Interview: Jack, BlockBeats.

Compiled by: Luccy, Joyce, BlockBeats

Editor: Jaleel, BlockBeats

In recent months, the trading volume, new issuance, and blue-chip NFT prices in the NFT market have continued to decline, and BAYC has also fallen below 24ETH multiple times. When it comes to NFTs in the crypto community, Yuga Labs is definitely a topic that cannot be avoided.

As a leader in the NFT industry, Yuga Labs' incubated NFT brand firmly occupies the blue-chip rankings. Over the past year, although Yuga Labs has launched new narrative gameplay such as hao Dookey Dash and the Bitcoin NFT series TwelveFold, these have only attracted players' brief attention and liquidity. The sentiment of "the darkest moment of NFT" and "NFT is dead" still persists.

During the Token2049 conference in Singapore, BlockBeats reporter had an exclusive interview with Daniel Alegre, the CEO of Yuga Labs, to delve into topics such as the narrative of NFTs and Yuga Labs' ecological layout.

NFT Narrative: Is it Really Over?

Before joining Yuga Labs, Daniel Alegre worked in the music industry, while his family was in the broadcasting business. He later moved to Google, where he worked for 16 years and was responsible for opening Google in China in 2005 and operating Google Asia, where he established many businesses in the Asia-Pacific region. In March 2020, Daniel Alegre joined Blizzard as President and Chief Operating Officer, and 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 of this year, Daniel Alegre posted on his personal social media that March 31st was his last day working at Activision Blizzard, and he would officially start as the CEO of Yuga Labs the next day. He expressed great excitement for the next stage of his career, which sparked discussion within the community.

BlockBeats: Do you think the narrative of NFT has come to an end regarding the current situation?

Daniel Alegre: No, of course not. This is a misconception that the valuation of the NFT space is based on the valuation of PFP. But just a few weeks ago, some BAYC sold for over a million dollars. It's like when people asked Jeff Bezos of Amazon in 1998 if e-commerce had come to an end, he replied, "No, of course not," even though everyone thought Amazon would go bankrupt at the time.

But if you look at the evolution of NFTs and their true value and functionality, you will understand that NFTs are a clear value proposition. Their value is so high that holders are now using them not only as PFPs, but also for community branding.

Therefore, for Made by Apes, we have over 900 holders who are using their PFPs to create independent businesses, but they are actually leveraging the entire community brand building. What they are doing is establishing various businesses, from selling alcohol and water to clothing, and even to digital cards, hamburgers, and more. The entrepreneurial spirit demonstrated by our NFT holders, I believe, is very unique because they are creating a brand new ecosystem, similar to what Amazon has established in e-commerce.

NFT Ruler, Yuga Labs: How to Build an NFT Brand

Yuga Labs, founded in 2021, is a marketing and development company for NFTs and cryptocurrencies. Its first product, BAYC, was launched in April 2021 and became one of the most influential projects in NFT history. Along the way, Yuga Labs has also created other well-known NFT projects such as MAYC, BAKC, Cool Cats, and World of Woman. The acquisition of the IP for CryptoPunks and Meebits has caused a frenzy in the entire crypto community.

Last March, Yuga Labs, the parent company of Bored Ape Yacht Club, completed a $450 million funding round at a $4 billion valuation, with a16z leading the round and participation from Animoca Brands, Thrive Capital, FTX, MoonPay, and others. From a single image at the beginning to a $4 billion valuation, Yuga Labs has become a dominant player in the NFT space, with support from sports, entertainment, and venture capital stars, acquisition of well-known IP, and the launch of Ape Coin.

Related reading: "Yuga Labs Handwriting: The Origin of the $4 Billion Story - "Let's Make an NFT"".

BlockBeats: We have indeed seen some people printing their monkey NFTs on water bottles or different types of drinks. However, if the price of the NFT drops, people are less willing to associate them with brands.

Daniel Alegre: I disagree with this. Just a few days ago, I saw a robot that automatically makes coffee at the San Francisco airport. My son said to me, "Look, there's a BAYC." Then I noticed someone displaying their BAYC on the screen. So it's not that people are unwilling to use their PFP.

