What is ApeCoin?
Launched in March 2022, ApeCoin (APE) is a governance and utility token used within the APE ecosystem to empower decentralized community building. ApeCoin is intended to be used as a governance token for voting on proposals to the ApeCoin DAO (Decentralized Autonomous Organization), as a shared currency within the APE ecosystem, as a means of exclusive access to parts of the APE ecosystem, such as a games, merchandise and services, and as a tool that third parties can integrate into services, games or other projects to participate in the APE ecosystem.
ApeCoin is associated with the Bored Apes Yacht Club (BAYC) non-fungible tokens (NFTs). Yuga Labs, the creator of BAYC, and Yuga Labs’ founders received APE tokens when APE was first launched and are therefore members of the ApeCoin DAO. Yuga Labs has adopted APE as the primary token for BAYC projects. Holders of BAYC NFTs also received APE tokens as part of an airdrop when APE was first launched.
ApeCoin was launched and is governed by the ApeCoin DAO, which can field proposals from the ApeCoin community. Only APE token holders are members of the ApeCoin DAO and can vote on proposals. Any decisions made by the DAO are administered by the APE Foundation, which is responsible for the day-to-day administration, bookkeeping and project management of any ApeCoin community proposals. The ApeCoin DAO can elect members of a special council of the APE Foundation, referred to as the DAO’s Board, to oversee the Foundation’s administrators.
On the technical side, ApeCoin is an ERC-20 governance token that operates on the Ethereum (ETH) blockchain. The total supply of APE is fixed at 1 billion tokens. APE’s ERC-20 contract will not allow minting beyond this number, and so this supply should never increase. Moreover, there is also no burning capability, so the supply won’t decrease either.
Unlike the BAYC NFTs, APE tokens are meant to be “fungible” – as with Bitcoin (BTC) or Ethereum (ETH), any one ApeCoin will be worth exactly as much as any other ApeCoin, and you can buy, sell, and trade them freely on any centralized or decentralized exchange that supports the token.
How does ApeCoin compare to Bitcoin?
ApeCoin differs from Bitcoin in a few important ways.
First, Bitcoin is a “coin” and ApeCoin is a “token.” That is because Bitcoin powers the Bitcoin blockchain, and it is mined by a decentralized network of computers that solve complicated maths puzzles to verify transactions. By contrast, APE is a token that runs on the Ethereum blockchain. On Ethereum, ETH is the only coin that can be mined. And miners mine ETH to process ApeCoin transactions. It is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain.
Being an ERC-20 token has perks. Blockchains aren’t great at speaking to each other—you can’t get an Ethereum contract to work with a Bitcoin smart contract without some complicated engineering. However, it’s very easy for ERC-20 tokens to speak to one another, which means that APE can be used in most other decentralized finance applications.
Secondly, the ApeCoin DAO model leaves the future of the token in the hands of its community. ApeCoin holders can vote on ApeCoin Improvement Proposals (AIPs), which may seek to add functionality or features to the ApeCoin token, or to apply ecosystem funds to real-world applications (e.g. hosting an ApeCoin event). The APE Foundation, a separate entity from the DAO, will be responsible for the administration of any decisions made by the ApeCoin DAO.
Thirdly, unlike Bitcoin, APE is a governance and utility token. While, like Bitcoin, APE can be used as a means of payment or a store of value, its market price may be very volatile and so it may not be useful for payments or storing value. The price of APE may be significantly affected by public sentiment, among other factors. For example, the price of SHIB, a meme coin, declined significantly when Vitalik Buterin gave away or destroyed most of his holdings of SHIB in May 2021. The price also declined when the billionaire Elon Musk suggested in October 2021 that he did not own any. APE could be subject to similar public influence in the future.
Finally, APE’s market capitalization is smaller than Bitcoin’s. As of March 2022, APE’s market capitalization was estimated to be $3.8 billion, as compared to Bitcoin’s market capitalization of $800 billion.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about APE, including an opinion that APE is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of APE prior to making it available on Wealthsimple Crypto and has concluded that APE is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated APE based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of APE, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created ApeCoin;
- The supply, demand, maturity, utility and liquidity of APE;
- Material technical risks associated with APE, including any code defects, security breaches and other threats concerning APE and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with APE, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of APE.
Like all other crypto assets, there are some general risks to investing in APE. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure.
In addition to these general risks, APE presents elevated short history risk (having launched March 17th, 2022) and other unique risks, notably potential significant volatility given its vulnerability to public sentiment, short market history, and reliance on the activity of other projects like the demand for NFTs. APE may also be subject to other risks, including regulatory risks, due to the limited adoption of its intended utility to date and the project’s potential dependency on its association with Yuga Labs and the BAYC intellectual property. Further, the ApeCoin community, ApeCoin Foundation, or Yuga Labs are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of APE have no recourse to ApeCoin, the APE Foundation, Yuga Labs, or Wealthsimple if APE declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading APE. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.