If you know anything about NFTs (non-fungible tokens), you will have likely heard about a few big names or artists like Matt Furie or the Bored Ape Yacht Club (BAYC) – those anthropomorphic digital apes that celebs such as Gwyneth Paltrow and Eminem own. But despite the over $23 billion spent on NFTs since 2017, a big portion was for just a handful of popular projects.
Larva Labs, one of the pioneers in the market, sold the intellectual property rights of its historic CryptoPunks and Meebits to Yuga Labs, the creators of the Bored Ape Yacht Club, making Yuga a palpable powerhouse in the “profile picture" (PFP) sector.
1. How CrytoPunks started
As an antipode to the malleable and centralized nature of mainstream collectibles like Pokémon cards, CryptoPunks was released as an experiment to explore the dynamics of scarcity and demand. With the use of a set of algorithmic templates, the final design of each 24x24 8-bit-style pixel art image, which was inspired by the 1970s' London punk scene and the dystopian grit of cyberpunk, was randomly generated and unalterable once it went live on the Ethereum network.
Because of that unique methodology, variations in the collection are ranked according to rarity determined by certain attributes like beards, hats and pipes and by types – the most uncommon being nine light-blue-skinned alien Punks. Overall, there are 6,039 male Punks, 3,840 female Punks and several pop culture archetypes that, along with the ethereal aliens, include 88 green-skinned zombie Punks and 24 ape Punks. There are also eight Punks with no distinctive features, and those are occasionally referred to as the Genesis Punks.
Each character, viewed as individual pieces of generative art that exist as part of a larger conceptual work, can't be replicated and has a profile page that details its specific qualities and complete transaction history, as shown by CryptoPunk 8348, which is notable for being the only Punk with seven attributes.
Larva Labs originally released 9,000 Punks for free to anyone who had an Ethereum wallet, minus the price of gas fees, which were 11 cents at the time. Larva Labs kept 1,000 Punks for itself. Although slow to gain traction, the collection later sold out after gaining exposure from media outlets like Mashable.
Significance of CryptoPunks
Before 2017-2018, most applications on the Ethereum blockchain were aligned with the ERC-20 token – a standard that allowed for digital assets to be fungible, or mutually exchangeable, with one another within the Ethereum ecosystem.
Although Punks followed the general requirements of an ERC-20, Hall and Watkinson added modifications to the software code to produce a new non-fungible standard, or uniquely identifiable single tokens.
At the time, the modifications were significant advancements in digital ownership because they meant collectors wouldn’t be able to own one-half of a Punk, or a fraction of the token as was the case for most ERC-20 decentralized applications (dapps).
To help collectors understand which specific NFT they own, all they need to do is reference the metadata within a Punk’s token. For example, CryptoPunk #503 refers to the 503rd Punk in the large, composite image.
Physical lithographs of CryptoPunks
Larva Labs also printed 24 lithographs (handmade using oil and water), signed by co-founder Watkinson. Included with each of the 24 physical CryptoPunks was a sealed envelope containing the private keys that when unsealed and opened would endow ownership of the Punk to its buyer. Nine prints were offered during a Sotheby's auction held in July 2021, and five of those sold for between $197,170 and $295,755.
V1 and V2 Punks controversy
Shortly after the collection of CryptoPunks was launched in 2017, a bug was found in the smart contract that allowed buyers to have their ether refunded, leaving sellers without their NFT or the ETH that they were supposed to receive for a sale. In response, Larva Labs created an amended contract and later airdropped what’s now considered as the official V2 Punks.
Despite differences in price and background color, it's slightly contentious to say which are the "real" Punks because the communities for each set of Punks say their versions are legitimate. Both have valid arguments. Still, the V2 version is what Larva Labs and auction houses consider as the "authentic" Punk.
The controversy was also what pushed Larva Labs to issue a warning to OpenSea about copyrights and forced the marketplace to delist the V1 collection.
CryptoPunks on-chain storage
Although the images were initially stored off-chain, in response to collector sentiments, Larva Labs announced in August 2021 that it had placed all the artwork for the existing CryptoPunks on the Ethereum blockchain. While storing data on-chain is notoriously costly and therefore unusual, the transition to Ethereum helped aid in the longevity and durability of the NFTs and reassured the Punk community that their assets won't disappear from the internet.
How it’s going
Yuga Labs x CryptoPunks and Meebits' IP acquisition
In light of their inherent passion and skills as creative technologies, and deeming themselves unsuited to best manage the growing demands for profile pictures, the Larva Labs co-founders sold the intellectual property of CryptoPunks and an associated collection called Meebits to Yuga Labs in March 2022.
