The CryptoPunks Evolution

The story behind CryptoPunks is truly a source of inspiration when it comes to the foundations of Non-Fungible Tokens on Ethereum. Firstly CryptoPunks’ very design was disruptive in its conception as it was in stark contrast to what had been achieved on any blockchain in 2017.

Before the ICO or CryptoKitties craze began, the Larvalabs team managed to create 10,000 tokens using the ERC-20 standard. Each Punk represented a pixel art image generated by artificial intelligence.

Lavalabs choosing to use the ERC-20 standard was a surprise as this standard was not suitable for such a diverse distribution. With a few more months of waiting, the ERC-721 would have served them much more efficiently in terms of distribution and yet all it took was for the Larvalabs team to announce their tokens would be given to anyone with a compatible Ethereum wallet and all the CryptoPunks were claimed within days.

Who would have thought that more than three years later and this experimental project would generate a volume of more than $3 million for all sales and continue to attract hundreds of new collectors? 

What were the trends that carried CryptoPunks during these years?

2017: The Launch

It is May 2017 and the Larvalabs team announce to the Crypto community that they will be giving away 10,000 tokens for free and all of them are one of a kind. It only took a few hours for the registration for distribution to be complete.

CryptoPunks were donated to claimants and then resold between owners. This means that during the early days of NFT markets, the “proto-age” S2 2017, actually originated within a secondary market and not a primary market.

At that time, Opensea did not exist and the only way to exchange CryptoPunks was through the Larvalabs marketplace on their site. This was the case up until 2020 but also another constraint was present: there was no web browser wallet plugin easily compatible with Web3 applications.

Even so, the launch of CryptoPunks quickly experienced a craze during the first few weeks which soon ran out of steam from August. The reason for this lies in the lack of new collectors despite the high volume of trade.

Out of 10,000 NFTs only 720 of them were sold to 28 new collectors during the last 6 months of 2017.

Also, it’s important to note that a huge quantity of CryptoPunks were kept in a safe place during the Ethereum surge at $1200, possibly due to the high network charges at that time but also due to a new competitor with a more modern design: CryptoKitties.

2018 – 2019: The Sense of Value

With a high start to the year in 2018 and then following on for the rest of the year with lower prices, it takes until 2019 for collectors to pull out from this gloomy period and show renewed interest in the potential of CryptoPunks.

Unlike CryptoKitties which can be generated ad infinitum, the fixed quantity of CryptoPunks begs the question of the scarcity of a digital artwork on the blockchain in the NFT ecosystem. Whether generated by an AI or a human, the blockchain proves the authenticity of a digital creation in a tamper-proof way.

This signature is one of the central criteria of the value of a blockchain work and thanks to the arrival of SuperRare and other art based marketplaces, many artists have been able to grow in this market and in the process bring it to the attention of a wider audience.

So why was there such little volume during 2018-2019? Probably because many other NFTs projects appeared on Ethereum!

The owners of NFTs took an interest and interacted with these new projects …letting their Punks sleep or refusing to sell them.

2020: Adaptation

At the same time, the more the Crypto Art market developed, the more the very nature of CryptoPunks naturally made them become even more rare. The proliferation of artistic NFTs only served to increase the value of Punks as they are the Ethereum pioneers of such projects.

2019 was the year of the birth of Crypto Art and with an entire family of NFTs growing, the real public interest began towards the end of this year, only continuing to grow exponentially throughout 2020.

It was from April that USD volumes started to regain colour again, but as with all other projects during this year, the exorbitant Summer Ethereum gas fees calmed potential buyers’ appetite immensely.

Even so, sales for the first 6 months of the year were enough to generate $477,958 which is more than the first three years of CryptoPunks combined.

As for collectors and especially new Punks purchased, there too the number exploded during the first 6 months of the year: 82 new collectors joined the ranks of 110 historical “secondary” owners of CryptoPunks. Seemingly these newcomers were more curious than the old ones or at least had more resources!

Indeed, in June 2020, 594 never before sold Punks are to change owners and find a place in a new wallet.

It was during the start of the school year and the global craze around NFTs that arose after the “DeFI Degens” that arguably explains why September will mark a new record in CryptoPunks history: September alone generated $1M in total sales and 651 punks have been shared among 138 new collectors.

From January 1 to November 30, 2020, the global sale of CryptoPunks will have generated $2,742,983, attracted 360 new collectors and 1,645 punks changed ownership for the first time in their existence.

The CryptoPunks evolution is rising

In a single year, the historic Larvalabs project managed to surpass the performance of the previous three years: +700% in terms of USD volume, +300% new users and -0.9% new Punks sold.

To put these figures into perspective it’s important to remember: a total of 3,447 punks found the initial estimate of their value as determined by 1,645 collectors who negotiated with the historical owners of the airdrop. Through their original nature and unique technological dimension, the first owners have naturally developed an attachment to their Punks over time.

This means that there are still a little over 6,500 jealously guarded punks from May 2017 who still haven’t found a price estimate. Their low liquidity combined with their seniority makes CryptoPunks an asset class to watch very closely in the coming years.

The current market is only an emerging part and the eventual return to market of the rest of the supply of Punks and could well hold some big surprises! 

The race for the rarest CryptoPunks is on, but what will be the most valuable criteria?