decrypt.co
When Larva Labs first created the now-iconic CryptoPunks back in 2017, the first batch of Ethereum NFTs was made with buggy code. So they were scrapped and replaced with the so-called “V2” versions, some of which have sold for millions of dollars worth of ETH each.
But while many newer NFT collectors may not have known about the discarded “V1” NFTs, the blockchain never forgets.
Late last year, enterprising members of the CryptoPunks community created a “wrapper” program that effectively rescued the V1 versions and turned them into new NFTs that could be traded on their own, separate from the official (V2) CryptoPunks.
And that’s when things got wild. The notoriously protective and litigious Larva Labs—a.k.a. Matt Hall and John Watkinson—pushed back against the V1 Punks (as they’re often called) in January, tweeting that they were “not official” CryptoPunks and that they “don’t like” them.
Likewise, some V2 owners aren't thrilled about the rise of V1 Punks.
PSA: "V1 Punks" are not official Cryptopunks. We don't like them, and we've got 1,000 of them... so draw your own conclusions. Any proceeds will be used to purchase real Cryptopunks!
— CryptoPunks (@cryptopunksnfts) January 25, 2022
But at the same time, Larva Labs also wrapped and sold some of its owned V1 Punks—a move that the duo apologized for in February, calling it “stupid” and a “bad decision.” All told, they made about $622,000 worth of ETH at the time from selling off V1 Punks.
Larva Labs ultimately spent the funds buying up official V2 Punks NFTs from owners and donated a matching amount to charity, but the clumsy situation left a bad taste in the mouths of some Punks owners. To supporters of the V1 project, however, the whole debacle was deeply amusing.
“It was a big clusterfuck, right? We really put them under a lot of pressure,” V1 Punks community member hemba told Decrypt. “They were just tripping over themselves.”
An NFT works like a receipt that proves ownership for an item, including digital goods such as profile pictures, artwork, collectibles, and video game items. The market surged to $25 billion worth of trading volume in 2021, with CryptoPunks helping to lead the charge.
The V1 Punks are visually identical to the official versions, aside from a unique background color added by the wrapper. But that means that each of the 10,000 official CryptoPunks NFTs now has a near-duplicate version on the market, and even the V1 Punks have become pretty valuable: they start at 5.2 ETH (about $10,400) on secondary markets as of this writing.
Despite engaging with the NFT wrapper program and selling their own V1 Punks, Larva Labs then took action against the project, issuing a DMCA takedown notice to OpenSea claiming a copyright violation—despite the fact that the NFTs initially originated from Larva Labs.
In any case, the V1 Punks were no longer listed on the leading NFT marketplace.
But when Larva Labs unexpectedly sold the CryptoPunks IP to Bored Ape Yacht Club creator Yuga Labs in early March, the firm was no longer in a position to litigate the DMCA claim. And Yuga Labs, for its part, appeared uninterested in pursuing it. The claim expired, and the V1 Punks returned to OpenSea.
Still, that's not the end of the V1 Punks saga, the creators tell Decrypt.
In an effort to tell its own story and help secure its future, the V1 Punks project has launched its own marketplace in partnership with Rarible. And as Yuga Labs ponders its own CryptoPunks plans, V1 backers aim to unify the wider Punks community to have a say in what’s next for all of them.
A new home for CryptoPunks
Rarible kick-started the conversation earlier this year, ahead of the DMCA saga.
Sunil Singhvi, the firm’s chief business development officer, told Decrypt that his team was looking to partner with notable NFT projects to help roll out its white-label marketplace tech, which is built on Rarible’s increasingly multi-chain decentralized marketplace protocol.
“This is one that's very true to the Web3 world—a fabled project,” he explained, describing V1 Punks as being akin to “a Wright Brothers plane that didn’t fly.” In speaking with core contributors, he saw “a team that wanted to stick around and have their legacy protected.”
Notable V1 Punks member FrankNFT.eth, who created the wrapper program, said that he wasn’t initially convinced that the outreach from Rarible was real. “Honestly, I didn't believe it,” he told Decrypt. “I said, ‘That's a scammer.’”
While the V1 Punks project already has its own webpage, the standalone Rarible marketplace is a much more robust effort. It’s fully customizable, so the V1 Punks can share their own story and welcome their community, plus a share of the marketplace fees will go to the V1 treasury. Frank said that it could fund future community-driven projects and initiatives.
