Understanding Why CryptoPunks Lost to BAYC: From the Perspective of the "V1 Punks Controversy"
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Understanding Why CryptoPunks Lost to BAYC: From the Perspective of the "V1 Punks Controversy"
Judging from the current situation, CryptoPunks seems to be on the decline, while BAYC has taken a completely different path—creating a "ape collection" that anyone can relate to, and it is precisely this form of expression that sets BAYC apart.
Navigating Web3 tides with focused insights
Author: Andrew Hayward
Translation: Moni, Odaily Planet Daily
For many in the NFT community, CryptoPunks—the avatar-style NFTs launched by Larva Labs—are seen as the gold standard of Ethereum-based profile picture NFTs. Numerous celebrities on Twitter have adopted CryptoPunks as their digital identity, and market momentum has driven sales volumes higher and higher.
However, recent events have somewhat dimmed the shine of CryptoPunks, prompting Larva Labs to reevaluate some of its own actions. As the creators of CryptoPunks, Larva Labs discovered a minor flaw in the original smart contract when they first released the NFT series in 2017. As a result, they deprecated the initial version and reissued the collection under a new contract. The V2 contract successfully launched CryptoPunks into the crypto asset market, achieving massive success—total trading volume for the series has now surpassed $2 billion.
Yet some of these early "V1 CryptoPunks" NFTs were later "wrapped" via community-driven smart contracts and reissued as ERC-721 Ethereum tokens, each with a distinct background color compared to the standard Punks. In recent years, as market interest and prices surged, these vintage NFTs have begun to be sold as historical artifacts.
The V1 Punks website states:
“The return of the early version of the Punks smart contract was driven by a rapidly evolving community, including early recipients of the Punk airdrop, early adopters of the NFT industry, and some exceptionally talented developers.”
But recently, Larva Labs has taken steps to suggest that V1 Punks NFTs are not “authentic” CryptoPunks. On January 25, 2022, Larva Labs tweeted officially:
“‘V1 Punks’ are not official Cryptopunks. Although we hold 1,000 of them… we don’t want them. So the community can judge for themselves what’s good or bad. We believe any proceeds should go toward buying real Cryptopunks!”
What upset the community, however, was that the Larva Labs team had personally sold dozens of V1 Punks, profited from them, and then turned around to claim these NFTs shouldn't be considered legitimate CryptoPunks. To quell the backlash, Matt Hall, co-founder of Larva Labs, issued an official apology on Wednesday (February 2), calling the sale “foolish” and “wrong.”
On selling the V1 CryptoPunks, Matt Hall said:
“We shouldn’t have profited from this deprecated contract. We thought that by making our stance clear and selling some tokens, others might follow suit. But it turned out to be a terrible decision. We deeply regret it and apologize to the community.”
Matt Hall revealed that Larva Labs earned 210 ETH (approximately $622,000) from the V1 Punk sales, using part of those funds to purchase standard (V2) CryptoPunks. Moving forward, the team plans to use the remaining funds to repurchase additional CryptoPunks NFTs and will donate 210 ETH to the Rainforest Foundation.
Matt Hall added:
“Before we made this foolish move, we had been doing everything right with the CryptoPunks project. Now we’ve learned a painful lesson, and we hope this donation helps make amends.”
Will Larva Labs’ Countermove Work?
One detail in Larva Labs’ statement drew attention: Matt Hall hinted that the company might take legal action against projects wrapping V1 CryptoPunks.
“Initially, we didn’t pursue the V1 project over artwork or IP infringement because we didn’t want to give V1 Punks extra attention. But now many CryptoPunks owners are urging us to act, and we agree. Don’t confuse the legitimacy of the ‘V1 Punks’ project—it has no right to use the CryptoPunks name. We’ll take appropriate measures in the coming days.”
It remains unclear what form this action might take. For example, Larva Labs could issue DMCA (Digital Millennium Copyright Act) takedown requests to NFT marketplaces like OpenSea and LooksRare, demanding removal of related NFTs. They might also warn websites facilitating V1 Punk trades, marketplaces for V1 Punks, or platforms hosting the wrapping smart contracts.
As of now, Larva Labs has not provided a clear public response.
Ironically, Matt Hall’s move—especially after Larva Labs itself sold wrapped V1 CryptoPunks—has drawn fierce criticism from holders. Some see it as anti-community, anti-blockchain, and anti-decentralization. This has brought other controversies surrounding CryptoPunks to light.
Collector DCinvestor wrote on Twitter: “I’ve never seen a team mishandle a project like Larva Labs has with CryptoPunks. The IP value is high, but they’re ruining it. At this point, I think they should either transfer personal IP rights to the ‘official’ CryptoPunks NFT holders, or learn from BAYC and launch derivative projects like Mutant Apes. Otherwise, Larva Labs will only make things messier, potentially destroying the NFT’s value entirely.”
Another prominent NFT collector, Anonymoux, shared his view on Twitter, stating that after reading Larva Labs’ statement, he decided to sell his Punk and shift focus to other projects due to growing anxiety:
“Time to sell Punk #2311. If a company’s executives constantly create chaos, I wouldn’t hold its stock—same goes for CryptoPunks. I’m done following this project, though I’m grateful for the role Punks played in my NFT journey.”
