The punks are everywhere. An early artifact of crypto subculture gone viral. From advertising placards on the streets of New York City to the bougie halls of Christie’s Auction House it’s impossible to escape their 8-bit gaze. With the launch of Punks, a comic book developed by the incredible team at Pixel Vault, our pixelated friends take another giant step into the global mainstream.
If you’ve been following Beanie on Twitter these past few months you’ll have seen the teasers. Minting is now live at PunksComic.com and make no mistake it’s cool AF. The artwork, the content and the intellectual property are all A+. They have to be. Content is always king.
That said, the true genius of this project lies in the tokenomics and rewards. A 0.2E minting cost per comic is steep up front, but there are a number of things at play when looking at expected value. Lets start with the most obvious one.
The Comic
First things first: for your 0.2E you get the NFT comic limited to an edition of 10,000. Due to the burning mechanism (more on that anon) one can reasonably expect the realized supply to be quite a bit lower once the dust settles. In addition to the NFT, which acts as an entitlement to the PDF of the comic, you’ll also be able to redeem a physical printed version of the genesis edition. As a bonus, the first 5,000 mints also get the issue 2 NFT for free — a solid value add.
The physical copies will be shipped world wide (shipping is included in the mint cost) and it will come in a protective case with a certificate of authenticity. There is also a theoretical max supply of 10,000, though we can reasonable expect the realized supply to be much lower for the same reason mentioned previously. Regardless of where the final number ends up, even at maximum supply a 10k print run would be extremely small.
Finally minting a comic enters you into a lottery where 27 NFTs are given away to minters. The winning serial numbers will be generated on chain thus ensuring no shenanigans. The potential winnings include:
- 9/9 Hackatao
- 9/9 Robbie Trevino
- 9/9 Killer Acid
To recap: right away your 0.2E buys you the NFT of the genesis comic with entitlement to the PDF and the physical copy, potentially the second issue if you were within the first 5000 mints and enters you into the raffle for one of the NFTs listed above. Not bad.
Burning
As mentioned previously, the genesis comic also has some complex tokenomics and game theory. One side of the coin is burning. By burning the $COMIC token the holder forfeits the ability to redeem for a physical copy in exchange for 1 $PVFT — essentially a governance token for Pixel Vault, which should be DAO-like. Worth noting here that burning your $COMIC will not prevent you from claiming issue 2 for free. Every mint within the first 5k of the genesis comic will be able to redeem issue 2.
The number of $PVFT will be extremely limited as only the genesis issue will be burnable for the token. If every comic was burned there would be a max supply of 10,000. However its reasonable to assume there will be less than 10k $PVFTs in the wild. Also of interest, the core Pixel Vault team will not own any $PVFT without buying and burning $COMICs themselves.
Between the team burning a lot of $COMICs to cement ownership in the project and investors also wanting a piece of the pie it might be rational to picture a 6,500–7,500 $PVFT supply with some margin for error either side. With this sort of low volume investors should expect to get liquidity from their $PVFTs via direct sales similar to NFTs rather than through an AMM.
Looking at value capture for $PVFT, it should be derived from 2 main sources over time. The first source of value is the vault of rare NFTs including one of the “Lost Robbie’s”, plus 25% of the total supply of $PUNKS — fractionalized tokens representing the 16 CryptoPunks featured in the comic. The approximate value of this vault at inception will be approximately 600E.
The second main driver of $PVFT value will be the Punks intellectual property itself. As Beanie points out in the tweet above, the underlying goals of Pixel Vault are ambitious. If the IP they build around Punks generates the type of value and excitement investors believe it will that will be reflected in the value of $PVFT. All that said Marvel wasn’t built overnight and it’s success wasn’t linear. This is definitely a long term investment with a high risk profile but the upside is definitely there.
Staking
As an alternative to burning, holders can stake their $COMIC for $PUNKS. Fictionalized ownership of the 16 CryptoPunks featured in the the comic will be provided via Fractional. Using Fractional the 16 punks will be turned into 100,000,000 $PUNKS tokens. Currently these 16 punks are worth an estimated 1250E.
Fifty percent of this supply will be farmed over 24 months through staking $COMICs. If every $COMIC was staked for the entire 24 months each token would yield 10k PUNKS. Considering the high percentage of expected burns the yield here starts to look really juicy.
There are two final considerations for staking. First, the Pixel Vault team will be funneling profits from merchandise around the intellectual property to $PUNKS holders.
Finally, when staking you retain ownership of the underlying NFT and maintain exposure to the secondary market for the Punks genesis comic. If the price of the genesis issue on OpenSea goes up with the success of the project stakers stand the benefit.
Details are still being finalized for the contract but it seems like emissions will be linear and rewards will be distributed proportionally. Liquidity for the token will be set up on either UniSwap or SushiSwap, giving investors access to capital if they desire. With so many different facets staking is a great sidekick to burning, creating just the right amount of tension over choice.
Fin
Developing intellectual property around CryptoPunks is incredibly ambitious and potentially very lucrative. This ambition is matched by the thoughtful tokenomics and game theory of the genesis issue. With the first issue of Punks the Pixel Vault team has built one of the most novel and interesting projects around NFTs to date and has set the standard for projects that follow.
The unique selling point of an NFT comic with a physical copy combined with the choice between getting in on the ground floor of an exciting new media company or fractional ownership over 16 of the most sought after NFTs with a direct revenue stream makes this an exciting opportunity. Staking and burning are slated to start in July, so there’s time to mull over your optimal strategy. How investors navigate the tension between burn and stake when forming said strategy will be extremely interesting to see play out.
Much like Beanie here, I too am bullish.
Disclaimer: I own multiple $COMICs with the view that this is a long term investment. Do you own research, understand your risk tolerance and know your investment horizons. Not financial advise. Not every investment is for everyone.
