Interview: Jack, BlockBeats
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Editor: Jaleel, BlockBeats
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In the past few months, the trading volume, new issuance volume, and blue-chip NFT prices in the NFT market have been continuously declining, and BAYC has fallen below 24ETH multiple times. When it comes to NFT, Yuga Labs is definitely a topic that cannot be ignored in the crypto community.
As the leader in NFT, the NFT brand incubated by Yuga Labs firmly occupies the blue-chip rankings. Over the past year, although Yuga Labs has launched Dookey Dash and Bitcoin NFT series TwelveFold, these new narrative gameplay only attracted players’ temporary attention and liquidity. The sentiment of “the darkest moment of NFT” and “NFT is dead” still persists.
During the Token2049 conference in Singapore, BlockBeats frontline reporter had an exclusive interview with Yuga Labs CEO Daniel Alegre, discussing in-depth topics such as the narrative of NFT and Yuga Labs’ ecological layout.
Has the narrative of NFT really come to an end?
Prior to joining Yuga Labs, Daniel Alegre worked in the music industry, while his family was involved in the broadcasting business. Later, Daniel Alegre moved to Google and worked there for 16 years. In 2005, he was responsible for establishing Google in China and operating Google Asia, where he established many businesses in the Asia-Pacific region. After that, Daniel Alegre joined Blizzard in March 2020 as President and Chief Operating Officer. During his tenure at Blizzard, he was involved in the development of well-known game brands such as “Call of Duty,” “World of Warcraft,” “Diablo,” “Overwatch,” and “Candy Crush.”
On April 1st this year, Daniel Alegre posted on his personal social media that March 31st was his last day at Activision Blizzard, and he would officially start as Yuga Labs CEO the next day. He expressed great excitement for the next stage of work, which caused a heated discussion in the community.
BlockBeats: Regarding the current situation of NFT, do you think the narrative of NFT has already come to an end?
Daniel Alegre: No, of course not. It’s a misconception that the valuation of the NFT space is based on the valuation of PFPs. Just a few weeks ago, some BAYC sold for over a million dollars. It’s like asking Jeff Bezos about e-commerce in 1998, whether it has come to an end. He replied, “No, of course not,” even though everyone thought Amazon would go bankrupt at that time.
But if you look at the evolution of NFTs and the true value and functionality of NFTs, you will understand that NFT is a clear value proposition. Its value is so high that holders of Bored Ape Yacht Club are now using it not only as a PFP but also for community branding.
Therefore, for Made by Apes, we have over 900 owners who are utilizing their PFPs to create independent businesses, but actually leveraging the entire community brand building. What they are doing is establishing various businesses, ranging from selling alcohol and water to clothing, digital cards, hamburgers, and more. The entrepreneurial spirit demonstrated by our NFT holders is, in my opinion, very unique because they are creating a whole new ecosystem, similar to what Amazon has built in e-commerce.
How NFT ruler Yuga Labs built its NFT brand
Founded in 2021, Yuga Labs, as an NFT and cryptocurrency marketing and development company, launched its first product Bored Ape Yacht Club (BAYC) in April 2021, creating one of the most influential projects in NFT history. Not only BAYC, but Yuga Labs’ famous NFT projects also include Mutant Ape Yacht Club (MAYC), Bored Ape Kennel Club (BAKC), Cool Cats, World of Woman, and more. The entire crypto community went into a frenzy after the acquisition of CryptoPunks and Meebits IP.
In March last year, the parent company of Bored Ape Yacht Club, Yuga Labs, raised $450 million in funding, with a valuation of $4 billion. The round was led by a16z, with participation from Animoca Brands, Thrive Capital, FTX, MoonLianGuaiy, and others. From starting with a single image to reaching a valuation of $4 billion, Yuga Labs has become a true ruler of the NFT world, attracting stars from sports, entertainment, and venture capital, acquiring well-known IPs, launching Ape Coin, and more.
BlockBeats: We have indeed seen some people printing their monkey NFTs on water bottles or different types of drinks. But if the price of NFTs drops, people are less willing to associate them with brands. How do you view this issue?
Daniel Alegre: I disagree with this. Just a few days ago, I saw a robot making coffee at the airport in San Francisco. My son said to me, “Look, there’s a Bored Ape.” And then I noticed that someone was displaying their Bored Ape on the screen. So it’s not that people are unwilling to leverage their PFPs.
The trading volume of Bored Ape Yacht Club shows that 92% to 93% of holders are unwilling to sell their Bored Apes. Therefore, the actual circulation and trading volume of $ape is relatively low. People hold $ape because they see value in it, both in terms of the community and the personal value derived from the brand established in collaboration with the community. On top of that, you can see a complete ecosystem emerging, with many developing businesses.
