ApeCoin is an ERC-20 token that serves as the governance token for the Bored Ape Yacht Club (BAYC) NFT community. BAYC is a part of the Ape ecosystem which is managed by Yuga Labs. The ApeCoin website states clearly that the project is for the ApeCoin DAO. The DAO will govern various aspects of the community such as fund allocations and brand decisions. Although some of the direction of the BAYC is being outsourced to the DAO, the team at Yuga labs will still play a role.
ApeCoin launched on March 16, 2022, and has already become the most valuable metaverse token with a multi-billion dollar market cap. Holders of BAYC, Mutant Ape Yacht Club (MAYC) and Bored Ape Kennel Club (BAKC) had the APE airdropped to them.
ApeCoin was the best performing metaverse token of April, growing by over 100% since its launch. The token currently sells for $24 and still looks set for more gains, but is the bubble about to burst? There are a few fundamentals and data that long-term investors should look at before throwing their buck at ApeCoin.
ApeCoin Utility
ApeCoin is fundamentally a governance token residing on the Ethereum blockchain. Holders of ApeCoin will be able to access services like games and events in the Ape ecosystem. The token has a fixed supply of 1 billion tokens. There is no buy-back or burn mechanism, so the token supply is expected to remain constant. ApeCoin will be distributed among four groups within the Ape ecosystem.
62% of the total supply is reserved for ‘Ecosystem funds’ which include all BAYC and MAYC holders. The ApeDAO and resources are also a part of the Ecosystem funds. 16% is reserved for the Yuga labs team and charity. 14% of the tokens are for the partner companies and individuals that helped launch ApeCoin.
The smallest share is reserved for founders of The BAYC NFT who get 8% of the total supply.
Tokens allocated to some groups (DAO treasury, Yuga Labs, BAYC founders) are locked up and will be unlocked every month for the next 48 months on a vesting schedule.
Sustainable Growth or NFT Bubble?
ApeCoin has seen tremendous growth since its launch. It has been listed on most major exchanges such as Binance, Kucoin, CoinBase, and FTX and this has made the coin rise into the top 30 cryptocurrencies by market cap. There is data that suggests ApeCoin’s steady rise may not have such a steady descent.
First, about 260 million of the ApeCoins given to different groups are currently locked up and will be released in batches over the next 6 to 48 months. Holders of these coins will likely sell off once they are unlocked which could lead to a price dump.
A report from Santiment showed that the coin is currently overvalued. The report used the Market Value to Realised Value (MRVR) model to highlight the discrepancy in the actual market cap of ApeCoin over the realised one. This points to the likelihood of a sell-off and highlights the fragile sustainability of ApeCoin’s rise.
Source: https://ambcrypto.com/apecoins-50-rally-can-it-really-keep-it-up/
