Exploring altcoin NFT to Bitcoin Ordinal Reproductions
Two very different ways of collection cloning, both guided by strong market forces
As discussed in last Thursday’s market roundup, altcoin NFT collections sent into the cloning vat to emerge as Bitcoin Ordinal reproductions are proving to be extremely popular! We might even say begun, the clone wars have. Indeed, reproductions now comprise the majority of the leading Ordinal collections, as measured by trading volume or floor price. As such, it’s important to understand these “clones” and the complex factors which drive their creation, community cohesion, and perceived value.
The top two collections by trading volume at the time of writing are both altcoin to Bitcoin reproductions:
Data courtesy of Best in Slot.
Apart from their obvious differences in subject matter, supply, and market stats, these two collections have a fundamental difference which goes unmentioned in the data – yet is a key factor in the assessment of any cloned collection. That key difference is that Bitcoin Apes was recreated by its community and DeGods was recreated by its original founders. This leads us to define the 2 main clone categories:
- Proprietary: the originator of the NFT collection, whether an individual, team, or company, clones it to Ordinals. Sometimes the new Bitcoin version is modified but it remains recognizably similar to the original. The founder generally inscribes all units in the collection then lists them for sale in the Ordinals secondary market. This is similar to traditional business models, for example a film studio which releases its movie on DVD then later releases a Blu-Ray version.
- Decentralized: the community takes matters into their own hands and clones the collection onto Ordinals themselves. This is usually done by uploading copies of the original artwork to an inscription service (like InscribeNow.io with its Mint feature, OrdinalsBot with its Launchpad, or Gamma.io‘s Minting Now). Prospective inscribers are able to claim as many units of the collection as they can afford. Sometimes inscribers can select the specific piece they want, as in the case of the current Nakamigo minting process, but often it’s assigned to them at random. This process is more like torrenting the above film studio’s movie.
DeGods had already hopped from Solana to Ethereum so its arrival on Bitcoin was not entirely surprising. Most likely, the DeGods team had been planning the move since the Ordinals space proved itself. Furthermore, the DeGods team was uniquely well-positioned to act, given that three of its members hold executive positions at the leading Bitcoin Ordinals marketplace by volume, Magic Eden:
Chart art for chart art’s sake; Ordinals marketplace volume share courtesy of Dune and @domo.
As for the Apes, they were originally created (as the “Bored Ape Yacht Club,” or “BAYC” for short) by the world’s leading NFT company, Yuga Labs. However, it seems Yuga wasn’t as prepared for the new Ordinals space as the DeGods team, with the natural result that Apes fans within the Ordinals community got impatient and “copied their homework.” It’s also possible that Yuga had their own reasons for not Bit-cloning their famous simians. Yuga has a lot going on with their various NFT projects, games, and crossovers, and perhaps didn’t want to introduce another ball to that juggling act.
Why Clone at All?
Let’s back up a step, and address why anyone would want to clone Ethereum or any other chain’s NFTs onto Bitcoin in the first place.
While the energy expended on Bitcoin mining does make all the polar bears stranded on rapidly-melting chunks of ice sad, it has the side-effect of making Bitcoin the world’s most secure blockchain. Combine that with Ordinals’ no-nonsense approach to Non-Fungible Tokens, which is to permanently embed them into that robust blockchain thereby making them truly Non-Fungible, and you have an attractive value proposition for digital asset collectors.
To explain further; most altcoin NFTs don’t get their data written directly into their respective (made-from-recycled-materials) blockchains. Instead, only a marker leading to that data is added into the chain. Usually the data itself is stored on some third-party, centralized site and thus is subject to tampering or deletion. As one Ape fan put it, “when you buy the ETH collection, you’re just buying a URL.”
The controversy over introducing royalty payments within NFT trading also created some anxiety that familiar NFT systems may be altered against user interests.
Comparing the Centralized and Decentralized methods
While the Centralized and Decentralized methods both have their pros and cons, the Decentralized route is by the far most popular method. It’s not hard to see why most users prefer it, as it’s the cheapest and fastest way to acquire Bitcoin Ordinals reproductions. For example, if Yuga had re-issued the Apes on Bitcoin, it would likely have taken them months of planning.
Perhaps more importantly, Yuga’s Ordinal version would have sold at a much higher price than the inscription cost of Bitcoin Apes. Consider that the current floor price for BAYC is 60 ETH (~$115,560 at the time of writing), about 240 times the Bitcoin Ape floor price of 0.01627 BTC (~$490). Even with the high network fees caused by the rush to inscribe Apes, the inscription price for the Bitcoin Ordinals reproduction was likely well below that $490 floor price. While BAYC’s high floor price is great for the portfolio of its early collectors, it does price out a lot of would-be art hodlers. Given the collection’s fame, it’s understandable that there was a virtual stampede to mint a Bitcoin Ordinals reproduction at low cost.
Speaking of that rush, the following numbers tell the tale:
The way the Decentralized process was handled, all 10,000 Apes were made available for inscription at once. Pretty soon, it became a race to inscribe them while supply lasted. That race crammed Bitcoin blocks with Apes data and so pushed up mining fees. If Yuga had handled the minting process, they could have controlled distribution in a more responsible way which had less impact on the wider network. Slower distribution would also have allowed for wider participation, as many NFT collectors aren’t up to speed on Ordinals yet. It can be hoped (though not really expected) that future Decentralized mints of popular collections will stagger the process to minimize network impacts.
Another relevant point is that for a founder with less money than Yuga but a BAYC-like collection, containing a huge number of high file-size pieces, it could make more sense to let the community carry the inscription cost. The company will miss sales profits but also the risk of sinking money into a collection which doesn’t sell. A Decentralized clone may also benefit a founder by providing free publicity, expanding their audience, and opening possibilities for collaboration.
Something else to keep in mind when weighing the pros and cons of the 2 methods is that, while Decentralized clones may be much cheaper, you really just get a copy – and sometimes not even a perfect one – of the original data. All the glitzy features offered by Yuga, a multimedia – or to update the buzzword, “metaverse” or “web3” – behemoth, aren’t expected from the Bitcoin Apes community. Sure, they’ll probably do some fun things but certainly not with the same production values.
Some of the Bitcoin Apes fans I spoke to said they’re happy Yuga didn’t handle the release, as official Yuga Bitcoin Apes would have led to something akin to share dilution of their NFT Apes. I remain skeptical of this claim, as distinct assets on separate chains aren’t really comparable to fungible shares in a single company. Furthermore, the BAYC price is holding up, as did the DeGods NFT asset on Solana:
DeGods’ price on Solana with Bitcoin Ordinals reproduction date marked by line.
On the Ethereum side, DeGods is holding steady. Chart courtesy of CoinGecko.
The Bitcoin DeGods collection currently has a floor price of 0.885 BTC, or $26,389. On the Ethereum side, its floor price is 9.44 ETH, or $18,150, a couple hundred bucks more than its last traded price on Solana. Its very interesting that the Bitcoin version has flipped the Ethereum version, given that both are new clones of the Solana-based original. This points to a bright future for Ordinals, whereby the questions for any popular NFT collection are when (not if) they’ll get cloned to Bitcoin and whether that will happen in a Proprietary or Decentralized way.
Full Disclosure: the author holds no financial stake in any products or services mentioned above.