Looking Deeper into CryptoPunks & Azuki (Including Issues Behind the Famed Collections)
NFT Collectibles "The Why" Series - Part 2
Now that we have looked into the Bored Ape Yacht Club & Moonbirds in the Part 1 series, perhaps it’s best to dive deeper into the other two popular collections in Part 2 - the OG of NFT, CryptoPunks, and the 2022 anime-theme NFT, Azuki.
In a visual sense, these two NFT collections lie on the extreme end of the spectrum and it’s intriguing to see what’s the difference beyond the visual - type of NFT collectors that support these collections, the team behind them, and what lies in the future for these two NFT.
1. CryptoPunks
CryptoPunks - The accidental NFT creators & the start of the NFT era.
CryptoPunks is a collection of 10,000 24x24 pixels, 8-bit-style NFT avatars that were launched on June 23, 2017. Named the OG of NFT blue-chip, CryptoPunks is one of the earliest NFTs created. It all started off as an experiment, in which Matt Hall and John Watkinson, the founders of Larva Labs, were thinking to create software programs that would generate thousands of similar but distinct individual feature characters.
It soon, turns out that the apps became the key to developing the CryptoPunks collections that will become one of the first NFTs that would drive the NFT space to what we see today.
The CryptoPunks collections were offered for free initially, with interested owners only needing to pay the gas fee, but has since joined the blue-chip NFT (NFT floor price beyond 10 ETH) club in terms of valuation.
Larva Labs
Larva Labs, a mobile software company based in New York City that make applications for iOS and Android devices, had unintentionally made its way to the NFT world with its creation of CryptoPunks. Some of their notable products are the RetroDefense and PhotoTwist apps.
CryptoPunks NFT
CryptoPunks inspired a community of collectors and connoisseurs as the OG of the NFT. Most NFT collectors believe that if only one NFT collection would sustain through the NFT craze, that would be CryptoPunks.
Although CryptoPunks has been developed around 5 years ago, the utility value of having a CryptoPunks NFT is not as clear as some of the latest NFT collections i.e. Bored Ape Yacht Club and Moonbirds, where these NFT holders are able to develop a brand with the NFT they are holding (imagine merch, film, collaborations with brands).
Larva Labs Comes Under Scrutiny
Despite not being a Web3 Crypto company, Larva Labs was in the spotlight for their creation of CryptoPunks. However, recently Larva Labs has been in the spotlight for the wrong reasons.
1. CryptoPunks V1 Collections Issue
In the early days back in 2017, Larva Labs found some issues with the initial version also known as the CryptoPunk V1 (version 1) so they fixed the issue & recreated it. So the collection we see today is the CryptoPunks V2 (version 2). However, the CryptoPunks V1 (official name is V1 CryptoPunks Wrapped) is still out there with Larva Labs owning most of it.
In mid of Jan 2022, one of the co-founders of Larva Labs sold all of his 40 CryptoPunks V1 for 260 ETH. A few days later, the team announced that the CryptoPunks V1 is worthless. This created the first backlash from the community as Larva Labs profited from selling the CryptoPunks V1 prior to announcing it a few days later.
The way the Larva Labs team handles the issue pertaining to CryptoPunks V1 has caused a huge backlash as some NFT collectors do believe in the V1 collection & the fact that the Larva Labs gain huge returns before deeming the collection worthless was the last straw for the community.
2. Unclear NFT License to CryptoPunks NFT Holders
The second backlash & persisting problem is the issue of NFT License. Since 2017, Larva Labs has not officially addressed the issue of the owners’ right to commercialize their Punks.
Unlike Yuga Labs which has been very vocal and supportive of its community in commercializing their Bored Ape Yacht Club NFT, Larva Labs has been relatively quiet in addressing this issue.
In January 2018, Eric Adler, the attorney who registered the CryptoPunks’ copyright license, posted an article in an attempt to address the license rights but the article has since been taken down.
In the archived article, Eric wrote an ideal case scenario of the NFT license and how it should work but given that the CryptoPunks NFT collections has been launched prior to the NFT license clausal agreement embedded onto the Ethereum Smart Contract, the team decided that the best-case scenario would be Larva Labs having the Copyright-Owner rights while the NFT owner would have the Crypto-Licensee rights (the rights to do certain things with CryptoPunks).
In 2019, John Watkinson, the co-founder of Larva Labs addressed the confusion and lack of clarity surrounding the NFT license for CryptoPunks holders in Discord.
