Yuga Labs, the powerhouse of NFT, the start-up behind the ape Bored Apes Yacht Club (BAYC) JPEG files, launched its native cryptocurrency ApeCoin in March to much fanfare. Thanks to this launch, the startup was able to expand its ecosystem beyond the few thousand individuals who already hold its NFTs, and it plans to eventually expand the use of ApeCoin, for example by incorporating it as a system. payment in video games featuring characters from his universe. .
For regulatory reasons, the actual structure behind its token issuance was quite complex (more on that here from my colleague Lucas Matney), but one thing is clear – whatever Yuga does, other NFT projects will seek to emulate. This is part of the thesis behind Co:Create, a new protocol that aims to provide infrastructure and tools for NFT projects looking to launch their own tokens, similar to ApeCoin.
For an NFT project, the rationale for launching a native token is to expand access and reach. Not everyone can afford to buy an expensive digital image, so issuing tokens offers projects a more scalable (and understandably less rare) way to expand and engage their community beyond just sale of NFTs.
The full protocol is expected to launch in beta this fall, while its website with developer tools and documentation is expected to be released this summer, Tara Fung, co-founder and CEO of Co:Create, told TechCrunch in an interview.
While the protocol is still only an initial prototype, it has already attracted high-level backers. The usual suspect a16z led the company’s $25 million seed round, with participation from Tom Brady’s NFT company, Autograph, VaynerFund, Packy McCormick’s Not Boring Capital, FTX’s Amy Wu, and the teams behind RTKFT (a sneaker-focused NFT design studio acquired by Nike last December) and fractional.art.
“The Co:Create The protocol puts creators on the right path to designing and implementing the toughest components of successful NFT communities,” wrote a16z crypto’s Chris Dixon, who led the company’s investment in the startup, in a statement to TechCrunch.
Alberto Simon, co-founder of art investment platform Masterworks, is leaving his current role at Gemini’s Nifty Gateway NFT platform to join Co:Create as co-founder and chief product officer, Fung said. Fung said Co:Create has two other co-founders but declined to name them, saying they were still leaving their current roles to join Protocol full-time.
Co:Create focuses on three fundamental pillars, Fung said. The first is to help projects expand their communities.
“NFT projects are great for acquiring customers, if you will, and getting people excited about the drops, but they’re not really able to expand their communities using NFTs as standalone tools,” Fung said. “We believe that by decentralizing the governance of the project through a fungible token, and then using that fungible token as a means to expand that community over time, is a very powerful prerequisite for building these sustainable decentralized brands.”
Second, the protocol aims to help projects encourage participation from their communities through mechanisms such as grant programs and awards, Fung explained. Third-party developers can be incentivized to create products such as games centered around a particular NFT project in exchange for an allocation of that project’s tokens, for example.
“NFTs are supposed to be those programmable assets that do more than collectibles, like unlock events, games, and experiences, but there has to be a reason for third parties to create games, events, and experiences that benefit NFT projects and communities,” Fung said. .
According to Fung, Co:Create’s third focus area is governance. The limited tools available to NFT projects today have resulted in a high degree of centralization, where a particular group or subset of contributors to a DAO (decentralized autonomous organization) largely makes key decisions about the project, it said. -she adds.
A native token that signifies membership in a DAO “can give a voice to all members of the community and expand that community to include not only collection holders, but also contributors,” Fung said. She hopes the native tokens will serve as a tool to encourage decentralization of project governance and creative control over time.
While the most high-profile NFT projects like BAYC tend to live on the Ethereum blockchain today, competitors like Solana have been quick to attract new projects to their ecosystems thanks to the promise of greater efficiency and reduced costs. Co:Create will be chain-agnostic, meaning it will support the blockchains its customers have built their NFT projects on, Fung said.
Yuga Labs’ virtual land sale for its Otherside video game revealed some of the scalability challenges that Ethereum-based NFT projects tend to face, as demand far exceeded expectations and users had to pay maintenance fees. exorbitant gas to hit their digital assets. Although the sale was bumpy and full of failed deals, Fung sees these challenges as inevitable for any startup so early in building the nascent NFT market.
“What I love so much about Yuga Labs is that they show what’s possible, test the limits, and pioneer – which means there’s a lot of learning associated with that,” Fung said. “Clearly Ethereum is not meant to be a high transaction protocol right now, and whenever there’s a lot of demand on that network, we see that reflected in gas fees… so that also explains why We will be channel independent and support multiple channels for our customers.