Credit: Yuga Labs
Yuga Labs Acquires PROOF & Moonbirds
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In a bombshell development, Yuga Labs announced on Feb. 16 that it has acquired PROOF, which includes the PROOF collective, Moonbirds, Oddities, and the Grails exhibition series.
The acquisition includes the project IP, as well as the PROOF team. “This was an all-stock deal on Yuga’s part. Wouldn’t have stood behind it if I didn’t think it was a value add for both my baby and the PROOF/MB ecosystem,” said Yuga co-founder Greg Solano.
PROOF founder and CEO Kevin Rose will also be coming on board for a brief handover period—and will become an advisor to Yuga. Alongside the PROOF team, existing Yuga team members Josh Ong, Jesse Bryan, and Amanda Gadbow will help bring PROOF into Yuga’s ecosystem.
For Yuga, this acquisition is in line with their mission to become “the front door of Web3.”
“As a company committed to championing art, culture, and community on the blockchain, we’re excited to have PROOF join the Yuga ecosystem,” Yuga Labs CEO Daniel Alegre said in a statement.
Connections and Conversations
The conversation between Yuga and PROOF has been months in the making, Yuga Labs CEO Daniel Alegre told nft now in an interview.
“The latter half of last year, we were talking about what was going to happen with Moonbirds. We knew Kevin from the industry and interpersonal relationships, and we had the conversation with him—he said, ‘look, we as PROOF are rethinking what we should be doing with Moonbirds, and to find a better home for them,’” Alegre said.
As Rose and Alegre engaged, the conversation grew broader.
“We started thinking about their community; where we’re taking Otherside. Moonbirds and Otherside fit very, very well together. Birds, avatars, or islands on Otherside—made a lot of sense. And then, as we were sitting down with Kevin, we said, ‘Well, what about Proof Collective?’ We started talking about how important art is for us at Yuga, in particular with our CryptoPunks community—how we’re elevating it to museum-style and art collectors. There was a very strong strategic meeting of the mind: ‘Wait, Proof Collective would fit very, very well into what we’re doing at Yuga as well,” Alegre explained.
“The art, I think, is spectacular…you would have sworn it was done by the Yuga team, it fits so well.”
yuga labs ceo daniel alegre
After the initial dialogue, things moved quickly, with conversations continuing through November 2023 and over the holidays.
While Alegre could not share the details of the deal, he could disclose that Yuga had bought the company outright. To him, some of the most significant upsides are the Moonbirds’ art and its potential for integration into Yuga’s gaming and metaverse endeavors.
“The art that was created for [Moonbirds,] I think, is spectacular. And from an artistic perspective, there’s a very strong alignment with how we look at art. That was a very strong plus from this engagement: we’ve been looking at some of the projects that they’ve been working on, and you would have sworn it was done by the Yuga team, it fits so well,” he said.
Integrating Art – And Community
Some of the immediate next steps will be integrating Moonbirds into Otherside while also supporting interoperability with experiences like Dookey Dash. “Having Moonbirds and their community as part of that evolution of Otherside makes, makes a lot of sense. We’re going to give them the focus and the attention that they deserve,” said Alegre.
Alegre and the Yuga team are conscious that it will take dedication to integrate Moonbirds, alongside collections like Oddities and Grails, into their ecosystem. While they’re still at the ideation stage, Yuga has plans to support all of the PROOF PFP communities.
Alegre is well aware that integrating PROOF is a big challenge, but he’s confident that Yuga is up to the task.
“This company has grown really quickly, maybe a little fast, relative to what a company of 120 employees can do,” Alegre told us. “What I’ve been focused on since I became CEO is: let’s really pare down the number of projects we’re working on, and then really stay focused on executing on the community elements, and ensuring that the vibe that brought them together in the first place continues,” he said.
After a period in the last quarter of 2023 when several individuals and groups were offering to acquire Moonbirds, their founder and CEO, Kevin Rose, is optimistic about the future.
