I wanted to begin with an update on the next quarterly issue of Frontier Fortunes.
I’m currently putting the finishing touches on this issue, which contains a comprehensive review of the performance of our portfolio as well as my introduction to the hottest new opportunity in the cryptoconomy—a way to earn annualized returns of more than 100% by offering collateralized loans against non-fungible tokens, or NFTs.
I’ll send you an alert in the coming days once the issue is finalized.
But first, I have a new NFT opportunity to tell you about. (Before reading this alert, I’d advise that you check out the two Frontier Fortunes NFT reports: How to Invest in NFTs and The Frontier Fortunes Guide to NFT Wallets.)
The NFT is called ape16z. The name is a play on a16z, a famous venture capital firm in Silicon Valley founded by Marc Andreessen. He’s the developer behind Netscape, the grandfather of all internet browsers.
Ape16z is something of a venture-cap firm and accelerator in the NFT space, but with a twist: It’s a VC firm masquerading as a launchpad on the Solana network.
Launchpads are sites where projects go to launch, or “mint,” their NFTs…like an IPO on Wall Street.
Now, the truth is that the Solana ecosystem isn’t lacking in launchpads. There are plenty, and they all have pros and cons. But ape16z is bringing a new approach that is very much needed. And in that, there is an opportunity for those who mint the ape16z NFT…
The ape16z NFTs will mint in September, though the date hasn’t been set.
Nor has the team set a mint price yet because Solana, the cryptocurrency in which the NFTs will be priced, has been bouncing around crazily in recent months, so the team is waiting to price the NFTs closer to the mint date.
The NFTs will number between 5,000 and 7,000, depending on the mint price relative to what the team needs to raise for the business.
We are early to this one. In fact, ape16z has not yet launched its Discord channel, though it does have a Twitter feed here. If you follow ape16z on Twitter, you will learn when it opens its Discord channel.
Now, about this launchpad…
The NFT space struggles with a couple of problems when it comes to mints.
- Teams rug, meaning that an NFT mints and then the team never follows through with its plans and just absconds with the cash, either immediately or slowly.
- The launchpads are built for volume and, thus, they don’t really care what happens with a project after the mint. They served their role—minting the NFTs—and so they move on to the next one, often three or four in a day.
Those two characteristics mean that we, the NFT buyers, are not terribly important other than serving as a source of income for the launchpads.
Ape16z changes that.
As part of its fee structure, ape16z will take a portion of the NFT supply for its own wallet—sort of like the way a VC firm takes a portion of a company’s stock as its fee for providing access to venture capital to grow the business.
That aligns ape16z with us, the minters. We’re in the same boat.
Moreover, it should mean that ape16z won’t be looking to launch any and all NFT projects that come knocking. They will be more discerning in what they choose.
So, when ape16z agrees to launch a project, it will mean that the firm feels so confident about the project that it wants to own part of the mint, too.
In addition, ape16z will essentially destroy the capacity of teams to rug. It’s doing this through a system I started jabbering about on Twitter months ago—milestone-based escrow.
The concept is simple, but effective: Teams will not have immediate access to the cash they raise in the mint. Instead, they will unlock tranches of money as they meet pre-determined milestones. And that money will be locked in a multi-signature wallet that prevents any one person from draining the account and disappearing.
Ape16z, working with a project team, will set the milestones based on that project’s roadmap. As a team completes a milestone, a new tranche of money unlocks so that the team can then begin working toward the next milestone.
This is the way minting should work in the NFT space because it provides an assurance that a team really is aiming to build out their project. If they don’t, the money raised in the mint returns to those who minted the NFT.
To keep the focus on quality and not quantity, ape16z aims to launch three or four projects every quarter, similar to how VC incubators and accelerators operate. That will give the ape16z team time to work hand-in-hand with each project, meaning ape16z will operate similarly to a VC fund and accelerator in that it incubates projects before sending them out into the world.
As for the ape16z team, one of the founders was an investor focusing on fintech, enterprise, and Web3 deals for a VC fund, before becoming a product manager helping an enterprise startup scale their tech architecture. The other founder built and launched a remittance app, worked for a crypto-focused hedge fund, and joined a family-office focused on Web3 and cleantech deals. (Web2 is the internet era of today, while Web3 is the emerging internet era of tomorrow, which will be based on decentralized crypto blockchain technology.)
So, we have a team that has real experience in this corner of the world.
What’s in it for NFT owners?
Many of the NFTs that ape16z takes in as its minting fee will go to the ape16z DAO, the decentralized autonomous organization controlled by the NFT owners. As an NFT owner, you own a portion of the DAO’s assets, just like owning a share of a mutual fund means you own exposure to every stock in the fund.
As such, an ape16z NFT is essentially a share of a venture capital/angel investor fund in which the NFT owners are the analog to limited partners, while the team is the equivalent to the general partner.
As the value of the NFTs inside the DAO increases in time, the underlying value of the NFT should increase too.
Moreover, through voting, DAO members could choose to sell NFTs and put the cash to work in other angel investments, or they could vote to distribute some of the accumulated wealth to each NFT holder.
Finally, owners who stake their ape16z NFTs will earn the in-house $APEZ tokens that can be used to buy NFTs on ape16z’s own secondary NFT marketplace, which will only list ape16z projects. Effectively, then, you’re gathering NFTs for free by spending the tokens earned in staking.
All in all, ape16z is bringing to Solana a new type of launchpad that is very much needed.
This, to me, is not an NFT to buy and flip, but one to buy as a long-term investment that grows in value—potentially substantially—as the values grow for the NFTs that end up inside the DAO. Just be sure to pay attention to ape16z’s Twitter feed so that you know when the Discord channel opens and when the mint is scheduled to occur.
