Genesis CyberKongz — Blue Chip NFT with 5x upside
CyberKongz (“CK”) offer access to groundbreaking innovation within the emerging NFT space; Supported by a strong governing council/dev team, CK has a track record of delivering unique utility benefits to its holders; Genesis Kongz (“Gens”) serve as nodes to this ecosystem through attractive $Banana yield, access to a unparalleled community of builders/investors and ownership of a historically-significant PFP collectible
Investment Thesis Key Points:
· Focus on Genesis Kongz as the best risk/reward bet within the metaverse. As the primary source of the $Banana token, Genesis Kongz function as supply nodes to the entire CyberKongz ecosystem
· As one of the most respected PFP collections, Genesis Kongz offer access to the Gen Hall discord which provides an avenue to build relationships with the top builders/investors in the NFT space
· At a projected fair value of 350e, Ghost Capital projects a potential 5x upside on the current floor price of 75e
Leading Innovation within the NFT Space. CyberKongz minted (0.01e) in March 2021 as a 1,000 piece PFP only collection. As the community came together, the team developed utility functions with several first of their kind innovations including utility token generation ($Banana), breeding (Baby Kongz), metaverse 3D voxels (CyberKongz VX), and gamified NFT minting through Play & Kollect (“P&K”). Today, the CyberKongz family consist of Genesis, Baby, and VX NFTs, each with unique abilities that differentiate the ecosystem from other existing NFT collections:
For this discussion, we focus primarily on Genesis Kongz given their compelling valuation with multiple sources of upside and a representation of the overall CyberKongz ecosystem
Ownership of Gens are the only way to guarantee distribution of the $Banana token to an investor and correlating ability to participate in the CyberKongz ecosystem in a material manner. $Banana is the utility token used within the CyberKongz ecosystem with >90% of all $Banana supply generated from Genesis Kongz. The only $Banana created outside Genesis Kongz is through the Play & Kollect prize pool.
Groundbreaking ERC-20 token providing key utility functions within the CyberKongz ecosystem. Initial $Banana utility was designed to facilitate breeding for Baby CyberKongz, which concluded in mid-December 2021. Since then, the CyberKongz team has introduced a new $Banana utility as part of its gamified minting project, Play & Kollect. Additionally, we anticipate substantial further utility through the Banana Shop upon launch of the Sandbox metaverse (2H22/1H23) where CyberKongz own a significant land position currently being designed/built out for the Kongz community.
While there are a number of NFTs which offer a utility token, CyberKongz was one of the first to launch and has continued to introduce new and innovative ways to enhance utility including Breeding, Name/Bio Changes, gamified minting and third party project integration.
While yield percentage is important in evaluating token yield, we place a much higher value on balance of ecosystem and stability of the yield itself. Unlike traditional yielding products, NFT projects that yield an ERC-20 are in full control of their ecosystem and in charge of balancing the supply/demand aspects of that ecosystem.
We view CyberKongz as unique in this sector given:
· $Banana is capped and distributed primarily through Genesis Kongz holders, who have a large vested interest in protecting and furthering the ecosystem
· CK are now on their second major utility after breeding ended in December 2021. The token now has gone through periods of high utility and effectively zero utility, with proven demand in both time periods
· The second utility (P&K) debuted by CK has done well to decrease the entry cost and diversify the holders that are able to use the utility
While the $Banana token has a USD value through trading on decentralized exchanges, CyberKongz have proven to deliver value above the USD market value through utilizing the token within the ecosystem. We view using the token through the primary utilities (breeding historically, P&K currently), as the best way to maximize the long term value of the $Banana yield. That being said, valuing $Banana in USD terms is the best way to quantify the yield generation aspect of Genesis Kongz. Ghost Capital’s projection of the USD value of $Banana represents our projection of it’s value when used within the ecosystem.
$Banana saw prices higher than $120 during the height of breeding and demand around finding legendary VX Kongz. Achieving a price this high while having a very siloed demand is impressive and indicative to where future $Banana price could stabilize. With the addition of P&K to the roadmap, Kongz Tank projects implementing $Banana utility and the future Banana Shop, we expect $Banana price to stabilize at $125 once the full ecosystem is up and running.
We’ve decided to focus our investments and valuations on Genesis Kongz for a few reasons:
· Genesis Kongz yield the $Banana token and represent a piece of the Kongz ecosystem, benefiting from all future $Banana and Kongz utility
· The CK team has commented that utility for Gens are complete, meaning no future utility will be added outside of benefitting from the $Banana token. This makes Genesis CK a complete collection, minimizing future utility risk
· The Genesis Kongz PFP is a blue-chip art collection with a great reputation known industry-wide. Additionally, ownership of a Genesis Kongz grants access to the CK full discord, including the Genesis Hall channel
Given the special nature of Gens as both a utility yielding asset within the CyberKongz ecosystem and a collectible PFP project that pioneered aspects of the NFT system that are widely adopted today (genesis collection, breeding, fixed token utility, etc.), we’ve taken two approaches to valuation
Genesis Kongz — The Collectible
As a blue-chip collectible in the NFT space, CyberKongz belong in the upper tier of NFT projects providing both historical value and a well-regarded culture and reputation market-wide. While some projects have gone the route of influencer and celebrity route, Kongz have continued to bet on building an innovative project and represent the builders of the space.
What makes Gens unique to BAYC and Punks is the 1,000 collection size. While Genesis Kongz are included with Baby Kongz in NFT exchange collections, their utilities are very different and represent two different asset types. To gain access to the Genesis Kongz utility, an owner must own one of the 1,000 Gens. Therefore, normalizing the Genesis Kongz market cap to those of Punks and BAYC gives an appropriate fair value.
By normalizing the collection size, we project entry into the Genesis Kongz ownership group to be fair valued at 790e compared to the other blue chip PFP projects
Genesis Kongz — The Node
Putting aside the PFP collectible value, Gens are the only NFTs within the CyberKongz ecosystem to yield $Banana. Gens yield 10 $Banana per day and, besides the 9% additional supply of $Banana added for prize pools in P&K, represent the entirety of the $Banana production.
This structure of disseminating the supply of $Banana is significant given (1) $Banana is capped through the Genesis Kongz supply and (2) there is no way to significantly generate $Banana outside of owning Genesis Kongz. Gens represent a node within the CyberKongz ecosystem and ownership represents a bet on the entirety of the ecosystem to be successful.
When looking at this asset through the lens of a node, supplying the token needed to operate within the ecosystem, we can compare $Banana prices to yield and project a fair value. As mentioned before, comparing the yield on a fiat basis is the cleanest form of valuation but we believe that achieving our projected value of $Banana is done through utilizing it within the ecosystem, rather than selling for USD.
We project a fair value of 332e for Genesis Kongz given a $125 stabilized $Banana price and a 50% discount rate.
Blended Genesis Kongz Valuation
Ghost Capital projects Genesis Kongz to have a blended fair value of 350e.
Gens are unique given the value as a PFP collectible within an incredibly diverse community and the value based on their role as a node within the CyberKongz ecosystem. In our experience, there are buyers for both of these reasons but the value of Gens have more closely followed the fundamentals provided through the node route. $Banana has been a clear valuation driver for Gens and we expect it to continue moving forward with additional upside premium from the community/collectible impact. In ascribing greater weight to the utility valuation, Ghost Capital projects a Genesis Kongz blended fair value of 350e.
Nothing in this article should be construed as financial advice. Members of Ghost Capital own investments mentioned in this article. The article is meant to share why Ghost Capital has invested, not to persuade others to invest.