Monday, 15 April 2024

Crypto News

ApeCoin leads in NFT and Metaverse market share, but are APE’s hefty staking rewards sustainable?

ApeCoin leads in NFT and Metaverse market share, but are APE’s hefty staking rewards sustainable?

In January, ApeCoin (APE) had an underwhelming performance compared to metaverse-based tokens like Decentraland (MANA) and The Sandbox (SAND). APE token gained 61% compared to the 90% and 150% respective gains seen in SAND and MANA. The subdued gains can be attributed to the hefty APE staking rewards that is likely creating some selling pressure.

An upcoming unlock of around 9% of APE’s circulating supply in March 2023, along with not-so-impressive fundamentals, will add further headwinds for the token. The gains in APE will depend on the success of the blockchain gaming projects in the ApeCoin ecosystem and new partnerships between Yuga Labs and big brands.

Traders take advantage of oversized APE staking rewards

ApeCoin DAO launched its APE staking mechanism in December 2022. The APE staking pool yielded 90% annual returns in the first two months. Holders of the Bored Ape Yacht Club (BAYC) NFTs and related collections are eligible for twice the yields of around 171%, adding significant selling pressure for the token.

ApeCoin staking yields. Source: Dune

However, these traders are primarily interested in capturing risk-free APE gains instead of accumulating the token. Thus, they may eventually become a source of constant selling pressure.

The token has been heavily shorted in the futures market, especially after the launch of the staking mechanism. The funding rate for APE/USD perpetual contracts has been negative since December 2022.

Funding rate for APE/USD perpetual swaps. Source: Coinglass

Otherside Metaverse and Yuga Lab’s influence

The ApeCoin ecosystem is the most valued metaverse project ,not only in total market capitalization, but also the total value of its virtual world. APE will be the primary currency of the Otherside metaverse. The Otherside metaverse has 100,000 virtual land plots which have a floor value of 1.6 ETH. In comparison, the Sandbox has 113,400 land plots with a floor price of 0.98 ETH. 

Otherdeeds sale price. Source: OpenSea

There will be a total of 200,000 Otherdeeds and currently 100,000 Otherdeeds are available. The other 100,000 NFTs will be awarded to people who hold Otherdeeds and contribute to the development of Otherside.

The decentralized organization has passed numerous grants to develop the Otherside metaverse’s gaming space. The ApeCoin ecosystem will also see a native NFT marketplace and a clothing brand. According to a report from crypto analytics firm Messari, the developments are “helpful, but they are unlikely…

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