According to BAYC's trading volume, 92% to 93% of holders are unwilling to sell their BAYC. Therefore, the actual amount of $ape traded in circulation is relatively low. People hold $ape because they see the value, the value in community and community connections, and the personal value of identification with the brand established by the community. In addition, you can see a complete ecosystem emerging, with many developing businesses.

BlockBeats: Does Blur disrupt the atmosphere or the overall of NFT? After all, only Blur can extend their brand or reputation through permission, but projects like Azuki or Pudgy Penguins, although performing slightly better, did not really benefit from BAYC. Daniel Alegre: Yes, we focus on one thing, which is to tell good stories, build good communities, and everything else comes from this. Especially in BAYC, the model we adopt is disrupting the traditional concept of intellectual property. In a normal media company environment, you create intellectual property and then license it in a very specific way. For example, you can use Mickey Mouse's image to make a hoodie and profit from it, but if you want to create a restaurant, you won't use Mickey Mouse to build it. Here, we are actually letting 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, we have built some Web3-based or non-Web3-based experiences for the community. What we do with Made by Apes is to support the business of the entire ecosystem, and they are also creating offline businesses.

We hope they succeed. It's all about community and connection. We established Otherside because community members told us they wanted a place where they could connect with each other, and on top of that, we provide a unique experience.

BlockBeats: So you fundamentally disagree with practices like CC0 and other NFTs that do not obtain permission for creation, commercial use, and other purposes. How should we use them then? Daniel Alegre: What surprised me was the level of entrepreneurial spirit in the community. I knew the community would be very strong, and users would connect with each other and be committed to the community. What I didn't expect was that many people are using what they have collectively built in the community to create other very interesting things. Moreover, the reason I came to the Asia-Pacific region is that I know there are many community holders here. In the early days, this was just a company that had been established for two years, 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 community event) would not be held in the United States, but in the Asia-Pacific region. I think this is the right decision because the community in this region is very close-knit, and it also provides us with an opportunity to expand the community.

BlockBeats: It is indeed very difficult to establish a brand in Web3, especially to expand influence to Web2. Many friends in the Chinese community are also building NFT brands, but many of them leave because they cannot successfully establish a brand and strong community through NFT, and eventually return to the Web2 industry because Web3 does not bring them enough income to survive. What do you think about this? How do you survive and build a brand? Daniel Alegre: I think the mistake these companies make is that they treat the NFT industry as a revenue opportunity and consider how to profit from it. If you look at it from this perspective, you may launch an NFT, but there is too much noise in the market. You may think that this is not useful, one earns a little money, and the other earns 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 development, 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 thing to do. As a company, we should be completely focused on telling stories and building connections, and if you do it well, you can establish long-term relationships. But we don't look at this issue from the perspective of NFTs today 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 in Web3

BlockBeats: Some people say that a great achievement of Yuga Labs is having many celebrities standing with this brand, but others say that this is a carefully planned strategy, such as giving monkey NFTs to these celebrities. What is the thinking behind this strategy? Daniel Alegre: In fact, our endorsement by celebrities or ownership of monkey NFTs, or promoting anyone to buy monkey NFTs, has nothing to do with it. They bought it spontaneously, they identified with this art, liked its uniqueness, and resonated with many people. I think that's what makes it special.

All of this ultimately depends on whether you have a good story and excellent artwork. This kind of art is innovative and can truly resonate with people all over the world, whether in 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 hold ApeFest in Hong Kong in early November. The special feature of this ApeFest 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 a leader in this field, I think it is also important to show people the value of joining such a successful brand, so that more people can experience the fun of Web3.

BlockBeats: Another very important question for us is, where do you think Yuga Labs' main source of revenue will come from in the future? Daniel Alegre: Frankly, I think this is unpredictable. What I can see now is revenue from new coin minting to secondary royalties, as well as in-app purchase experiences we are building in Dookey Dash and Heavy Metal Forge, and revenue sharing with third-party partners like Gucci. There may also be new sources of revenue that I cannot imagine.

