Yuga Labs: The Roman Empire of the Metaverse

*Author: *Tang Han, The SeDAO

1: Where Does the Price of PFP NFTs Come From?

Before answering this question, I would like everyone to think about one thing: when you buy an NFT, what are you actually buying?

I believe very few people are really just buying a picture! "Speculating on images" is just a joke; if we evaluate NFTs based on images, it’s all just a bubble. Back in August last year, I concluded that the valuation of PFP NFTs ultimately comes from the valuation of the community behind the NFTs, rather than the valuation of a single image. This is why one should buy and hold BAYC.

If CryptoPunks is the ancestor of 10k projects, then BAYC is the first 10k project that understands how to mobilize and organize a community using NFTs. Since then, all 10k projects have followed BAYC's path: calling everyone to change their profile pictures on Twitter; establishing Discord groups for the project; organizing offline events that only NFT holders can participate in; doing PFP graffiti in cities… Remember, these are all innovations from BAYC. Celebrity Effect: Making Your Community More Valuable BAYC's NFTs sold out in just 7 days, and the initial quality of its community members was not very high. However, BAYC did not stop at selling out like traditional artists. They wanted a higher quality community.

Since the valuation of PFP projects equals the valuation of the community, introducing celebrities will naturally boost the price of NFTs. Thus, while other projects were still thinking about how to sell out and run away, BAYC was already promoting itself in the NBA, getting superstars to change their profile pictures on Twitter. Promoting BAYC within the celebrity circle brought two effects: first, when the Web2 world was eager to understand the Web3 world and NFTs (especially after Beeple's famous $70 million auction), through the network of celebrities, BAYC became the first window for ordinary people to recognize the NFT world, laying the foundation for it to become a symbol of Web3 culture. On the other hand, this solidified its position in the NFT market. Open Copyright:

Mobilizing Community for Secondary Creation, Promoting Symbol Dissemination BAYC was also the first project to decentralize the commercial rights of its works to NFT holders, encouraging them to engage in all kinds of secondary creation of the works.

This also established another paradigm for subsequent 10k PFP projects: encouraging secondary creation; meme contests; encouraging holders to get tattoos, manicures, and cosplay of the project’s image, and expose it on social media… All of this is aimed at shaping the community atmosphere and promoting the dissemination of symbols alongside celebrities. Every instance of symbol dissemination increases consensus. Web3 is more eager for traffic than Web2 because Web2 monetizes traffic through advertising, which involves friction; while Web3 culture directly translates into purchases (NFTs/Tokens).

This means that traffic is more valuable in the Web3 realm. BAYC was the first to see this clearly, from early calls for community members to change their Twitter profile pictures to later signing contracts with celebrity agencies, all of which were very wise moves. Community Expansion:

Balancing the Relationship Between Project Parties, Old Communities, and New Communities In terms of external expansion, YugaLabs has also handled the relationship between the project party and the community very well. Unlike teams that are overly fixated on terms like "decentralization" and "self-organization," YugaLabs views its relationship with the community as a community of interests. They share the same goal: to raise the floor price of BAYC, making it the greatest project in PFP NFTs, and positioning BAYC holders as the core circle of the NFT community.

As more and more people enter the metaverse and the floor price of BAYC rises to 30-40 ETH, YugaLabs decided to issue more projects to generate revenue and expand the community. The method was: a Dutch auction of 10,000 MAYC, and then airdropping 10,000 bottles of mutation potions to BAYC holders. This move was very wise: it allowed new holders to enter the NFT OG circle (if they didn’t airdrop to BAYC holders, newcomers would not be able to join the same community as the OGs), while also protecting the interests of the original community.

Many people criticize YugaLabs for leaning too much towards Web2 and distancing itself from the community. I can only prove how strong YugaLabs' community operations are by helping everyone review this history. Community members who have purchased NFTs issued by YugaLabs rarely have regrets. In fact, it is only with such a strong Web3 community and culture that YugaLabs has the confidence to leverage the Web2 world.

After becoming the strongest PFP, YugaLabs still did not stop its expansion. It dared to attack like the Romans, dissatisfied with dominating the Latin world, but instead aimed to establish an empire. Thus, there was the Ape plan in the Deck, aiming to issue a land project. Its target was no longer CryptoPunks (which had already been incorporated into its territory), but Sandbox and Decentraland.