The license, however, does not grant the transfer of IP, copyright, or trademark to the CryptoPunk holders. Rather, the license allows CryptoPunks holders to use the art for personal, non-commercial use and that you are eligible to commercialize your own merch for up to $100,000 a year.
The license stated two things a CryptoPunks holder not allowed to do are:
Modifying the art
Sell third-party products with it.
However, the Larva Labs team did not update any of the mentioned Licensing Rights onto the Terms & Conditions on their official website and this causes more confusion amongst the Punk holders. Given the lack of communication beyond the one-sentence clarification by John on Discord & the proven success story of Bored Ape Yacht Club in executing an NFT for utility, this led to frustration, especially for Punk holders who trusted and bought this NFT for a large amount of money, in this case, a prominent NFT collector with Twitter handle @punk4156.
@punk4156 who has been building a brand surrounding the CryptoPunks 4156, has since let go of the CryptoPunks 4156 for a whopping $10.26 million after he was disappointed with the way Larva Labs team handle the NFT License issue.
Perhaps this is the downside of a first-mover and a company that deprioritizes building NFT platform beyond the NFT collection, given the lack of further development other than the NFT 3 collections (CryptoPunks, Autoglyphs & Meebits) unlike collections like Bored Ape Yacht Club, Moonbirds and even Azuki, which is looking beyond just creating NFT collectibles.
Our speciality has always been the creation of things early in the life of a technology. So, as this category of “Profile Picture Projects” (PFP) grew into an industry in itself, we found ourselves less and less suited to the operation of these projects. Our personalities and skill sets aren’t well suited to community management, public relations, and the day-to-day management that these kinds of projects require and deserve. - extract of statement from Larva Labs on the acquisition news
Perhaps There is More to the V1 CryptoPunks Collection
The V1 CryptoPunks were initially launched but the bug caused the team to remove them and relaunched the V2 CryptoPunks which we have seen today. Some collectors felt that there is more to V1 given that is the “original” collection, while some felt that V2 has more value.
With the acquisition of the CryptoPunks & Meebits IP by Yuga Labs, the situation saw a turnaround where Yuga Labs has decided not to follow in the same footsteps as Larva Labs by banning the V1 CryptoPunks.
A Twitter user with the handle @chriscantino summarizes the issue surrounding V1 CryptoPunks succinctly.
In fact, with the acquisition, now that CryptoPunks and Meebits have the copyrights to their NFT, perhaps we can expect something more to come for the CryptoPunks - both the V2 and V1.
What’s Next for CryptoPunks?
Although there was no clear roadmap for CryptoPunks by Larva Labs, the acquisition of the CryptoPunks IP rights by Yuga Labs will signify a big change in what will come next for CryptoPunks.
Given that Bored Ape Yacht Club has successfully proven the huge potential of NFT utility and it is only the start for them, perhaps we can imagine the same that will happen to CryptoPunks as we delve deep into Bored Ape Yacht Club next.
With the acquisition of the CryptoPunk and Meebits, owners of these two NFT collections can rejoice at the entitlement to the commercialization rights by Yuga Labs.
Now that we own the IP for CryptoPunks and Meebits, here’s what we’re planning to do with it. As a first step, we will soon be granting CryptoPunks and Meebits holders the same commercial rights that BAYC and MAYC owners enjoy. We’re working with our legal teams to draft the new terms and conditions for both collections, and expect to share these with the community soon. By handing over these rights, we’re further aligning CryptoPunks and Meebits with the web3 ethos, and we expect a wide-range of third party developers and community creators to incorporate CryptoPunks and Meebits into their web3 projects. We’ll be building the overall brand right alongside them.
What we don’t plan to do is shoehorn these NFT collections into the ‘club’ model we’ve developed for BAYC. We view BAYC as the center of the universe we are building at Yuga, and CryptoPunks as a historic collection. - statement from Yuga Labs
2. Azuki
Azuki (also known as a red bean in Japanese) is one of the darling of NFT in 2022, which quickly became the blue-chip NFT after its launch on January 12, 2022.
10,000 of the anime-like skateboarder character were released on the 12th of Jan, where they were priced at $3,400 per NFT. The first batch of NFTs sold out within three minutes, reaching $29 million in sales.
The Highest-grossing of Azuki #9605 was sold for 420.7 ETH ($1.4 million at that time) and is the second-rarest NFT in the Azuki collection.
While Azuki is not the first anime-theme NFT to be launched, it is, however, the first to come about defining it.
Team Behind Azuki
Chiru Labs is the startup behind Azuki & it is led by four anonymous founders.
