it, while staking could take away a lot of APE liquidity from the market.
“A big question is what happens to the price of APE as staking continues,” he wrote. “APE is inflationary, and the circulating supply will expand as rewards are emitted. New buyers will be needed to maintain its price.”