y00ts Ethereum Migration | July 12, 2023
Thesis: We believe y00ts are likely to make a strategic decision to migrate to Ethereum given low transaction volume and lack of traction on Polygon.
This migration would push the price of y00ts up significantly for similar reasons as the price of DeGods increased when they migrated to Ethereum.
Frank (DeGods & y00ts founder) has repeatedly said his plan is to make DeGods the #1 collection in the world and y00ts the #2 collection in the world.
Realistically, being the #2 collection in the world is not likely to happen on Polygon, where NFT trade volume is 15 times lower than trade volume on Ethereum.
Polygon has less volume, fewer wallets that can afford an expensive pfp, and less overall liquidity.
Furthermore, there is a lot of onboarding friction in that users must bridge ETH over to Polygon, which can take an hour at a time. With Polygon having such a small NFT scene, there is less clout in owning a Polygon NFT making y00ts a harder product to sell on Polygon.
Frank has also recently said he believes in building for web3 users, not web2 users, quoting the Goblintown “Only Up” game as an example of why web2 virality does not equate to floor price going up.
Only Up is a video game with Goblintown (an NFT collection) branding all over it. Despite the game being streamed for weeks by the largest streamers in the world, Goblintown’s floor price did not react positively as viewers were interested in the game, not an NFT collection.
One of the biggest benefits to moving to Polygon was the potential for large web2 partnerships. We have yet to see any of these partnerships manifest, and as Frank has made clear, marketing to web2 users is not a winning strategy.
Perhaps the biggest evidence for y00ts moving to Ethereum is an easter egg found on the DeLabs website where they said y00ts are “thinking about making a new move.”
A “new move” could mean a multitude of things, but it would certainly fit the idea of moving to Ethereum.
Additional points to consider:
- DeLabs can move y00ts wherever they want. They are not contractually required to stay on Polygon.
- With the SEC calling MATIC a security, Frank has an excuse to move from Polygon.
- y00ts moving to Ethereum would reduce the royalty from 3.33% to 0.5% (Blur caps royalties at 0.5%), which is bad for floor price. This would further help floor price increase.
- Having y00ts on Polygon (where DUST is required to (stake/unstake) fractures the liquidity for DUST, which has not developed a very liquid market on Polygon yet, and adds no benefit to DUST. Moving y00ts to Ethereum is net positive for DUST, another reason for them to move.
- Frank, Kevin, and the DeLabs team strive to provide users with low friction “pleasant user experiences”. The friction created from being on Polygon and needing to bridge funds is not a pleasant user experience.
- Frank has a history of scrapping plans completely and pivoting aggressively towards what he believes the market will respond positively to.
- The move from Polygon → Ethereum would potentially have a larger effect on y00ts price than the DeGods move from Solana → Ethereum as Ethereum trade volume is 15x higher than Polygon’s and only 5x higher than Solana’s.
- Timing wise, most speculation is occurring on DeGods due to the Season 3 rollout in July. y00ts are being somewhat ignored. For the patient, this may be a solid entry opportunity.
- The actual migration of y00ts to Ethereum would be simple and easy in comparison to the Solana migration, since Polygon is already an EVM compatible chain and the team has already done a successful migration to Ethereum.
In short, we feel the risk/reward for speculating on a y00ts move to Ethereum is asymmetric to the upside.
At worst, y00ts stay on Polygon and there is likely some positive price action due to speculation around y00ts Season 2, points utility, and an art upgrade.
At best, y00ts announce a migration to Ethereum and price responds positively for the reasons discussed above. We do not think it’s unreasonable to expect a floor price of 3+ ETH should y00ts move to Ethereum, with potential to go higher depending on DeGods Season 3 performance and y00ts Season 2 speculation.
Official Links:
Buy y00ts on OpenSea: https://opensea.io/collection/y00ts
Buy y00ts on MagicEden: https://magiceden.io/collections/polygon/y00ts
Stake y00ts for points (highly recommended): https://www.y00ts.com/