These four anonymous founders are said to be in their 30s and based in Los Angeles. Zagabond leads Azuki and is said to have worked at Google in business development, followed by a four-year stint at a decentralized finance platform. Another founding member, Location Tba was an ex-software engineer at Facebook while Hoshiboy, claims to be a two-time alumnus of startup incubator Y Combinator.
Although four of the are anonymous, however, there is a fifth team member who co-created the Azuki art who is not anonymous. Arnold Tsang, who goes by the pseudonym of steamboy, was the character art director at Overwatch, a famous multiplayer shooter game.
This gives huge credibility to the team and the expectation of the art before it was launched as the team continuously showcase their NFT & people were really attracted to its art.
Chiru Labs’ Mindmap
Similar to Yuga Labs, Chiru Labs is ambitious about the future of its own ecosystem created with Azuki & community in mind.
The team put in the current & future goals clearly on the website.
With the team looking to build a strong community by providing Azuki Grants and building a community-run space (called the Red Bean Soup), a strong presence in the real world with more physical items collectibles & metaverse, and more partnerships with other brands and a potential $BEAN token to be launched, it is definitely something that we can look out for to see how Chiru Labs execute their vision in building the largest decentralized brand for the metaverse.
Azuki NFT Holders
All Azuki NFT holders will have access to “The Garden”, the project’s virtual universe.
The team has started experimenting with the introduction of a character; Bobu the Bean Farmer (Azuki #40). Bobu is the core character in the Azuki universe, who enjoys sakes and lives on his farm growing beans.
Bobu token signifies potential interesting development as the company looks at IP governance, which means that any Bobu token holder will be able to vote on the character development paths.
Besides Bobu, Chizu Labs has released several soundtracks and launched a private party for holders in the Garden.
Similar to BAYC, Chizu Labs has rewarded the Azuki holders with BEANZ, a child collection of Azuki consisting of 19,928 NFTs on March 31, 2022. What initially was thought of as dirt turns out to sprout red beans.
On April 10, 2022, Azuki Official announced its partnership with the iconic Korean band, Epik High. As part of the collaboration, Azuki will design original visual art for the hip-hop group’s upcoming Coachella performance.
What Created The Hype with Azuki?
There are a few reasons perhaps why Azuki quickly catapults and remains to be popular among the crypto community. One of them is the refreshing anime-like NFT art, which was a niche segment within the NFT space when it was just newly launched.
Zagabond (Azuki co-founder), who was born in China, suspects Asian investors are driving some of the most expensive purchases of Azuki NFTs and that Azuki resonates with the audience,, especially in Asia where anime is more popular.
“I've had a couple of conversations with Asian investors who told me that this was the first NFT that they purchased,” says Zagabond
Anime-like art is not the only thing Azuki collections seem to grab attention. The excellent design of the art that amaze a lot of people entices them to grab one as a collection.
Arnold Tsang, the co-creator of Azuki says that Azuki managed to capture the rebellious culture of skateboarders which connects really well with the crypto community.
Recent Controversy Surrounding Zagabond & The Team
Zagabond posted a controversial article on May 10, 2022, detailing his past three projects that had failed to garner success.
While this may seem normal on the surface level per Zagabond’s claim that all these experiences helped him and the team to build Azuki into what we see today, there is more to that.
In the article, he mentioned the three projects that he had worked on:
CryptoPhunks
Tendies
CryptoZunks
However, some people felt that the team “abandoned” the 3 projects mentioned hence there is a huge risk that the team might abandon the Azuki project too while the others have firm trust that Azuki has huge potential that the team won’t overlook.
While it’s hard to say how this would hit the Azuki collection in terms of investors’ perception of its outlook, it has certainly impacted the community as the floor price hit low while the sales see a higher trend after Zagabond’s tweet.
TLDR
While the NFT space has been plagued with a low attention span & fueled with hype, it is more important than ever to do your own research for any of your own desired collections. Past NFT scam cases like the Big Daddies Ape Club & Frosties are some of the best examples that we should learn from to identify any red flags.
That said, each of the collections from BAYC, Moonbirds to CryptoPunks, and Azuki each presented its own unique identity & vision for its future, as the community put more weightage onto the utility of NFT beyond just as a collectible. CryptoPunks, Azuki, and even ON1 Force have shown great examples that although the NFT can be driven by hype, the team plays a huge role in ensuring the success of the NFT collection through the community’s trust.
As more NFT collections are launched, the importance of inclusivity - gender and race-wise especially - is something we can’t overlook.