One Year On: Inside ApeChain’s Brief Rise and Slow Fall

ApeChain, the Yuga Labs-backed Layer 3 network built for the ApeCoin ecosystem, celebrated its first anniversary last month. After a brief rise in on-chain value and activity, ApeChain has been mostly in decline since its launch, while its native token ApeCoin (APE) has also struggled to regain its NFT-era highs.

When it launched at ApeFest in Hong Kong on Oct. 20 last year, the project promised a variety of features such as fast transactions, non-fungible token (NFT) staking, and multiple utility-cases for APE, which was launched two years prior to the network’s debut.

At first, the launch of ApeChain — which was initially proposed to the ApeCoin DAO by a team including leads at Horizen Labs, Arbitrum developer Offchain Labs, and the Arbitrum Foundation — sparked a surge in activity as the network was supported by “Banana Bill,” an initiative with over 100 million APE tokens aimed at incentivizing developers and apps.

And for a brief period of time, those efforts indeed paid off as the network saw a surge in total value locked (TVL), hitting a peak of $33.8 million in December 2024, according to data from DefiLlama.

But TVL has mostly been in steady decline since then, falling as low as $6.7 million at the time of writing — its lowest level ever, except for a brief drop in November of last year.

Also per DefiLlama, only three of the nearly 30 protocols on ApeChain are making any revenue, and two of them made less than $100 in the past 24 hours.

Since ApeChain’s native token APE launched, its price has also fallen over 95%, trading at $0.36 at press time, according to The Defiant’s price page.

Token Before Network

At its launch in March 2022, APE tokenomics included allocations to its DAO treasury and launch contributors, as well as scheduled unlock allocations for founders and Yuga Labs, which left meaningful supply earmarked well before the launch of ApeChain.

By the time the ApeChain network debuted last year, over 495 million APE tokens were already unlocked for the ApeCoin DAO’s Ecosystem Fund, while founders had 42.22 million APE, launch contributors 115.2 million, Yuga Labs 79.17 million APE, and the Jane Goodall Legacy Foundation a more modest 5.28 million and, according to DefiLlama.

For context, at that time, ApeCoin was priced around $0.87, giving it a market cap of $628.8 million.

But one year later, the APE price had dropped by over 50%, with market cap falling to around $325 million at the time of writing. Meanwhile, the amount of unlocked tokens has grown and allocations have increased across the board.

The Ecosystem Fund allocation is up 25% to 620 million APE, the founders share has grown nearly 90% to 80 million APE, launch contributors’ allocation grew 21% to 140 million, the Jane Goodall Legacy Foundation nearly doubled to 10 million APE, and Yuga Labs’ share increased 88% to 150 million APE.

Capital Consolidation

Nicolas Lallement, co-founder of NFT analytics site NFT Price Floor, said that token unlocks and ApeCoin’s early tokenomics “are only one part of the story behind the TVL decline.”

“When you look at crypto more broadly, power laws are always in play, meaning a few dominant players capture most of the value,” Lallement told The Defiant.

“For example, Aave now represents over 80% of Ethereum’s lending market (if we look across chains, they have more TVL than the next 30 lending protocols combined). The same concentration is happening across L2s, where Base and Arbitrum are far ahead of other chains. So in that context, ApeChain’s declining TVL isn’t an anomaly; it’s part of a broader pattern where capital consolidates around the biggest ecosystems.”

He added that ApeChain’s drop was a mix of fading hype, token unlocks, and a sluggish NFT market that “hasn’t seen a proper bull run this cycle.” Even in DeFi, Lallement noted, adoption has grown but token performance has lagged, largely because Ethereum itself underperformed until recently.

“And ApeChain isn’t alone,” he continued in comments to The Defiant, adding: “Abstract also peaked around August and has since seen its TVL decline despite Luca Netz [the CEO of the NFT project Pudgy Penguins] efforts.”

Governance Reset

Another important element in ApeChain’s decline, according to Lallement, is its governance structure. He said that operating as a DAO in its early stages probably wasn’t optimal, as “most DAOs have struggled to execute efficiently.”

The initial proposal for ApeChain stated its aim is “to house the next generation of consumer-facing applications and games,” a goal requiring “strong business development, rapid adaptation to market shifts, and active incentive design,” Lallement noted.

“That’s why I think the proposed transition from ApeChain DAO to ApeCo is the right move,” he said, referencing a proposal from June to transfer governance and operations from the DAO to an entity created by Yuga Labs, with the stated goal being “to supercharge the APE ecosystem by supporting high-quality builders and reinforcing three core pillars: ApeChain, Bored Ape Yacht Club, and Otherside.”

“There will be time to decentralize later, once the ecosystem is stronger,” Lallement added.

Indeed, later that month, ApeCoin holders voted to dissolve the ApeCoin DAO and handed over control of the ecosystem to ApeCo, established by Yuga Labs. Despite the inherent centralization in the move, an overwhelming 99.66% of voters supported it.

By that time, some high-profile figures, like Alexis Ohanian, who had been on the DAO’s Special Council, had already stepped away as governance powers shifted to other community members.

Meanwhile, ApeChain TVL and ApeCoin’s price have remained mostly flat since the voting ended in late June, before declining further last month.

The broader Ape ecosystem and the price of APE also failed to recover after news in March that the U.S. Securities and Exchange Commission had ended its long-running probe to determine whether ApeCoin and Bored Ape Yacht Club (BAYC) constituted securities. The SEC’s decision to end the investigation without enforcement removed major regulatory uncertainty that had loomed over the project since October 2022, just seven months after APE was launched.

BAYC and the NFT Sector

BAYC, Yuga Labs’ flagship NFT collection at the heart of the Ape ecosystem, remains the second-largest NFT collection after CryptoPunks, with a market capitalization of 58,990 ETH, or over $206 million. The collection’s price floor — the lowest market price of an NFT in the collection — has stayed around 10-13 ETH since the ApeChain debut, declining in recent months to 5.9 ETH at the time of writing, per data from NFT Price Floor.

This May, Yuga Labs sold the intellectual property of CryptoPunks, one of the sector’s oldest collections, originally launched by Larva Labs, who sold the IP to Yuga Labs in 2022. Later that month, crypto gaming startup Orange Cap Games acquired the IP of another Yuga Labs collection, Moonbirds.

As Lallement explained, Yuga Labs’ focus has now shifted to a longer-term strategy, adding that “they’ve streamlined by selling non-core IP assets like Meebits, CryptoPunks, and HV-MTL, and are now doubling down on their original IP and metaverse ambitions.”

He suggested that the right market setup — such as ETH breaking new highs, established DeFi assets pumping, and a wealth effect spilling over into NFTs — could create “the perfect storm for a NFT revival.”

The Defiant reached out to Yuga Labs for commentary on the Ape ecosystem and the company’s broader plans, but didn’t hear back by press time.

“We’re in touch with many communities,” NFT Price Floor’s Lallement said, continuing, “and one thing ApeChain has been relatively successful at is serving as a launchpad for new NFT collections with lower entry prices to attract and onboard new users.”

But with markets struggling after the Oct. 10 crash, ETH back below $4,000, and NFT sale volumes down over 44% in the past month, an NFT comeback doesn’t appear to be in the cards anytime soon.