BlockBeats: Does Blur disrupt the atmosphere of NFTs or the overall NFT space? After all, only Blur can expand their brand or visibility through licensing, while projects like Azuki or Pudgy Penguins, although performing slightly better, have not really benefited from Bored Ape Yacht Club.
Daniel Alegre: Yes, we focus on one thing, and that is to tell good stories, build good communities, and everything else comes from that. Especially in BAYC, the model we adopt is disrupting traditional concepts of intellectual property. In a normal media company environment, you create intellectual property and then license it in very specific ways. For example, you can use Mickey Mouse’s image to make hoodies and profit from it, but if you want to create a restaurant, you wouldn’t use Mickey Mouse to build it. Here, we actually let the community help build the brand, they own the brand and can truly drive it forward, and we just need to support them. In addition to that, we have also built some experiences for the community based on Web3 or not based on Web3. What we are doing with Made by Apes is supporting the business of the entire ecosystem, and they are also creating offline businesses.
We hope they succeed. It’s all about community and connection. The reason we established Otherside is because community members told us that they wanted a place where community members can connect, and on top of that, we provide a unique experience.
BlockBeats: So you fundamentally disagree with practices like CC0 and other NFTs that don’t obtain licenses for creation, commercialization, and other uses. How should we utilize them?
Daniel Alegre: What surprises me is the level of entrepreneurial spirit in the community. I know that the community is very strong, users will connect with each other and dedicate themselves to the community. What I didn’t expect is that many people are using what they have collectively built in the community and turning it into something else very interesting. Moreover, the reason I came to the Asia-Pacific region is that I know there are many community owners here. In the early days, this was just a two-year-old company, and we were more focused on our business in the United States. But when I became CEO, the first thing I said was that the next ApeFest (an annual ape community event) would not be held in the United States, but in the Asia-Pacific region. I think this is definitely the right decision because the community cohesion in this region is very impressive, and it also gives us an opportunity to expand our community.
BlockBeats: Building a brand in Web3 is indeed very difficult, especially expanding influence to Web2. In the Chinese community, many friends are also building NFT brands, but many people leave because they can’t successfully build a brand and a strong community through NFTs, and eventually return to the Web2 industry because Web3 doesn’t bring them enough income to survive. What is your opinion on this? How did you survive and build a brand?
Daniel Alegre: I think the mistake these companies make is that they see the NFT industry as a revenue opportunity and think about how to profit from it. If you look at it from this perspective, you might launch an NFT, but there is too much noise in the market. You might think it doesn’t matter, one makes a little money, another makes a lot of money, but what’s next?
Yuga Labs was built from the beginning with the idea of being a continuous interaction and community building, which is why it is called BAYC. When the community feels that they are not only being listened to and connected, but also that the experience will continue to evolve, they will remain passionate and help build the brand. Of course, this is not an easy task. As a company, we should be fully focused on storytelling and building connections. If you do it well, you can establish long-term relationships. But we don’t look at this issue from the perspective of NFTs now or 12 months ago. We see it as a long-term commitment, and we hope to continue to maintain and build this passion and connection in the years to come.
Yuga Labs is more like Tencent of Web3
BlockBeats: Some people say that one of Yuga Labs’ major achievements is having many celebrities stand with this brand, but some also say that this is a carefully planned strategy by the team, such as giving monkey NFTs to these celebrities as a clever marketing strategy. What was the thinking process behind this strategy?
Daniel Alegre: In fact, our association with celebrity endorsements or ownership of monkey NFTs, or encouraging anyone to buy monkey NFTs, has nothing to do with it. They purchased them spontaneously because they identify with this art and appreciate its uniqueness, which resonates with many people. I think that’s what makes it special.
Ultimately, it all depends on whether you have a good story and excellent artwork. This art is innovative and can truly resonate with people from all over the world, whether it’s the Asia-Pacific region, the United States, the Middle East, or Europe. From the top celebrities to the unknown, they have all found a sense of identity.
Speaking of ApeFest, we will be holding ApeFest in Hong Kong in early November. What sets this ApeFest apart is that we have added an extra day of activities, inviting creators, community members, and potential new members to experience the meaning of joining BAYC. We care not only about developing the community, but also about enhancing the connections between community members. As leaders in this field, I think it’s important to show people the value of joining such a successful brand so that more people can experience the joy of Web3.
BlockBeats: Another very important question for us, where do you think the main source of income for Yuga Labs will come from in the future?