Yuga Labs said it would amend the intellectual property to grant full commercialization rights to holders of NFTs from both collections. That gives legal permission to owners of CryptoPunks and Meebits to develop further products, services and other initiatives. Yuga Labs will reportedly not pursue any of Larva Labs’ previous takedown requests regarding derivative projects such as the V1 Punks.
2. How CryptoCats started
The online cats were created as 8-bit cats before the ERC-721 token standard and as a fork of the Punk contract. The Australian team behind the project, which includes Gendry Morales, Nas Munawar and Jochy Reyes, deployed their first batch of 12 "original" cats on the Ethereum blockchain in November 2017, predating the official launch of CryptoKitties.
The entire series now consists of 625 NFTs and was released periodically in line with market demand. Following the acclaim of the original cats, the team ramped up their production and launched 177 more cats, dubbed the “Australia Blockchain Edition,” which is signified by green and gold bars, in November 2017.
The Melbourne-based startup later produced 436 cats for an initial mint price to better manage the growing attention. However, a large amount of that final "December edition" remained unsold until a rediscovery of the project in the CryptoPunks Discord channel in March 2021, upon which over $100,000 worth of volume poured into the collection, leaving only one remaining Cat (#414) stuck in the contract.
In response to the rekindled attention and to secure a stake in royalties from secondary sales, which wasn't included in the original contract, the CryptoCats team created an official ERC721 Wrapper called the CryptoCat WCCAT token and introduced Wrapped CryptoCats Official on OpenSea, with cat 14 being the first NFT to sell for 8 ETH.
How it’s going
The CryptoCats team held a signing ceremony of prints in March 2021 that included the release of 625 tokens. That represented a physical piece of artwork exhibiting all of the CryptoCat NFTs that were created in homage of the CryptoCat journey.
3. How CryptoKitties started
Shortly after the release of CryptoCats, Axion Labs introduced CryptoKitties. Those tokens were unveiled in October 2017 and became the next NFT phenomenon to hit the market.
The collection officially launched the following month in conjunction with Dapper Labs and included a novel breeding feature that allowed holders to generate entirely new CryptoKitty NFTs.
By using a genetic algorithm, holders can breed (combine) any two NFTs to produce offspring with their own set of unique traits, determined by the immutable genotypes stored in the smart contract.
Significance of CryptoKitties
Soon after the NFTs went live, the mass appeal and engagement with breeding caused CryptoKitties to congest the Ethereum network to the point of preventing other Ethereum-based platforms from operating efficiently and driving gas fees to dizzying heights.
Read more: What are Ethereum Gas Fees?
In response to expensive gas fees and slow processing times caused by the rapidly multiplying digital cats, CryptoKitties announced in May 2020 that it would go to a new, native blockchain called Flow.
That migration allowed for the integration of several new features in the CryptoKitties game, including the following:
- 3D designs and animations.
- Greater scalability, helping more people use the network.
- A free-to-play model through the proof-of-stake consensus model.
- Cross-game integration using CryptoKitties in other games on Flow.
Collaborations and collectibles
Together with breeding, CryptoKitties helped inspire new classifications of NFTs called Crypto Collectibles, which is original and limited edition collaborative content from artists and brands. Examples of that include designs inspired by British rock band Muse, and renditions by Chinese artist Momo Wang, whose limited-edition CryptoKitties made their debut on the Nifty Gateway marketplace.
How it’s going
An $11 million investment, the support of Warner Music Group and Ubisoft and the transition to Flow blockchain have all helped CryptoKitties achieve scalability and reach.
What we learned
Overall, although the exponential growth of these collections of NFTs led to occasional bugs and controversy, they all found ways to gain scalability, efficiency and adoption.
For instance, despite being skilled creators, Larva Labs' founders admitted they weren’t the best managers of an image that gained the power to represent people’s online identities, and Yuga Labs provided its own solution and bought CryptoPunk’s intellectual property.
Similarly, although the innovation of breeding with CryptoKitties led to network congestion and high gas fees, the transition to the Flow blockchain provided a framework to help sustain the NFTs.
And while the project had humble beginnings, the rediscovery of CryptoCats is another example of how even a relatively obscure collection can quickly gain prominence and cement itself in digital artwork history without the need for a multimillion-dollar marketing campaign.
Just as these iconic collections defined the early era of NFTs, it’s likely a new generation of disruptive, unique asset collections is just around the corner that will continue to push the boundaries of this flourishing crypto sector.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.