2: YugaLabs Deck: A Shocking Move with No Retreat

Around March 18, YugaLabs' financing Deck circulated wildly online. The 90-page Deck had seventy or eighty pages showcasing its achievements, with the remaining pages pointing to one goal: team configuration, continuing the attack. Team Configuration Unlike many Web3 startup teams, YugaLabs has completed its integration with Web2 and has basically finished building its top-level team. In addition to the original four founders from Web3, other executives include: partner Guy Oseary, founder of U2 and Madonna's management company; CEO Nicole Muniz, who has ten years of internet marketing experience with clients including Google, Nick, HBO, etc.

Chief Operating Officer Jasmin Shoemaker has 15 years of operational growth experience, with clients including Apple and Facebook; Chief Creative Officer Patrick Ehrlund has 15 years of branding experience (especially in storytelling, which explains the strength of the Deck…), with clients including HBO, Kanye, Google, etc. From the configuration, this is a team that spans Silicon Valley internet giants and the American fashion industry, heavily focused on marketing operations.

Many people are confused by the Crypto Native slogan. Little do they know that even in Web3, the most important asset in the metaverse is still traffic.

From this perspective, the integration of Web3 and Web2 is an inevitable trend. There’s no need to be embarrassed to say that Web3 practitioners crave Web2 traffic and urgently need to leverage Web2 to expand their brands and improve their product experiences. Constantly preaching about the transformation of production relations is just airdrops, which will only tire people out in the long run.

YugaLabs has grown out of the Web3 mother body, building its powerful team that spans both Web3 and Web2 ahead of others, and completing the capital station and resource integration from both worlds.

This is a significant first-mover advantage, leading other NFT blue-chip teams by at least a year. This means that YugaLabs will not have any competitors in the coming year, so let’s take a look at what they plan to do in this year. Goal: Unify the Metaverse! Yes, you read that right; YugaLabs' plan is to unify the metaverse. To be honest, I was shocked when I saw this. Everyone thinks the metaverse has just begun, and many people haven’t even stepped through the door of the metaverse, with many creators not even knowing what PFP is, and YugaLabs is already planning to unify the metaverse? What a joke! Let’s see what YugaLabs has to say.

YugaLabs first criticized land-based NFT projects, pointing out that MMOs have existed for a long time, and Decentraland and Sandbox are not exciting at all (it’s surprising that DCL still has such a high valuation), and they are not what people want in a metaverse.

Next, they criticized PFPs, stating that all project parties want to build their own metaverses, but they do not interconnect, which is not the future. The Deck even did not mention games like AXS because there was no experience at all.

YugaLabs believes that a true metaverse must have captivating stories that people want to participate in; people must be able to find goals and make important decisions; and there must be close connections between people. YugaLabs' advantage lies in the enviable Web3 culture, strong community, and influence they have built. Opensea's trading volume increased 600 times last year, with an average daily trading volume exceeding $150 million, of which 10% was contributed by BAYC. Unprecedented Virtual Game Based on this, YugaLabs will create a virtual game that is completely different from DCL and Sandbox. It will have stories and culture; it will be open (allowing users to bring in other PFP images or create in-game assets); it will provide SDKs for developers (allowing them to create games based on the platform); and the land can be combined with real-world land (this seems to combine the story of the latest metaverse project, Dropp, which is unprecedented).

Many people criticize the BAYC series assets for being too expensive, making it impossible for ordinary people to participate, and the community is too small. Well, 200,000 pieces of metaverse land should be large enough to build a community (surpassing Sandbox). Moreover, this land can connect with the real world. Considering that YugaLabs has team members from Oculus and plans to invest $37 million in product and technology development in 2022, the gaming experience is worth looking forward to.