Daniel Alegre: Frankly, I think it’s unpredictable. What I can see now is income from re-minting to secondary royalties, as well as in-app purchases we are building in Dookey Dash and Heavy Metal Forge. There are also revenue sharing agreements with third-party partners like Gucci, which may bring in income, and there may be new sources of income that I can’t even imagine.
BlockBeats: If Yuga Labs were to be compared to a Web 2 company, which one do you think is the most similar? Which one is the closest?
Daniel Alegre: That’s a great question. We can feel that Tencent’s development in games, social connections, content, and other aspects is very strong. We have some similarities in the evolution of certain aspects, but there is one big difference, and that is the sense of belonging and community awareness. However, this is my understanding of Tencent from five to ten years ago, so I don’t know the actual situation of Tencent now. However, in the digital field, I haven’t found any other company that can compare to this kind of community and connection. It is a way of community brand building and brand connection that even the most loyal fans of Elvis Presley, Britney Spears, and BTS do not have to this extent. The closest example I can see is the level of connection that fans of large artists have, but they take it further, embracing it, wanting to build and strengthen this connection for the benefit of others and themselves.
Where will Yuga Labs go in the future ecological pattern?
Starting from this year, Yuga Labs’ layout seems to have undergone new changes. On January 12th, Yuga Labs officially announced the launch of the new game “Dookey Dash” on January 18th, and will start the Mint of the game participation ticket “BAYC Sewer LianGuaiss” on the day before the game opens. This is the third stage of the prequel to the new storyline in the BAYC ecosystem and the preparation stage for the launch of the first interactive game in this storyline.
Similar to Temple Run, Dookey Dash is an “endless running” game. The game has no end point and the difficulty of the game increases as the distance progresses. The game will be a web-based game that can be played on both PC and mobile devices, but you must have “BAYC Sewer LianGuaiss”.
On June 21st, the official Twitter account of BAYC Yacht Club released a promotional video about the new game “HV-MTL Forge”. “HV-MTL Forge” is a space building game centered around Yuga Labs’ latest mecha NFT series, HV-MTL. Players who own HV-MTL can access and participate in the game, build or customize an exclusive and distinctive space in the game, and upgrade their HV-MTL to a new form through the game.
7 days later, the “HV-MTL Forge” game was officially launched. On the eve of the launch, Yuga Labs co-founder Garge.eth posted a long article on his personal Twitter account, discussing his thoughts on the game, the earlier “Dookey Dash”, and the game development plan of Yuga Labs. Two years after the release of BAYC, Yuga Labs had the idea of making games, although it didn’t come to fruition in the end, the idea still exists, and the thinking about games has not stopped.
Following “HV-MTL Forge”, the public beta testing of Legends of the Mara (LotM), a game under Yuga Labs, will start in September, providing new NFTs and a broader metaverse experience for Otherdeed virtual land NFT holders. “Legends of the Mara” is a “collection-based 2D strategy game”, and “Otherside” itself is a large-scale 3D game. LotM will also reveal more information about the Kodas, a small bipedal creature that exists on 10% of the initial 100,000 Otherdeed lands.
Building Culture and Community on the Chain
BlockBeats: There is a question that many NFT entrepreneurs often ask, regarding Yuga Labs being seen as a spiritual mentor in building Web3 brands. However, now they see Yuga Labs also venturing into the gaming industry. Therefore, they need to make a choice between building a brand for NFT projects or games. How did you make the choice? Why did you turn towards the gaming industry?
Daniel Alegre: I want to say to the questioners that Yuga Labs is not a gaming company. Our mission is to build culture on the blockchain, which means telling stories, showcasing art, providing experiences, and building communities.
The reason why we provide gaming experiences for the community is twofold: first, many of our holders have a strong interest in gaming and understand the value of Web3, so we created games that connect them together and they enjoy these games. Dookie Dash is a game we designed for Heavy Metal Forge and it will enter its final season tomorrow (I believe it’s tomorrow). This game actually brings the community together, and for us, it’s also an opportunity, just like ApeFest I mentioned earlier. It’s an opportunity for us to show people who are not familiar with Web3 what they can experience in terms of gaming, shopping, videos, and more.
Now we start with games because it’s the easiest way to explore what Web3 can do and show gamers what Web3 is about. They can understand that through Web3, they can have digital ownership, trade assets in games, and use their characters across different games. These were problems that existed in previous games, and I have personally experienced these problems in Activision Blizzard. The closed nature of games meant that as a player, you invested money but never got any return, or the fruits of your hard work could not be exchanged with others. This is a unique problem in the gaming industry, and Web3 will bring unique evolution in this aspect.
