The original 10,000-piece NFT collection that launched the entire industry — then its founders sold out to Yuga Labs and the market promptly crashed 90%.
Evaluating only Larva Labs (CryptoPunks)’s profile at its peak — without knowing the outcome — the model ranked Market collapse as the #1 likely cause. Documented cause: Founder chaos.
Larva Labs, a two-person studio founded by Matt Hall and John Watkinson, created CryptoPunks in 2017 — 10,000 algorithmically generated pixel art characters distributed for free to Ethereum wallet holders. CryptoPunks became the ur-text of the NFT movement, with floor prices reaching 70+ ETH and individual punks selling for millions. In March 2022, Larva Labs sold the CryptoPunks and Meebits intellectual property and NFT collections to Yuga Labs (makers of BAYC) for a reported $400 million+ in APE tokens. The acquisition united the two dominant NFT brands under one roof. However, both founders had essentially announced they were done — they cashed out at the peak. The NFT market subsequently collapsed through 2022-2023. CryptoPunks floor prices fell from 70+ ETH to under 20 ETH. The Meebits collection lost over 95% of its peak value. The Larva Labs chapter was over; the asset class it created was in freefall.
Lesson
“NFT collection value is inseparable from creator culture — institutional ownership of the IP cannot substitute for the founding community's organic belief.”
Failure anatomy
Collapse type
Acqui-hire
📉 MEDIUM
Hype cycle
trough of disillusionment
Moat type
Brand / Trust
Fatal mistake
Founders sold IP and exited at peak, removing the organic legitimacy that sustained collection value
FAQ
How much did Larva Labs sell CryptoPunks for?
Larva Labs sold the CryptoPunks and Meebits IP to Yuga Labs in March 2022 for a reported sum exceeding $400 million, paid primarily in APE tokens — ironically, Yuga's own governance token that subsequently fell 97%.
What happened to CryptoPunks under Yuga Labs?
Yuga Labs retained the CryptoPunks brand and expanded its IP licensing efforts. Floor prices fell from 70+ ETH to under 20 ETH during the 2022-2023 NFT collapse. Yuga Labs expanded Punk holders' commercial rights but the cultural energy of the original Larva Labs era did not transfer.
Did the founders make money?
Yes — Hall and Watkinson were among the biggest beneficiaries of the NFT boom, having distributed the original Punks for free and accumulated significant ETH through secondary market royalties, plus the Yuga Labs acquisition sum. The founders exited near the absolute peak.