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The Otherside and its potential impact on the NFT market
Most of you would have probably heard of the YUGA labs – Otherside drop that is happening on 30 April. In this post I will give the details of the drop and make data based assumptions on how the drop could go taking clues from such drops in the past as well as exploring the potential impact of this on the entire NFT space.
The sale is for Otherdeed NFTs, which possibly are for the lands in the Otherside Metaverse.
The public sale was supposed to be through a Dutch auction but as of today morning that is no longer the case. Link to announcement.
This now will be for a fixed price of 305 $ape per deed.
Fixed price sale is a good call in my opinion. It brings clarity and helps community members prepare better. The sale being in $ape already has added an extra layer of complexity. All the confusion that comes with a dutch auction would perhaps have been a bit too much.
The sale will happen in phases with the limit per wallet increasing with every phase, starting with 2. This is done to ensure that the deeds don’t end up with just a handful of whale wallets and are well distributed.
Total supply is 100k out of which 55k will be sold through the public sale. Those who had KYC’d will be eligible to take part in the public sale. 30k will be available to claim for free by the BAYC and MAYC holders. They will have 21 days to claim their free deed.
The remaining 15k are reserved and it is not clear for who.
Price of $ape
At the time of writing, $ape is trading at $22.77. The was trading around $11 just 10 days ago and earlier today it had even touched $27.
The circulating supply of 285 million tokens makes the market cap to be $ 6.5 billion
The $ape holding pattern suggests that the deed may not sell out during the first phase. We don’t have the complete picture as $ape in exchanges is lumped together in the exchange’s wallet but its highly likely that we go to phase 2 for it to sell out. The fact that more people still need to get $ape to be able to mint lands gives it holding/mooning power.
Mint price : around 2.5 ETH (at the current $ape price)
We don’t know the development has been done for the otherside metaverse and how much if at all owners will be able to interact with their deeds/lands at the start. Having seen the development on other metaverse projects like Sandbox and Decentraland, we know that the endeavor takes years. Although, It’s totally possible to do it in an iterative manner where they continue to engage holders and potentially increase interactivity in each iteration.
From the otherside teaser (linked below) we know that prominent non-YUGA projects will also be included in the experience. This makes sense as any metaverse experience aims to involve as many people as possible. Could it be that the 15k deeds are reserved for holders of these partner projects?
Speculating the floor price
Trying to establish what the floor price could be based on the market caps of other YUGA and comparable projects. For the sake of ease, we will consider just the floor price of those collections to get at a market cap.
Current BAYC floor : 152 ETH giving market cap of 1.5 million ETH (10k supply)
Current MAYC floor : 42 ETH giving it a market cap of 840k ETH (20k supply)
Current Sandbox land floor : 1.6ETH giving it a market cap of 265k ETH (166k supply)
While all 166k are not in circulation, this just gives an estimate of the potential market cap. At its peak the floor prices have been more than 2X of the current price. Sandbox also has been developing for years. This shows how high the current market cap of YUGA labs projects are because of the value created till now and the enormous future potential.
We should also note that the current BAYC and MAYC prices are inflated due to all the buzz and FOMO surrounding otherside and this drop. While each subsequent collection typically has a lesser market cap by the order of 2-4X, given that this has the attention of the entire NFT space, I wouldn’t be surprised if the market cap reaches MAYC levels in the initial first couple of days. With 100k supply that is a floor price of 8ETH. Though 100k supply and 30k people getting free money makes it hard for the floor price to be sustainable as there is always someone in need of liquidity and wants to take some profits.
There also has been speculation about another collection of Kodas with 10k supply. There are rumors that 10k of the 100k lands will contain a Koda. Assuming that the Kodas have a market cap of 1/15th-1/10th of BAYC ( similar levels as BAKC) means that holders will include this in valuing the unrevealed deeds and is another reason that the floor could moon to the levels described above. After the initial euphoria dies down and the demand lowers, I would expect a pull-back not only on the deeds but on other YUGA projects as well.
The sustainable floor price could be around 5ETH. Important to remember that we do not know the current utility and this is just a back of the envelope analysis for guidance.
Learnings from MAYC drop
On 1st August the average sale price for BAYC was 8.7 ETH. By the time mutants were minting at the end of August, it was 55ETH. It is interesting to see that it stayed in a similar range till the end of December.
The mutants had a volume of 40k ETH on the first day of launch with 5.5k sales, dropping to 11.2k ETH on the second day with 1094 sales and halving again on the third day with 4802 ETH volume with 568 sales. While more than 500 sales have happened just once since, the 4802ETH volume has been crossed 10 or so times aided by the floor rising to the whopping 42ETH right now after being in the choppy range of around 4 Eth for the first 2.5 months.
We could see something similar happening with the deeds floor price and volume in the next few months.
NFT market expectations
The release of MAYC was the highest volume day on OpenSea at the time. That led to huge liquidity entering the NFT market which led to other collections pumping as well and the market reaching new heights. But after the euphoria died down, it was followed by a bearish market for the next couple of months.
The floors of almost all collections have been going down in the last week or so as everyone in the space is looking to get liquidity to buy $ape for the drop if they KYC’d or positioning themselves to buy on the secondary market. Some liquidity should return to the top projects as people take profits from the deeds and the YUGA ecosystem but many of the projects will never be able to recover from this.
$ape may dump a bit after the mint is completed, but with what YUGA have managed to create and the potential of their future projects, it is never wise to fade YUGA. Game economy on these lands powered by $ape could sustain and keep providing value to $ape holders as the team continues to build. Also there are rumors of YUGA creating a marketplace run on $ape. YUGA has the eyeballs of the entire NFT space and crypto space. The possibilities of what they can create with the enthusiastic support of the community are limitless.
Put your seat belts on, the next few days are going to be absolutely wild. Even if you don’t own any Bored Ape/YUGA assets, this is a good opportunity to explore and learn a lot about NFT trends.
Important links :
P.S : The second funding cycle of TheLegendaryDAO is about to end on 30th April. Our mission with the DAO is to create a community where we share alpha and help each other succeed in this fast-paced NFT space. We have pooled money and take collective decisions for investing that.
The DAO was founded by me and many of the Impact Theory discord OGs are involved with it. If you like learning about the NFT space and liked this post, do consider joining us in our discord.
Our current funding cycle is through the NFT collection : https://opensea.io/assets/0x6c955cf3762a7571801a4fe2c5dd0175b7530c11/1
The art is really cool and demonstrates the qualities of grit and growth mindset. Please feel free to message me and other DAO members if you have any questions about the DAO.