What the Phunk are cryptoPhunks?
Anyone who’s heard of NFTs knows what CryptoPunks are, but far fewer have heard of CryptoPhunks. What exactly are CryptoPhunks?
CryptoPhunks are an NFT collection featuring the iconic imagery of the CryptoPunks, with one key difference: they have been “hand-flipped” over the vertical axis. Besides the fact that they face to the left instead of the right, they are otherwise aesthetically identical to CryptoPunks. Each of the 10,000 “Phunks” corresponds to a CryptoPunk counterpart.
CryptoPhunks were created as a blatant parody project of CryptoPunks. The creators of the Phunks aimed to poke fun at those in the NFT community who were applying old-school art world rules to the emerging NFT space. However, much has happened since the mint in June 2021, and the founding team that created the original contract abandoned the project in July.
So, what exactly went down with the Phunks?
Phunks vs. OpenSea and Larva Labs
First, the initial CryptoPhunks mint occurred on June 14th, 2021 on the original cryptophunks.com website.
Then, a week later on June 21, OpenSea delisted the Phunks, then relisted them on the 24th, only to once again delist them on the 29th.
Soon after on June 31st, Larva Labs submitted a DMCA complaint against the Phunks. This event was a turning point in the Phunks’ history, bringing attention to their apparent censorship by OpenSea. While some argued that the Phunks were a cheap ripoff of Punks, others argued that DMCA takedowns and the power of centralized platforms like OpenSea contradicted the values of NFTs and decentralization.
After the Phunks team complied with OpenSea’s changes to be relisted, OpenSea relisted the Phunks on July 3. However, just 10 days later, the Phunks were once again – you guessed it – delisted from OpenSea. Only this time, OpenSea received a DMCA complaint letter from the General Counsel of Larva Labs.
founders step down, community steps up
In response to the pressure from Larva Labs, the original team behind the Phunks stepped down. In a final act of defiance, the team published a letter to Larva Labs on the original cryptophunks.com site.
With the founders gone, the future of the Phunks seemed to be in limbo. However, in early November, the Phunks community launched NotLarvaLabs, a royalty-free marketplace for Phunks free of OpenSea’s control.
Besides the functional importance of having a marketplace, the launch of NotLarvaLabs was a critical milestone. Even though the original devs abandoned the project, the Phunks community stepped up as a united front and kept the Phunks alive.
Since the launch of NotLarvaLabs, Phunk transaction volume has exploded (see @PhunkBot for all Phunk sales), and the Phunk floor price has skyrocketed to ~1.4Ξ at the time of writing.
But what does this recent success for the Phunks mean for OpenSea?
The Centralized Overlords of nFTs
The launch of NotLarvaLabs marked a successful departure from OpenSea’s monopoly on NFT transactions. For all the talk of NFTs and blockchains eliminating rent-seeking middlemen, OpenSea is the ultimate rent-seeker in the NFT space, taking a 2.5% cut of the rapidly increasing transaction volume on its platform.
However, the role of OpenSea as a centralized giant in Web3 has been drawn into question, driven by a series of operational blunders and fiascos. First, product head Nate Chastain stepped down after Crypto Twitter users discovered he was conducting insider trading and front-running users. More recently, OpenSea delisted Clown Hashmasks named after Citibank, leading some to suspect a conflict of interest related to OpenSea’s rumored upcoming IPO.
the flippening: will phunks flip punks?
Moreover, those who criticized Larva Labs for attempting to censor the Phunks have found their views validated in recent weeks. Punk 4156, one of the most influential Punk holders, publicly auctioned his iconic ape Punk. He cited disillusionment with Larva Labs for being unwilling to embrace CC0.
More recently, Cozomo de’ Medici – another one of the most influential names in the NFT space – announced he too would sell his Punk.
Finally, in a twist of irony, Larva Labs took a page out of the Phunks’ book. They recently announced an open-source, decentralized, zero-fee CryptoPunks market, similar to NotLarvaLabs.
What do all these events have in common with the unlikely success of CryptoPhunks? They highlight the NFT community’s loyal adherence to the ethos of decentralization. The fact that Larva Labs tried so hard to suppress the Phunks only invigorated Phunk holders to stand firmer in support of the values of NFT ownership. Now, even Punk whales are starting to question whether Larva Labs and Punks embody the spirit and principles of NFTs and decentralization.
While I think it’s unlikely Phunks flippen Punks (although not impossible), Phunk saga encapsulates the current tension between Web2 control and Web3 decentralization. If decentralized Web3 platforms reach their disruptive potential, then centralized rent-seeking platforms like OpenSea must eventually go to zero.
If that happens, perhaps the emergence of CryptoPhunks will be seen in retrospect as a watershed moment in OpenSea’s downfall.
Disclosure: I don’t own any Phunks, although I almost pulled the trigger in November and have regretted not doing so. Furthermore, this article is absolutely not financial advice.