BlockBeats: If you were to compare Yuga Labs to a Web 2.0 company, which one do you think is most similar to Yuga Labs? Which one is the closest? Daniel Alegre: That's a great question. We can feel that Tencent's development in gaming, social connections, content, and other areas is very strong. We have some similarities in certain aspects of Tencent's development, but there is a big difference in the sense of belonging and community awareness. However, this is my understanding of Tencent five to ten years ago, so I don't know the actual situation of Tencent now. However, in the digital field, I have not found any other company that can compare to this kind of community and connection. This is a way of building a community brand and brand connection, even the most loyal fans of Elvis Presley, Britney Spears, and BTS do not have this level of connection. The closest example I can see is the level of connection that fans of large artists have, but they will go further to embrace it, wanting to establish and strengthen this connection for the benefit of others and themselves.

The future ecological pattern, where will Yuga Labs go?

Starting this year, Yuga Labs seems to have a new layout. On January 12th, Yuga Labs officially announced the launch of a new game, "Dookey Dash," which will start on January 18th, and will launch the game participation ticket "BAYC Sewer Pass" the day before the game opens. This is the third phase of the prequel to the new storyline in the BAYC ecosystem, and also the preparation phase for the launch of the first interactive game in the storyline.

Similar to Temple Run, Dookey Dash is an "endless runner" game. There is no finish line and the difficulty increases as the distance traveled increases. The game will be available on both PC and mobile devices as a web-based game, but players must have a "BAYC Sewer Pass" to play.

Related reading: "BAYC New Storyline in Progress: How to Play New Game Dookey Dash and Game Ticket BAYC Sewer Pass".

On June 21st, BAYC Yacht Club's official Twitter account released a promotional video for 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, building or customizing a unique space within the game and upgrading their HV-MTL to a new form.

7 days later, "HV-MTL Forge" game will officially launch. On the eve of the launch, Yuga Labs co-founder Garge.eth posted a long article on his personal Twitter account, discussing the game, the earlier "Dookey Dash", and some thoughts on Yuga Labs' game development plan. Two years ago, after the release of BAYC, Yuga Labs had the idea of making games, although it was not ultimately executed, the idea still exists and the thinking about games has not stopped.

Following the "HV-MTL Forge", Yuga Labs' Legends of the Mara (LotM) game's public beta testing will launch in September, providing new NFTs and a wider metaverse experience for Otherdeed virtual land NFT holders. "Legends of the Mara" is a "collection-based 2D strategy game", while "Otherside" itself is a large 3D game. LotM will also reveal more information about 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 another question that many NFT entrepreneurs often raise, they regard Yuga Labs as a spiritual mentor in building Web3 brands. But now they see Yuga Labs also turning to the gaming industry. Therefore, they need to make a choice between building brands for NFT projects or games. How did you make the choice? Why did you turn to the gaming industry?

Daniel Alegre: I want to tell our questioning friends 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.

There are two reasons why we provide gaming experiences for the community: first, many of our holders have a strong interest in gaming and understand the value of Web 3, so we created games that bring them together and they enjoy playing. Dookie Dash is a game we designed for Heavy Metal Forge and will enter its final season tomorrow (I believe). This game actually brings the community together, which is also an opportunity for us, just like ApeFest I mentioned earlier. This is an opportunity for us to show people who are not familiar with Web3 what they can experience in gaming, shopping, videos, and more.

Now let's start with games, because this is the easiest way to explore what Web3 can do, showing gamers what Web3 can do, and making them understand: through Web3, I can have digital ownership, trade assets in games, and use my characters across different games. These were all problems in previous games, and I experienced them firsthand at Activision Blizzard. The closed mode used in games means that as a player, you invest money, but never get any return, or your hard work is never able to be exchanged. This is a unique problem in the gaming industry, and Web3 will bring unique evolution in this aspect.

