NFT Collections Are Flooding the Market
Non-Fungible Tokens (NFT) are all the rage in the crypto space. The technology has ushered in an era where anything can be tokenized and monetized using a distributed ledger, also known as a blockchain.
Today artists are able to protect their works and can monetize without the fear of theft and any hassles in getting the product to the market. It is because they can prove the ownership of their asset through NFTs.
NFTs are unique tokens. They essentially back an asset and verify if a public address or wallet is the owner of a specific asset. As the name suggests, no two NFTs carry the same value. Moreover, NFTs do not have any value, as they are an asset. They derive their values from the assets they represent, and they are just a certificate of ownership.
NFTs Are More Than Just Images
Many projects have utilized this technology beyond the traditional digital art space. For instance, the Bored Ape Yacht Club (BAYC) is one of the most well known NFT collections. It commands a floor price of over 94 ETH on OpenSea. In the OpenSea all-time rankings for trade volumes, it ranks second only to CryptoPunks. BAYC volume stands at over 5.7 million ETH.
Beyond the image collection, BAYC provides its owners exclusive NFT drops, access to communities, and merchandise, and is now building its own metaverse.
However, the high floor prices of such NFTs mean only the rich can afford them, which undermines the ethos of decentralization of Web3. That’s why some projects have had their knock-offs produced.
One such project is the Bored Ape Solana Club (BASC), the Solana counterpart of BAYC. It has 6000 NFTs with almost similar images. The collection has a floor price of 11.8 SOL currently, way less than that of BAYC. Its website reads a disclaimer that it is not affiliated with Yuga Labs, the creator of BAYC.
Since the collection is hosted on the Solana blockchain, minting it would have been quick and seamless. Along with that, the transaction charges would be minuscule as compared to Ethereum.
BASC had been orginally created by cofounders Bored dragon and ApeK. The cofounders claimed to possess extensive experience in computer science, marketing, blockchain, NFTs, and web designing.
BASC Rug Pull
Things were seeming perfect, but, out of blue, in March 2022, the team rug pulled the project. Their Twitter profiles were deactivated. Some netizens claimed that their Discord, Twitter, and royalties disappeared.
Rug pull is a malicious way to scam investors of a token. Here crypto developers abandon a project and run away with investors’ funds. In such a situation, the price of a coin or token crashes. Many times rug pulls take place when the price of the crypto skyrockets, and the developers capitalize on the opportunity by either removing the liquidity or selling their tokens. Developers can even steal investor money through loopholes in smart contracts. Rug pull is one of the most common scams in the Decentralized Finance (DeFi) space.
Rise from the Ashes
After the collapse of the project, the Bored Ape Solana Club DAO (Decentralized Autonomous Organization) created another Discord server and moved the community there for the revival of the project.
Within just a span of 5 days, by March 26, 2022, the project was derugged. All the losses were compensated.
Moreover, the collection moved from Magic Eden marketplace, where it was originally listed, to OpenSea. Soon after the launch, it became a verified collection. The metadata also received an update.
The community raised 100 SOL to relaunch the project and remint 6001 BASC NFTs. As many as 5500 BASC NFT’s were airdropped back to holders.
Now a new team leads the project consisting of 6 people called Dak_Daze, Crypto Home Schooler, Exxempt, BeTheBender, KitsuneUK, and jameskobe.
The trade volume of the project stands at over 61 thousand SOL as per data from OpenSea.
Web3 is all about decentralization, where the community takes charge of a project. This incident is a paragon of that. The new BASC DAO website also states that “the intention was always set to be a community-driven Solana NFT project.”
Another noteworthy thing is that the development of the project has not stopped. According to its new roadmap, there are some upcoming initiatives which will be announced later.
However, there is no news of the original developers getting caught or pursued by anyone.
A community-run project means there would not be any arbitrary decisions. Right now, the project has over 2.2 thousand NFT owners. All these community members have a say in the DAO.
Since the revival, it has run contests awarding NFTs to winners. A major task of rebranding has also been finished. Considering the amount of popularity it already had, rebranding might have been a tough phase.
A very important feature of the NFTs, royalties also made a comeback. Today royalties are paid at a rate of 0.5 SOL per NFT owned.
The oldest cryptocurrency, Bitcoin, is just over a decade old. And, Ethereum, which actually kickstarted the wave DeFi by enabling smart contracts, is not even a decade old. Therefore, the DeFi space is not as mature as traditional finance. Moreover, it is largely unregulated and is seen from a negative perspective by most governments around the globe.
A big issue with DeFi projects is that many of them have anonymous founders who may take advantage of the system. DeFi advocates for anonymity but not at the cost of user funds. Some projects have appeared which verify the identity of cofounders, but this is also not the ideal solution.
As long as the community has the power, the developers can be held accountable. The biggest example is Bitcoin. Its founder is the pseudonymous Satoshi Nakamoto whose identity could not be verified. Still, it is the most popular and trustworthy cryptocurrency in the whole industry. With any project, it should be checked how much power the developers and the community wield. If the community does not have enough power, it should not be called a decentralized project.