Do V1 CryptoPunks Still Have Value?
Frankly, Larva Labs’ next steps regarding wrapped V1 CryptoPunks remain uncertain. However, V1 NFTs are still available for purchase—and some collectors are betting on their future potential.
On Wednesday (February 2), NFT investment fund Meta4 Capital announced it purchased two V1 CryptoPunks—one for 1,000 ETH (about $2.8 million) and another for 200 ETH (around $556,000). Meta4 Capital stated on Twitter that the prices reflect the “true” value of V1 CryptoPunks at roughly one-quarter of V2 CryptoPunks’ value.
Brandon Buchanan, managing partner at Meta4 Capital, expressed respect for Larva Labs and its co-founders Matt Hall and John Watkinson in protecting IP and overseeing the CryptoPunks ecosystem. Yet he noted that as an emerging asset class, most NFT rules and standards were established without deep consideration. Despite rapid innovation, the space still faces significant challenges.
Nonetheless, Buchanan doesn’t believe NFT creators should focus on “appealing to the masses,” leaving the market to decide which collections succeed. He urged Larva Labs to focus on creating value for NFT holders and listening to the community: “Once Larva Labs and its NFT holders are fully aligned, I believe CryptoPunks can unlock even greater value.”
Meta4 Capital argued on Twitter that flawed versions of NFT products can still thrive in secondary markets. Fundamentally, V1 Punks are based on code deployed by Larva Labs onto an immutable blockchain platform—meaning they aren’t counterfeits, even if Larva Labs disapproves of their revival. Buchanan advised:
“This isn’t really a copyright issue, as Larva Labs attempts to regulate the V1 Punk secondary market and reclaim distributed assets. Many misprinted collectibles—like stamps or comic books—have recall histories, yet they still trade in secondary markets, sometimes at higher values. We should view V1 Punks the same way. In fact, I think this is an exciting opportunity for Larva Labs—history and provenance should be embraced, not rejected.”
Matt Sanders (aka M.Shadows), lead singer of heavy metal band Avenged Sevenfold and creator of the Deathbats Club NFT series, shares a similar view. He believes both V1 and V2 CryptoPunks “hold value in their own ways.” Like Meta4 Capital, he owns both versions.
Sanders sees V1 Punks as artistic demos—offering historical context and narrative depth. Some fans or collectors may find the V1 or “demo” versions more meaningful. Still, as a creator himself, he suggests respecting Larva Labs’ definition of what constitutes a “real CryptoPunk.”
Sanders concluded:
“Most collectors will prefer the V2 ‘official version,’ but some may favor collecting V1 Punks. The distinction matters—V1 Punks reflect the creators’ original intent and thus deserve recognition.”
Is CryptoPunks Fizzling Out?
The NFT community has largely reacted negatively to Larva Labs’ official statement, and the negative sentiment continues to grow. As the NFT space evolves, the community expects Larva Labs to deliver utility to holders—but there’s growing uncertainty about what the future holds.
In recent months, some CryptoPunks holders have voiced complaints, expressing confusion about how to monetize their images. Larva Labs’ hands-off approach has drawn increasing criticism—especially when contrasted with today’s popular profile picture (PFP) NFT projects.
Meanwhile, another major player in the NFT space—Bored Ape Yacht Club (BAYC)—has advanced rapidly, highlighting stark differences between the two projects.
Bored Ape holders can use their images for any purpose—including merchandise, the metaverse, and branding. Additionally, Yuga Labs offers holders perks such as free additional NFTs, exclusive merchandise, and special event access. BAYC functions like a privileged private club while also serving as a public-facing social media avatar. The Bored Ape NFT series directly references pop culture—from Magnum PI’s Hawaiian shirts to togas and other historical fashion, to rainbow suspenders favored by LGBTQ+ teams—blending punk rock and 1990s hip-hop influences.
Recently, a wave of celebrities has joined the Bored Ape ranks, significantly boosting the project’s mainstream visibility—and predictably, Bored Ape NFT prices have soared. In December 2021, Bored Apes’ floor price (the cheapest NFT in the collection) surpassed that of CryptoPunks for the first time, and the gap continues to widen.
At the time of writing, Bored Ape’s floor price exceeds 100 ETH ($294,000), while CryptoPunks’ stands at 69 ETH ($203,000). According to CryptoSlam data, despite broader market growth from December 2020 to January 2021, CryptoPunks’ trading volume dropped by 28%.
Also in December 2021, renowned NFT collector and co-creator of the Nouns project, Punk 4156, sold his CryptoPunk for $10.26 million. He cited frustration with Larva Labs’ handling of intellectual property as his reason for exiting the project.
Currently, CryptoPunks appears to be on a downward trend, while BAYC has taken a completely different path—building a community where anyone can find their place among the apes. It’s precisely this inclusive expression that sets BAYC apart. Undeniably, communities make or break NFT projects. Going against community sentiment often leads to failure. While CryptoPunks’ apology may temporarily ease tensions, reversing the decline requires genuinely creating value for NFT holders and listening to the community.
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