“We’re very excited to bring Moonbirds into Otherside. It’s the perfect home and future for our collectors,” Rose said in a statement. “With the PROOF Collective on board, it shows Yuga’s commitment to digital fine art, and our combined resources will allow us to innovate faster and reach more people. It’s going to be an exciting journey,” he said.
PROOF’s Bumpy Road
The acquisition has taken place against a backdrop of controversy around PROOF, which has faced a bumpy ride since its Dec. 2021 launch.
For this reason, Yuga Labs holder and ecosystem participant Adam Hollander expressed anger at the acquisition.
“My initial reaction: I fucking hate this. Great for Moonbirds holders who wanted an exit. Nothing wrong with them celebrating it. But Moonbirds has been one of the worst-run projects in the history of NFTs. They made close to $100m and didn’t follow through on their promises. They were supposed to build a metaverse world and then canceled it. They guaranteed IP rights to holders and then stripped them away without asking,” Hollander posted on Dec. 16.
Alegre accentuates the positives when he thinks about PROOF.
“If I look at the PROOF collective, you can tell they are absolutely passionate about art and the art community. And so are we. So, we are going to continue to run PROOF collective the way that they’ve been run and really think through what are points of leverage that we can bring and how we can tweak their approach. It really comes down to the fundamentals, which is ensuring that the community is heard that, they’re supported, and that there’s an ongoing engagement plan with the community,” he told us.
“When you have two companies with a very strong founder led culture, you need to focus on getting the two cultures to blend and do well.”
daniel alegre
In light of recent Yuga community engagement efforts, including Otherside community showcases in LA, Berlin, and at ApeFest, as well as the establishment of the Gaming Council, Alegre has clear plans for integrating the often-fractious Moonbirds and PROOF communities with Yuga’s legions of holders.
“The first clear message for our existing Yuga communities is: we will continue to be laser-focused on supporting them, listening, and executing on the ambitions that we have and the community has for the various PFPs. We’ll do the same thing with Moonbirds. We’re going to have the community team on the PROOF side moving over to our community team, and we’ll be listening and having engagement with various community members—just to listen to them in the same way that we do with all our holders across, 10KTF, Meebits, BAYC and CryptoPunks,” he said.
To Alegre, the biggest challenge of integrating PROOF into Yuga will be blending the two communities.
“What invariably happens is, when you have two companies with a very strong founder-led culture, you need to focus on getting the two cultures to blend and do well. Luckily, we’ve had experience in our very short life of acquisitions. We acquired the Meebits and the CryptoPunks. Then we also acquired 10KTF—and those transitions went pretty smoothly, so I don’t suspect that’s going to be much of an issue. I think the bigger part is, how do you live up to the expectations of the communities, ensuring that we don’t miss a beat and that we execute properly? In the end, it’s all going to be about execution and ensuring that we let the Moonbirds team, who know their community really, really well, offer the best of their knowledge while, at the same time, bringing the level of scale and leverage that Yuga Labs can bring,” he said.
Future Acquisitions
With this latest announcement, Alegre believes Yuga has a clear strategy for possible future acquisitions.
“We’re a creative-first and community-first company. And when we see other companies out there who get it, who really understand how to build communities, that’s a clear interest to us. Larva Labs obviously knew it. 10KTF definitely knows how to do it, and PROOF has shown that they can actually really build strong communities,” he said.
“We just look out there as to, ‘what are potential companies that have a really strong community ethos and very, very strong, connected communities?’
daniel alegre
With a focus on community and a stated goal of being the front door of web3, Alegre thinks that Yuga’s future strategy could include arms-length partnerships as well as acquisitions.
“If we look at it, we’re opportunistic—and we just look out there as to, ‘what are potential companies that have a really strong community ethos and very, very strong, connected communities?’ And then, we figure out whether it would make sense to bring them under the Yuga umbrella, or whether an arm’s length partnership could work. If we want to live up to our mission of building culture on the blockchain, we want to bring really great communities together in the Otherside,” he said.