Thread by @punk6529

1/ On Punks and Yuga

I have slept on it and my conclusions are were they were last night.

Going put to put them down for the historical record and we will see, in a 1 month, in a year, in a decade, how they age

2/ First some background (OGs can skip the next couple of tweets)

@larvalabs created the CryptoPunks, the Meebits and the Autoglyphs

The licensing regime to holders was basically non commercial use only, with very limited rights as noted below

3/ The rights to Meebits holders (and assumed to punk holders too) were:

✅Up to $100K per year
✅No digital collaboration (physical goods only)
✅No brand collaborations

They are, for an NFT, basically useless rights. Literally, you can make a hat.

meebits.larvalabs.com/meebits/termsa…

4/ I have heard a lot of hopium by punks holders over 2021 on rights, where they continually projected onto Larva Labs their desires on what they thought rights should be, ignoring what LL was actually telling them extremely extensively in writing!!!

5/ What I mean to say, if there was any ambiguity about LL's views on what rights punks holders should have, that ambiguity was gone the day the Meebits license was published.

Basically you had a standard artistic non-commercial license, with a small safe harbor for merch

6/ @yugalabs famously made the Bored Apes and the Mutant Apes and famously tweaked the standard PFP approach by giving an unlimited worldwide commercial license to the holders.

I always thought the apes were fun art and the "you own your ape" was a good part of the narrative

7/ One more nuance:

- Larva Labs kept 10% of the punks at launch and has been slowly selling (434 pre transaction)
- The Larva Labs marketplace is no fee, so LL does not get any ongoing royalties
- Yuga did not keep a large number of apes, but gets royalties on every sale

8/ This above point is quite interesting when you think about valuation because Yuga has an ongoing revenue stream from royalties (which tends to get high valuations) and Larva Labs can only make money from punks by progressively selling down or licensing their IP to others

9/ @punk4156 is right on many things, but I am not convinced he is right on his view that PFP projects should not have royalties.

He views it correctly as a tax on liquidity, but the flip side is that it gives the artist/creators staying power.

Worthy of its own discussion

10/ OK back to this transaction:

✅Yuga Labs bought the IP of punks and meebits along with all but 20 of the LL-owned punks
✅LL kept the rights to the glyphs
✅LL marketplace stays up
✅Yuga Lab converts punks and meebs to its commercial licensing model

So implications

11/ WINNER: @yugalabs

Yuga goes from having the 2nd best PFP project in the space (but one that is less "Lindy", more likely to be a fashion project than punks) to having both the #1 and the #2 PFP project

Yuga owned projects are now probably closing on $10B in NFT market cap

12/ A simplistic way of thinking about it is Yuga bought punks/meebs IP so punks/meebs IP has been valued at significantly less than Yuga IP.

This is wild for a <1 year old project. How can that be?

Isn't punks IP more valuable?

13/ The reason is two-fold:

a) Most important: A big chunk of Yuga's corporate valuation is not the BAYC / MAYC IP but "hey this team is smart and capable and think of new things to do"

b) less important: ongoing royalty streams are quite valuable

14/ So the absolutely simplest conclusion is that the Yuga team is absolutely crushing it.

Going from "random PFP project at 0.08ETH" to control of punks IP in less than a year is beyond the wildest possible good outcomes

They will generate billions of value for themselves here

15/ NEUTRAL: @larvalabs

I say neutral for LL because my assessment embeds in it exactly what the Larva Lab team says about themselves.

They are artists, they are tinkerers, they are on the cutting edge.

They are not business people, don't enjoy it, aren't very good at it.

16/ The LL teams made the first successful generative art PFP project, the first successful generative art fine art project and (I think?) the first 3D avatars

It is a huge accomplishment, it is a huge legacy, they are legends, they will always be legends.

17/ The reason I say neutral here is the following:

I think they almost certainly sold the punks/meebs IP for less than a business oriented team would have been able to monetize it for.

But to do that, they would have had to be a business oriented team, which they are not

18/ So, I think, contingent on them not being a business oriented team, it is an OK outcome economically for them.

If they were more business oriented, well, I think they could have generated significantly more value, but then they would have had to be someone else.

19/ The LL team anyway has Level 5 type money.

They are happiest on the edge, tinkering with new ideas.

I don't think they would be happier running LL as a business for 10 years to make more money so I think it is a very reasonable decision for them

20/ Good for Yuga for feeling this and going for it. My spidey sense felt this outcome possible a couple of months ago, reading between the lines on LL.