BlockBeats: Although BAYC is a brand with high community recognition, even without games, community members can start connecting and interacting with each other. And with the growth of other IPs owned by Yuga Labs, the community is expanding. Another way to expand the community, like Azuki, is through the trading of low-priced NFT IPs. I noticed these two obvious differences, such as in the narratives of BAYC and GameFi, where users can leverage or monetize their game tools or devices. What is your view on this situation?
Daniel Alegre: I don’t know if you’re a member of a country club, but if you look at the membership system of a country club, you can understand our perspective on community development. You join this country club to interact with other members. You meet them in the clubhouse, have drinks, engage in social activities. And then some people might say, “I actually enjoy playing golf, would you like to play together?” Okay, let’s play golf together. And then you start building your own social circle and truly engage in the sport of golf. That’s what we’re doing. BlockBeats: Why don’t you consider collaborating with other games? Daniel Alegre: That’s exactly what we’re doing. We have already created and launched our own games, and now we are starting discussions with third-party game developers to create unique experiences for our community. This is something we will definitely do. And that’s also why we are spending so much time in the Asia-Pacific region, as many of the best games and game companies in the world are located here.
BlockBeats: So, at least in the short to medium term, is the focus of Eugalyptus to build a platform for games?
Daniel Alegre: While we do provide gaming experiences, our absolute focus is on storytelling, engagement, and community. Whether it’s NFT minting, gaming experiences, or partner experiences like collaborations with brands such as Gucci, which allow you to truly experience a Gucci-ized experience, these are the things we are building. Our focus now is not just on games, but on considering multiple aspects.
BlockBeats: So, what will be the future ecosystem of Yuga Labs, including IP, NFTs, games, and other series?
Daniel Alegre: That depends on which series you are talking about. Obviously, we have CryptoPunks, orbits, and BAYC. For BAYC, I think our evolutionary vision is to establish a digital connection on the other end, and the evolution on the other end is that you will continue to have new experiences. No one knows what it will be like three years from now. But we are actually providing support for the community to participate in co-construction with third-party partners. It could be gaming, shopping, augmented reality (AR), or virtual reality (VR). We hope to encourage the ecosystem to build itself, rather than us building it ourselves. At the same time, ensuring community connectivity and a continuous storyline are factors that keep our communities connected. So it’s more like a meta-universe digital evolution of our platform, incorporating strong community elements.
Is the PFP NFT market heading in the wrong direction by “warring” with OpenSea?
On August 18th, OpenSea announced that it would implement optional royalties starting from August 31st, and all previously issued NFT series will be subject to mandatory royalties after February 29, 2024.
This move by OpenSea is puzzling, as they previously filtered out zero-royalty markets like Blur, giving NFT project creators the choice. Now they are turning to optional royalties and indirectly embracing zero royalties. Previously, OpenSea seemed to be on the side of creators, rooted in cultural tracks, providing support for new projects (such as LaunchLianGuaid), and differentiating themselves from Blur through transactions. However, OpenSea has been accused by Yuga Labs and has started to withdraw support for OpenSea’s Seaport protocol.
This issue has also attracted the attention of many community members. How will things develop? Will OpenSea make changes? Or will Yuga Labs have its own NFT marketplace like projects such as Pudgy Penguins, or settle with $APE?
BlockBeats: I know you have expressed many opinions on the issue of the maximum NFT transaction tax on OpenSea. Do you think the entire PFP NFT market is heading in the wrong direction?
Daniel Alegre: It’s not just you, I’m actually very concerned about the entire NFT ecosystem as well. The importance of secondary royalties lies in creating an economic business model for creators to incentivize them to create on Web 3. The more we can incentivize them to invest and create unique opportunities in this field, the more everyone will benefit from it. Whether it’s consumers who have the opportunity to engage with these artworks, or the ecosystem built around creators or creator economies, or companies like Yuga Labs, they can all help foster connections within the community. So, I’m very disappointed in the direction OpenSea has taken, and I’ve expressed my views publicly on Twitter: We are committed to finding ways to reward creators for their hard work.
BlockBeats: How do you think about FutureHub and are you considering building your own NFT marketplace?
Daniel Alegre: The first thing we need to do is ensure that we can establish partnerships with markets that support secondary royalties and support their development, it’s as simple as that. As for whether we are considering building our own NFT marketplace, we are committed to finding the right solution and ideally, others in this field can also help with its development and construction. The core issue is still about caring for creators and protecting their livelihoods, and we will do everything we can to achieve that.
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