The staking mechanism is meant to stimulate interest in yuga collections – does it work?
Juan Pellicer On-Chain Markets Update, Into the block
ApeCoin is the token of the Bored Ape Yacht Club ecosystem. It launched in March, allocating 15% of its offering as an airdrop to NFT holders of the BAYC/MAYC/BAKC collections.
On Monday, the DAO activated its staking mechanism, which aims to incentivize holders to lock their APE tokens in a smart contract and earn benefits over time.
reward share
The reward percentage varies depending on whether a wallet contains only APE or a combination of APE and any BAYC/MAYC/BAKC NFT. For example, a larger proportion of the rewards go to the group holding both APE and a BAYC NFT.
If a BAYC/MAYC/BAKC NFT holder sells their NFT while their APE is staked, they will lose all of their staked APE, as was the case with a handful of unsuspecting sellers.
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The staking mechanism aims to minimize selling pressure from NFT holders who are likely still holding APE from the airdrop and have a huge incentive to stake (with more than 100% projected annual returns). It also seeks to increase buying pressure from investors who hold APE and want to increase their returns by acquiring an NFT from the collection on marketplaces.
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A good measure of the sentiment the staking mechanic had towards collection owners is to analyze whether a collection’s current listings are attempting to sell at a loss or a profit for the seller. If we look at the BAYC list, we can see that almost 90% of the offers for BAYC are ready to sell at a profit, while just over 10% of listings sell at a loss:
BAYC In/Out of the Money indicators according to IntoTheBlock NFT Insights.
Each range corresponds to a price range that may be a percentage above or below the purchase price of each piece.
The size of the bubble represents the number of offers that are in that price range. In-the-money corresponds to those addresses that would make a profit if they sold their token at the advertised price, while out-of-the-money corresponds to the opposite.
If we look at the MAYC offerings and think that since they’re cheaper they’d have a worse score, we’d be surprised. The results are very similar to those of BAYC. A plausible explanation for this would be that since they are more affordable than BAYC, more purchases were made on their side:
Indeed, if we look at the listing analyzes for MAYC NFTs, this effect can be seen, MAYC delistings have grown rapidly: a reduction of 55 NFT listings in a single day is very significant for a collection that is typically less than 5% has listed his offer. This is the largest reduction in listings over the past six months:
MAYC listing variation indicator as per IntoTheBlock NFT Insights.
The decisive factor is the influence that large whales could have on the next price development of the collections. Because of this, it’s usually important to check if these whales are following a trend by selling or buying their pieces.
number of whales
If we measure whales as those addresses holding more than 1% of the supply (100 heads for BAYC) we can see how The number of whales in the collection has recently increased to 9 whales, now containing more than 900 pieces from the collection. This is very notable considering they were smaller from October to November (from a 0.11% share to 0.09%):
Peaking the whales, it is interesting to understand the rarity of the NFTs that are bought to benefit from staking. Since the staking contract does not discriminate based on the rarity of the BAYC/MAYC/BAKC held, one would assume that only the most basic pieces would be purchased.
Dominate the category
Far from it, if we look at the most expensive NFT sales that have occurred in 24 hours, we can see how BAYC continues to dominate this category half of the most expensive recent NFT sales have been BAYCs and MAYCs:
Notwithstanding these positive metrics, the immediate impact of deployment on the price of BAYC and MAYC NFTs has so far been small. The minimum prices have fluctuated between 2 percent up and down in the last week. The utilization rate of the staking mechanism is currently next: around 30% of BAYC’s supply is being staked, and 40% in the case of MAYC.
If we track the amount of APE spread across the current circulating supply, their share would be 17%. The low amount of APE using staking could be due to investor apathy who may be keeping their supply on centralized exchanges and don’t want to risk the self-custody issues.
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Another option might be the difficulty of accessing the staking site from some countries without using a VPN. However, considering the enticing returns staking is currently offering with over 100% annual returns, we can expect the usage ratio to increase over time and if all goes according to plan, the NFT floor prices of these collections will also increase.
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