In YugaLabs' words, this kind of game is unprecedented. If successful, it could achieve the linkage between the real world and the virtual world, the linkage of all PFP projects in Web3, and the linkage between Web2 brands and the Web3 world. This new experience and the strong consensus from both worlds will create a unified entity: a metaverse space recognized by everyone. In this way, DCL and Sandbox will become a thing of the past. Threat to OpenSea Furthermore, YugaLabs plans to build an internal trading platform. Personally, I believe this will be a real threat to Opensea. The Ape universe will generate a large amount of UGC content, and the preferred trading platform for this content will no longer be Opensea. Historically, the rise of exchanges is often accompanied by a significant wealth effect, and YugaLabs itself is synonymous with wealth; they have that potential.

In this context, Ape will also become a universal token for many games. Now everyone can think about the grand story YugaLabs is telling: taking down DCL and Sandbox, unifying all PFP metaverses, bridging the connection between the virtual and the real, and threatening Opensea. YugaLabs made $130 million last year and plans to make $460 million this year. This round of valuation at $5 billion is not expensive at all; what they lack the least is money and resources.

Finally, let’s think about a few questions: would you rather spend money on an NFT made for $37 million or one made for $100,000? Conversely, we can also ask: what opportunities do small and medium creators have in the NFT market next (is it to get support for UGC in the Ape universe)? Where will the NFT market go next?

3: How Did the Roman Empire of Web3 Rise?

Let’s review the rise and expansion of YugaLabs to see how a Roman-style Web3 emerged.

First, YugaLabs saw a market gap where the new rich of Web3 had money but could not be satisfied by Web2 cultural products, and established a community by issuing 10k NFTs; after the community was established, YugaLabs organized the community to launch an offensive on Twitter, expanding consensus through profile picture promotions and offline events; then, they collaborated with Web2 celebrities and well-known brands, becoming the face of the Web2 world recognizing Web3, as well as the expensive super blue-chip in Web3.

At this point, YugaLabs still did not stop its expansion, starting to issue more NFTs to expand the community, leaving little opportunity for projects like Cool Cats. Once the circles of BAYC, MAYC, and BAKC were established, YugaLabs also acquired OG projects like CryptoPunks and Meebits, bringing the world’s top Web3 IPs under its wing.

At this time, there were no competitors in the PFP field that could stand on the same level as YugaLabs. Even so, YugaLabs did not stop expanding—after consolidating the top consensus in the PFP field, it ultimately moved towards land.

This process begins with having a community (albeit of low quality), the second step is to cleanse the community (removing those with insufficient recognition and replacing them with celebrities and individuals with high recognition in Web3), the third step is to expand the community while protecting the interests of the existing community, and the fourth step is to merge other OG projects to form the periphery of the project. This way, the overall layout of core, sub-core, secondary core, and periphery is formed.

This structure is similar to Rome in some aspects: the Roman Emperor (YugaLabs), the nobility or Senate (BAYC), tribunes (MAYC), citizens (BAKC), and provinces (CryptoPunks, Meebits, etc.).

This is an empire of Web3 IP, where the members of the empire are all communities of interest. This relationship is very complex, but YugaLabs has done well in uniting them to achieve a greater goal, and there is indeed much to learn from this.

4: Conclusion: Keep the Offensive!

Finally, I would like to summarize a few insights gained from YugaLabs:

First, Web3 needs to have its own culture, and it will definitely produce its own cultural representatives, something that large Web2 companies can never achieve (refer to YugaLabs' Deck: we have a culture that makes them jealous).

Second, once this cultural symbol is established, it will definitely be valuable. Web3 has money and wants to purchase cultural products that align with their identity and stance; Web2 cannot produce such cultural products, but to avoid falling behind the times, they are very willing to combine with these cultural symbols (see Adidas, Nike, etc.).

Third, YugaLabs cleverly leveraged the needs of both the Web3 world and the Web2 world for Web3 culture, leveraging both sides for rapid expansion and accelerated success.

Fourth, due to its strong financial attributes, Web3 civilization inherently has a tendency to seek expansion, and it is inevitable that NFT project parties seeking stability will be swallowed by stronger projects or fade into obscurity (for example, YugaLabs acquiring CryptoPunk).

Fifth, communities are made up of people who want to follow leaders who can lead them to make money and achieve victory; this is something that everyone who wants to mobilize a community must recognize.

Based on the above, our final conclusion is simple: be fearless like the Romans and keep the offensive!