Explore the underlying drivers behind the value of CryptoPunks, how long can this frenzy last?

Original title: "CryptoPunks: What is Behind Their Unstoppable Rise?"

Original author: Yasmine Karimi, Nansen Analyst

Original compilation: Perry Wang

What are CryptoPunks?

CryptoPunks are 10,000 unique , a collection of collectible characters from , is widely considered to be the beginning of what is today's CryptoArt movement. On June 23, 2017, Larva Labs launched CryptoPunks, when anyone could get a CryptoPunk for free. I won’t go into details about the process afterwards, and today, according to Nansen’s data, the current price of Punks is between 1.005 ETH ($381,000) and 4,200 ETH ($7.58 million), making it the largest collection of NFT collections, with a total market value of 1,262,143 ETH ($4.5 billion).

CryptoPunks since its birth Price range

The underlying drivers behind the value of CryptoPunks

Favorites are difficult for many observers to understand The exorbitant prices paid recently to buy CryptoPunks are believed to have created a speculative bubble. Others argue that the value of CryptoPunks is driven by factors other than the wave of NFT hype, and that the recent trend may just be the beginning of a wave that will revolutionize art collecting.

In this article, we further explore the underlying drivers behind the value of CryptoPunks and the underlying trends that can be expected in the short and long term.

Fundamental drivers of valuation

The value associated with the first NFT project in history Narrative

The first fundamental driver behind CryptoPunks valuation is its value narrative as the first NFT project in history. This value narrative gives CryptoPunks a unique position in the NFT space.

This sounds impressive, but what exactly does it mean to be the first NFT project, and why is this important? This means it is the first project to use blockchain technology to represent the ownership of unique assets. This had three groundbreaking effects:

First, CryptoPunks revolutionized art and the art market. By leveraging blockchain's proof-of-ownership technology, CryptoPunks eliminates third parties involved in the art trade. Artists can now interact directly with viewers to buy and sell their work. The application of blockchain technology in art can truly realize the scarcity of digital art and collectibles in the digital world, because the original reproducibility of these items makes it impossible to guarantee rarity and high value.

Secondly, the role model set by CryptoPunks has broadly promoted the emergence of a new asset class: NFT. While art is one such use case, in reality there are other non-fungible assets (jpegs, memes, certificates, patents, etc.) that make themselves scarce and highly valuable using proof-of-ownership techniques.

Third, they inspired the creation of ERC-721 tokens, a token standard backing non-fungible assets, and even in the latter This is also mentioned in the white paper.

Scarcity

CryptoPunks are not only culturally significant in the NFT space, but they are also very scarce. Given the cap of 10,000, it becomes difficult for people to get one of these, otherwise they would be of little value.

CryptoPunks are scarce at the collectible level, but this scarcity is more pronounced in real-world collections as some Punks are considered more scarce than others.

Punks are worth more or less depending on their type, number of attributes, combination of attributes and subjectivity. There are 5 Punk types (Alien, Zombie, Ape, Male, Female) with 87 different attributes, each Punk has a maximum of 7 attributes.

Generally, the types that are considered more valuable are aliens, zombies, and apes. In fact, the average Alien is 16 times more expensive than the average male Punk.

In terms of stats, the industry generally agrees that a Punk with 0, 6 or 7 stats is more valuable.

The most sought-after traits tend to be the weirdest and most punk ones. Currently, the features with the highest average price are as follows:

- Beanie

- Hoodie

- Beanie

- Hoodie

- Tiara

- Choker

- Top Hat

- Orange Side )

- 3D glasses Welding Goggles

- Gold chains

Important to note , the most valuable features are not always scarce. If we consider the value of these features over time, it is interesting to see that the popularity of features changes over time.

The most valuable former Top 10 Traits Over Time

As you can see in the graph above, some traits that were not particularly popular, such as hoodies and pilot helmets, are gaining new emphasis. Therefore, it is very important to keep abreast of the discussions related to the feature in the CryptoPunks community (Discord, Twitter, etc.) in real time, and make good use of the recent sales history as a reference.