I considered this idea myself (raising money and making a similar proposition to LL) but never implemented, so gg Yuga

21/ WINNER: Punks

This is going to be the controversial part, so let's start with the anti-case.

There are a lot of disillusioned OG punk holders today that feel that the magic is gone, that they bought "art", that they don't want a brand manager

22/ First of all, I get that.

It is logical that if you bought a punk 1-2-3 years ago when it was wildly counter-cultural, it feels super weird to see the punks IP trade as any other IP.

It breaks a bit the counter-culture cool feel.

23/ I think the best analogy for how some feel is "indie bank goes mainstream" so the indie band, cool kids don't feel as connected any more.

I get that and it is normal and this is in fact what happens when indie bands go mainstream

24/ The more sophisticated version of this was "I liked the fact that LL were not business people and did not do anything so I would not have risk that they do something cheesy, counter brand, break the punks narrative"

I get that too - LL did not do very much

25/ So these arguments seem decent, why do I feel differently? I have many reasons, starting with "from the day I read the Meebits license, I realized the median view in punks discord about the punks was just projection, not reality"

LL owned the IP and was going to monetize it

26/ So once you have baked into your existing assumptions that LL was going to monetize (which I did almost a year ago), what are the possible ways?

a) LL starts running LL as a business (hard, not their style)

b) LL licenses or sells to traditional media companies

27/ c) LL does some super inventive DAO where everyone buys in and owns the rights to punks (Gary Gensler sends everyone to jail, do not pass go, do not collect $200)

So I had eliminated a) and c) as real possibilities, so the only real possibility was b)

28/ Relative to my expectation in b), Yuga Labs is a vastly better choice.

✅First and foremost, they did the most important thing they could do which was give unlimited commercial rights

✅Also, they are very PFP-competent

29/ I was much more worried that LL would sell to a Disney type company and we would end up with permanently locked into some atrocious licensing regime with Disney-style lawyers chasing around every "violation"

That is over now, even if Yuga sells further. Can't be pulled back

30/ How many of the important PFP projects have been a full commercial rights drop (a handful)?

How many of those teams have knocked it out of the park? One - Yuga

So if your prior assumption was LL is going to monetize, Yuga is almost certainly one of the best choices

31/ Now let's say the quiet part out loud.

A huge amount of the static about Yuga is that a lot of punks holders think that BAYC is kitsch, think that BAYC holders are kitsch, think that yacht parties in the Hudson are kitsch.

32/ BAYC is stylistically very different to punks and the holder base is very different to punks.

Here is what will matter in the coming months and years.

Oddly enough the best move for Yuga right now with punks is to do very little and keep focusing on BAYC-world

33/ Yuga has done the thing that LL *should* have done which is let punks be more free on IP.

Yuga has no immediate need for money I assume, so they should just chill and see where community goes with this.

If Yuga does kitsch things next month with punks, yeah, that is bad

34/ But a huge part of my analysis here is that Yuga has yet to make a wrong business move.

And this business move is a god-tier move within the NFT space, so I am assuming (here is my assumption out loud) that they get that punks are different than BAYC

35/ Now let's get to the substance of my view:

✅I assume Yuga will be chill on punks

✅In which case, the thing that has changed is that punks now give commercial rights to holders. Is that a big deal? It is a huge deal, a huge improvement

36/ First of all, punks have just become composable in digital world. The rights punks holders had before were explicitly non-digital. I can't imagine a more pointless set of rights.

The value of commercial or CC0 rights is not making a t-shirt for goodness sake

37/ The value of these rights is that you can build now in the digitally native world.

What we are going to build? How we are going to build it? We will figure it out.

But now it is plausible, whereas before I thought about this time and time again and said "why bother?"

38/ It also opens up punks for use by people / organizations with their own cultural authority.

If you have an existing brand (individual or organizational) why would you bother trying to figure out how to call LL and strike some type of deal.

You just buy the punk now

39/ "But 6529, what if people do cheesy collabs with their punks"

"oh, hi punk holder, I believe in permissionlessness, not that you should gate-keep what people should do"

But I also respect your right to go to another project instead, BUT...

40/ ...where exactly does one go where these issues do not exist?

- A corporate style RTKFT / Invisible Friends license (worse!)
- a commercial license (same)
- a CC0 license (anyone can do cheesy things)
- pepes (Matt L does DMCA on occasion)

41/ You can't have it all.

Either a centralized party holds all the IP and you just have a non-commercial license or yes, there will be a marketplace of ideas or memes around the project and some will be cool and some will not be.

