Thread by @cosmo_jiang

#BAYC Investment Thesis
As with any investment, I wrote this for myself before plunking down for a @BoredApeYC NFT. I've learned much more since. I'm sharing this to keep myself honest, seek feedback, and explain to TradFi friends why I'm so excited about web3/crypto. /1

11/23/21 Purchase at 40ETH
BAYC #9128
Decent rarity score: Rarity Tools v2 score 121.07, Rarity rank #2139
4-trait: blue dress, hypnotized eyes, silver stud, fez hat
Downside = 100% loss of capital
Upside = >130x

So what makes this special beyond just an image? /2

(A) Access to a community with
- Founders: authentic, involved and responsive @CryptoGarga @GordonGoner @TomatoBAYC @SassBAYC
- Culture: diverse membership that is happy, positive and supportive
- Network: web3 creators who give early looks at projects (mostly NFTs right now) /3

(B) IP / brand as a store of value
- Signaling/Flex: one of the “original” NFTs, #BAYC could be the premier digital identity in web3. It communicates a shared belief that web3 is a meaningful cultural shift - burnishing your reputation even if it goes to zero /4

- Accessible art with aesthetic value: whether plain or highly designed, everyone is able to find a narrative that matches their persona
- Brand credibility building: pattern recognition from media investing that virality is like catching lightning a bottle and... /5

...#BAYC has that due to buy-in from credible groups of people who don’t want this to fail:
Celebrities: @CozomoMedici, @jimmyfallon, @PostMalone, @StephenCurry30, @mcuban, @garyvee (and many more, note lot of musicians)
Corporations: @UMG, @adidasoriginals, @OfficialPLT /6

- Scarcity: supply is limited to 10k, just minted on April 30th, 2021. This could become a "must-have" for superrich, and in the context of >9k superyachts globally the floor price arguably could be something totally unattainable for most /7

(C) Why now?
- High degree of misunderstanding given this is still early days of NFTs generally and BAYC specifically
- @UMG's collab announced on 11/11/21 was the specific catalyst for me (a media investment I follow closely)

https://twitter.com/UMG/status/1458905852392325130

/8

- Liquidity discount because transaction friction is high: it is non-trivial to buy an NFT. Consumer onramps are not straightforward (took me a week to navigate bank > @coinbase > @Metamask > @opensea). This illiquidity discount will dissipate over time with better infra/tech. /9

(D) Commercial rights = #composability and network effects
- #BAYC is unique in that it gives commercial rights to the NFT holder. As a result, each owner is incentivized to maximize their own BAYC's value – and in doing so, accretes value to the total BAYC ecosystem. /10

Some examples include:
@jenkinsthevalet @TallyLabsNFT signed a deal with CAA to create media around their BAYC – the first plan is a “tell-all” memoir written by @neilstrauss (10x NYT Bestseller author), and those who license their BAYC will receive royalties (div yield!) /11

@UMG is starting a digital band called kingship consisting of 3 BAYC and 1 MAYC, through which it plans on releasing music (royalties)

@ForeverApesNFT is publishing an NFT and physical book featuring stories from 130 BAYCs, with sales benefiting the NFT-holders (more yield!) /12

#BAYC merchandise (apparel) is being sold on eBay, with enough volume to inspire ETSY copycats. Consumer investing pattern recognition: this is always a good check on a consumer brand's virality /13

(E) Why @BoredApeYC and not @cryptopunks (the actual OG)? Fair question and no FUD meant, but
I personally like the art more (not being on-chain probably helps)
Ecosystem appears more vibrant due to #COMPOSABILITY – more creators building other apps built on top (see above) /14

(F) Intrinsic value estimates - finally, for the fundamental value investors:
- Art market = $1.7 trillion, of which 55% is contemporary, 36% impressionist/modern, 9% old masters (Source: Deloitte)
- Contemporary (55% x $1.7 trillion) = $935bn from which NFTs can take share /15

Total NFT market cap = $7bn as of Nov-21 (@CoinMarketCap)
- BAYC floor market cap = 40ETH x $4k x 10k = $1.6bn, or 23% implied share
- If NFTs become as big as “contemporary” art, implies BAYC worth $213bn = 133x MOIC! /16

(G) My reflections reviewing my thesis two months later (with the benefit of it working out so far - I'll try not to drink my own kool-aid too much):
- First off, I'm incredible grateful for the meaningful learnings and conversations interacting with fellow #BAYCs @BoredApeYC /17

- Community: accessibility could have become an issue given only 10k BAYCs, which is why I’m encouraged about the excitement around #MAYC and #BAKC, as well as the potential launch of $APE coin (dividend distribution!) /18

- Traits: I didn't know what aesthetics mattered (e.g. laser eyes, gold fur) and relied on a 3P "rarity score", but if I had done the groundwork I could have realized far greater appreciation. Consumer investing pattern recognition: luxury value is an upside down pyramid . /19

- UMG as a catalyst: fortunate that’s what drew me in, but I've since learned that the ecosystem is about so much more than that

- Celebrity buy-in: key part of my bull case that has exceeded expectations. @KingBow01 has done a great job tracking this twitter.com/KingBow01 /20

- Performance: great so far (knock on wood), and I'm pleasantly surprised but can understand why #BAYC has outperformed other indices (#ETH, #BTC, S&P, QQQ) /21

/22

Some risk disclaimers: DYOR
- Most NFT projects are cash grabs and likely go to zero. The downside case is 100%.
- Pseudonymity and immutability have their advantages but also clear drawbacks
- I'm not blind to the "these are just jpegs that aren't even on-chain" critics. /23

DMs open and all comments / feedback are welcome!

Finally - kudos again to the #bayc fam and my sources. I'm just grateful to be here for the ride. @BoredApeYC @CoinMarketCap @DuneAnalytics @smaroo @KingBow01
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