Social currency for the OG community

As mentioned above, CryptoPunks have a unique value narrative and Limited availability. This scarcity fulfilled the next need: CryptoPunks became a social currency in the OG community and the NFT space.

When you buy a CryptoPunk, you're not just buying an image, but a membership to the coolest, hottest OG Club in the NFT space. Membership in this club is very powerful. It sends the message that you are an early mover, you recognize the historical significance of the project, and you are a celebrity in the NFT space. It also gives you access to a heavyweight network, access to exclusive conversations, and the ability to claim other NFT collectibles for free (like when Meebit launches).

The growing demand for OG and the entry of new players in the market will further drive Punks prices upward

Over time we will see demand for punks continue to increase from various market players. OGs will reinvest previously harvested profits in CryptoPunks, or at least hold on to those punks they already own. They are seasoned collectors. As you can see below, the top 5 holders of CryptoPunks are mostly original collectors who still own 14% of the total number of CryptoPunks to date.

Top 5 CryptoPunks Collectors

However, over time, the transaction evolution of different types of NFT collectors also shows that the transactions of "Legendary NFT Collectors" account for a large part of the total transaction volume proportion is getting smaller and smaller. (As far as ERC721 token transactions are concerned, legendary collectors mean the top 0.1% of collectors)

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Changes in the type of NFT collectors buying CryptoPunks over time

In fact, While collections were initially concentrated in the hands of whales, the number of CryptoPunks holders has been increasing over time, suggesting a more decentralized and healthier distribution of collections. There are now approximately 3,000 CryptoPunks holders.

As time goes by, Change in Total Number of Unique Addresses Owning CryptoPunks

Among these new entrants are high net worth individuals, investors, celebrities and industry opinion leaders. We can expect them to be motivated by the prospect of short/long term profitability, as well as the social currency attributes of CryptoPunks.

Two other trends are also evident. NFTs are gaining more attention from institutional investors, as evidenced by credit card giant Visa’s purchase of Punk 7610 last week. In addition, with the emergence of the NFT fragmentation mechanism, a new group of market participants has been unlocked. The fragmentation mechanism allows multiple people to jointly own an NFT.

The growth of the overall NFT market has enhanced Cryptopunks’ status as a pioneer of its kind

With the success of other NFT collectibles, such as Autoglyphs, Bored Ape Yacht Club  and ArtBlocks, and the return of everything in this field, it will eventually be traced back to CryptoPunks, which will appreciate in value as the overall market develops.

As the NFT space matures and merges with the Metaverse, VR and AR, CryptoPunks will become part of a larger market and gain practical use.

CryptoPunks are also increasingly spread in different media and industries, such as CryptoPunks comics, CryptoPunks inspired clothes. Some members of the Flamingo DAO even created a 3D rendering of their Punk to store in the metaverse, and Larva Labs signed an agency deal with the Hollywood agency United Talent Agency, which means that tamen will soon appear in movies, television and other media. This cross-pollination will make CryptoPunks even more popular. The collision of increasing interest and scarcity will promote the appreciation of CryptoPunks.

CryptoPunks will inevitably become a value storage tool

Since there will only be one OG NFT project, CryptoPunks will remain unique and will become a social currency within the NFT space. As the NFT space matures and new market players seek to acquire CryptoPunks, demand for this collection of collectibles will grow. When this increased demand encounters a cap of only 10,000 CryptoPunks, CryptoPunks will appreciate in value. Punks will become a store of value over time, and will undoubtedly be the most resilient to value as the NFT market enters a bear market.

Conclusion

In summary, the extraordinary growth in the value of CryptoPunks can be explained by fundamental drivers, For example, their value narrative as the first NFT project in history, their scarcity and social currency status. The aforementioned elements will continue to push the value of CryptoPunks to even greater heights. While we can expect the price of CryptoPunks to fluctuate in the short term as the crypto space ebbs and flows, in the long run the value of CryptoPunks will only go in one direction. CryptoPunks will remain one of the most established collections of blue-chip NFTs.

This is just the beginning. The NFT space is here to stay, and CryptoPunks will always be seen as the origin of NFTs, gaining more value over time. While the value of the series has grown tremendously, Punks are likely to be worth even more by 2025.

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