Importantly, it’s also a dedicated home for the V1 Punks. Rarible has made a few of these custom marketplaces for other NFT projects, including Solana’s Degenerate Ape Academy and Ethereum’s Meta Angels. It’s a way for them to not only have a unique space to transact but also to stand apart from the potentially millions of NFTs found on larger-scale marketplaces.
“I think the reality is—and Rarible obviously is a big, healthy marketplace—that it's not always easy to get visibility on a marketplace,” Singhvi explained. “You are effectively, to some extent, building somebody else's house rather than your own.”
In the case of V1 Punks—a project that has thus far yielded over $70 million in NFT sales, per CryptoSlam—they’ve uniquely gone through the process of being removed from the largest marketplace. This is an opportunity to assert themselves in a more controlled environment, and perhaps become less reliant on third-party marketplaces going forward.
“If your house has disappeared once,” Singhvi suggested, “you're always going to look to build a stronger house the second time.”
Uniting the Punks
It’s a new era for the V1 Punks, and not only due to the Rarible-powered marketplace. While Larva Labs has been widely hailed amongst NFT collectors for creating the CryptoPunks and inventing the concept of tokenized profile pictures with randomized traits, the team took flak for the way it ran the project when the NFT market blew up in 2021.
CryptoPunks prices soared over the last year, but Larva remained largely hands-off with the community, not offering loads of perks like the Bored Ape Yacht Club, nor offering guidance on whether owners could commercialize the IP rights of their respective Punks.
Hemba, who claimed the most free CryptoPunks at launch in 2017—but sold most of them before the boom, hence his Twitter name, soldthebottom—described Larva Labs to Decrypt as being like an “absent dad” to the Punks community.
When selling its CryptoPunks and Meebits project IP rights to Yuga Labs in March, even the Larva duo admitted that their “personalities and skill sets aren’t well suited” to managing the ongoing demands and community interactions required of a high-profile NFT project.
It’s not entirely clear how Yuga Labs plans to use the CryptoPunks going forward. They will factor into Yuga’s upcoming Otherside metaverse game, which has already seen $892 million worth of NFT land sales on the secondary market since April 30.
Otherwise, the firm said that it will give owners full IP commercialization rights and will “see what they build, and listen.”
The dynamics of history, IP, scale, and tokenomics are all fascinatingly at play in the continuing saga of V1 CryptoPunks.
Here’s what’s happening with them, and why I’ve been adding V1s to my collection. 🧵 pic.twitter.com/1LJ2Z2KB95
— cantino.eth (@chriscantino) March 23, 2022
Yuga is expected to be more hands-on than Larva Labs before it, but the V1 Punks community won’t be “waiting for daddy again” to start making moves, said hemba.
In a recent manifesto, he described various plans ahead for the CryptoPunks as the project nears its five-year anniversary, including a party alongside a crypto conference in June, a traveling exhibition to begin later this year in Dubai, and involvement in a documentary film.
He hopes that all CryptoPunks owners—of both V1 and V2 NFTs—can band together to help shape the future for the wider project, rather than let Yuga Labs solely dictate its path forward. CryptoPunks owners could form a DAO (or decentralized autonomous organization) and collectively act as a union, he suggested, to work with Yuga to ensure all voices are heard.
Whether official (or V2) CryptoPunks owners will get onboard with V1 initiatives remains to be seen, however. Despite their origins from the original Larva Labs contract, some see the V1 Punks as fakes or frauds—akin to the CryptoPhunks (that’s Phunks, not Punks), a derivative parody project that likewise yielded a DMCA notice from Larva Labs in 2021.
“Phunks are stolen IP that directly impacted the legit Punks market, just like V1 Punks,” tweeted NFT collector and entrepreneur, Jimmy McNelis, last week. “Both V1 and Phunks were bad for OG Punks collectors, the collection, and Larva Labs who collapsed under the pressure. This is not ‘Web3’ in any way.”
While convincing V2 owners may prove to be an uphill battle—and Yuga’s own view of V1 Punks is currently unclear—the project’s community appears to be working to find common ground, as well as advocate for collectors of all CryptoPunks.
“We’re choosing to lead by example,” hemba said of the V1 Punks. “I think it's also a really good example for what the V2 community should do, and what perhaps we could do together.”