42/ BUT WHAT IF YUGA DOES SOMETHING CHEESY and it is officially cheesy.

Sure, maybe. But as I said, on the margin, my guess is they are smart

42/ WINNER: Commercial rights and CC0 projects

It is game over for how PFP projects should be structured rights-wise

The only two choices are commercial rights or CC0 projects

Nothing else is competitive anymore - Punks were the problem with this thesis & now it is over

43/ This is an official 6529 view for new PFP projects

"non commercial licenses for personal use"
"limited license for non-digital use"

Honestly, NGMI in PFPs

Can't see why anyone would spend any time and effort as a holder of projects of this type

44/ "but I am into my PFP project for the art"

OK, sure, you can like the art. But PFP projects are not like a painting or something.

The value is emergent, the value is community based, the value is network based.

non-commercial licenses are web2 in this context.

45/ Btw, a side note to my very good friends in the generative art community.

You are not mentally ready to hear this, but the licensing regime for most generative arts project is also wrong.

Right now it is 100% restrictive, worse than the punks license

46/ Generative art collections of a 1,000 pieces are somehow community and network based as well.

And yet basically all the projects except sea hams and a few others are "artist has 100% of the rights and you, holder have none"

47/ "but 6529, it is art"

"Sure, it is art, but 1,000 set, rarity based, generative art projects are also some other things too"

Generative artists need social construction to form just like PFP projects do and tying the hands of their holders is not smart at all IMHO

48/ Of course I support the right of artists to do what they want, but I doubt it is in their best interests to have an important generative art project, at the founding moments of networked digital composable art and to treat it as if it was a piece of canvas.

49/ Somewhere in the multi-verse, Yuga Labs was a generative art competitor to Art Blocks that worked the community aspect more aggressively and the above would have been obvious.

We just know it is obvious in PFPs because Yuga went there, not to gen art

50/ WINNER: Honesty
LOSER: Hypocrisy

"I fully support artists to do whatever they want with their work"

Larva Labs: Sells IP to Yuga

"NOOOOOOOOOOOOOOOO! Not like that!!!!"

51/ "Punks are Schelling points of value, the fat punks hypothesis of 10,000 punks only and 9 aliens only means our punks are going to be all worth $1M to $100M each"

Larva Labs: Sells IP to Yuga

"I can't believe they monetized. I was just in it for the art"

52/ LOSER: Punks v1 flippening punks thesis

The risk with this thesis was that LL would grant commercial rights to punks holders and now that has happened.

And since artists get to do what they like with their copyrights, they can grant it to whichever tokenholder they like

53/ It is game over for that thesis, stick a fork in it, it is done.

V1 are a historical curiosity, perhaps protest art of some type.

But the idea that they will flippen the punks is ded

54/ "Money where my mouth is" alert

6529 Museum has 5 punks.

I am HODLing (I mean this is not really any surprise since that is what I always do but I will say it anyway for completeness

55/ The @6529capital fund bought 3 more punks last night post the announcement - the pilot helmet, cowboy hat and wild white

I like this gang below. They look fun

56/ As always, this is not 6529's trading group.

I have no idea how punks will trade tomorrow or in a month or in a year.

And I expect some stalwarts of punk world will migrate now because the narrative they wanted to believe was never the real narrative

57/ I think it is OK to be honest.

The person who bought a punk 1-2 years ago is in fact a counter-cultural person.

In a way similar to the LL guys. Both prefer to live on the edge and don't necessarily like the mainstream-ization aesthetic

58/ This is fine, cultural objects, particularly successful ones, can far far exceed their creators.

None of us know the life views of Frédéric Auguste Bartholdi, yet he left us a cultural gift for the ages.

59/ "But what about Seize The Memes of Production?"

Well, you have to go seize them ser.

The line is not: "Sit on your couch and expect someone to give you the memes of production"

Yuga has certainly done some seizing since last May

60/ You can make your own art, you can buy and HODL art, you can make derivative art, you can focus on CC0 projects or commercial projects or none of the above.

6529 believes in freedom. There is a new cultural world forming, the possibilities are endless

61/ Get out there, do things, these tectonic shifts only happen once every generation or two.

The amount of cultural and financial value that can be created right now is Up Only.

But there is no free lunch, you have to do the work

LFG

62/ If you have come to this account for the first time through this thread, know we are here for one reason only.

To ensure the metaverse runs on open standards based rails.

More here:

https://twitter.com/punk6529/status/1448399827054833668