BlockBeats: Despite being a highly recognized brand within the community, BAYC members can already start connecting and interacting with each other even without playing the game. Additionally, with the increasing number of other IPs owned by Yuga Labs, the community is constantly 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 utilize or monetize their gaming tools or equipment. What is your opinion on this situation?

Daniel Alegre: I don't know if you are a member of a rural club, but if you look at the membership system of rural clubs, you can understand our view on community development. Joining this rural club allows you to interact with other members. You will meet them in the main building, drink and socialize. Then some people will say, "I actually like playing golf. Do you want to play together?" Okay, let's go play golf together. Then you start building your own social circle and truly participate in golf. This is what we are doing. BlockBeats: Why don't you consider working with other games? Daniel Alegre: This is exactly what we are doing. We have created and launched our own game, and now we are starting to discuss cooperation with third-party game developers to create a unique experience for our community. This is something we will definitely do. This is also why we will spend so much time in the Asia-Pacific region, where many of the world's best games and game companies are located.

BlockBeats: So, at least in the short to medium term, is Eugalyptus focused on building platforms for games?

Daniel Alegre: Although we provide gaming experiences, our absolute focus is on storytelling, engagement, and community. Whether it involves NFT minting, gaming experiences, or partner experiences such as collaborations with brands like Gucci that allow you to truly experience a Gucci-fied experience, these are the things we are building. Our focus now is not just on games, but on considering multiple aspects comprehensively.

BlockBeats: So, what will be the future ecosystem pattern of Yuga Labs, where NFTs may include IP, games, and other series works?

Daniel Alegre: It depends on which series you are talking about. Obviously, we have CryptoPunks, orbits, and BAYC. As for BAYC, I think our evolutionary vision is to establish digital connections on the other end, and the evolution on the other end is that you will continue to have new experiences, and no one knows what it will become in three years. But we are actually providing support for the community so that their third-party partners can participate in the construction together. It may be a game, shopping, augmented reality (AR), or virtual reality (VR). We hope to encourage the ecosystem to build itself, rather than building it ourselves. At the same time, ensuring community connections and continuous storylines is what keeps us connected to each other. So this is 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 "going to war" with OpenSea?

On August 18th, OpenSea announced the implementation of optional royalties starting from August 31st. All previously issued NFT series will be subject to mandatory optional royalties after February 29th, 2024.

OpenSea's move has left many people confused, as they were previously the ones who filtered out zero-tax markets like Blur when making NFT project choices. However, they are now shifting towards optional taxes and indirectly embracing zero-tax markets. Previously, OpenSea seemed to be on the side of creators, focusing on cultural projects, providing support for new projects (such as Launchpad), and creating differentiation from trading with Blur. However, OpenSea has received criticism from Yuga Labs for this move and has stopped supporting OpenSea's Seaport protocol.

This matter has also received attention from many community members. How will things develop? Will OpenSea make changes? Or will Yuga Labs have its own NFT trading market like projects such as Pudgy Penguins, or settle with $APE?

BlockBeats: I know you have expressed many opinions on the issue of the NFT transaction tax cap on OpenSea. Do you think the entire PFP NFT market is heading in the wrong direction?

Daniel Alegre: Not only you, but I am also very concerned about the entire NFT ecosystem. The importance of secondary royalties is to create an economic business model for creators to encourage them to create on Web 3. The more they are motivated to invest and create unique opportunities in this field, the more everyone benefits. Whether it is consumers who have the opportunity to access these works, or ecosystems built around creators or creator economies, or companies like Yuga Labs, they can help promote connections between communities. So, I am very disappointed with the direction taken by OpenSea, and I have publicly expressed my opinion on Twitter: we are committed to finding ways to reward creators for their hard work.

BlockBeats: How do you consider the FutureHub and have you considered establishing your own NFT market?

Daniel Alegre: The first thing to do is to ensure that we can establish partnerships with markets that support secondary royalties and support their development, it's that simple. As for the question of whether to consider establishing our own NFT market, we are committed to finding the right solution, ideally with the help of others in this field to aid in 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 this.

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