Why is MoonPay overpaying so much for Bored Apes?

MoonPay has spent the last few months handling a small fortune in non-fungible tokens (NFTs) for the likes of DJ Khaled and Gwyneth Paltrow.

It has also made a habit of significantly overpaying.

More than $10 million in Bored Apes, Cryptopunks, Doodles, CloneXs, Nouns and other big-ticket items have passed through its moonpay-eth wallet since October 2021, as per OpenSea records. These sales have mostly come at a large premium relative to the so-called floor price, or the cheapest price at which an item in a given collection will sell. 

MoonPay’s primary business is providing infrastructure that enables web and mobile developers to let their users purchase crypto using credit cards.

It also launched a concierge service late last year, previously described as a “white glove service for high net worth individuals who want to purchase NFTs in the simplest way without all the hassle of setting up a wallet, buying crypto, using that crypto to purchase an NFT and then taking custody of it.”

MoonPay purchases NFTs and later invoices its clients for them and any other services rendered. It seems that its penchant for overpaying for NFTs stems from the demands of its celebrity clientele.

The MoonPay premium 

MoonPay has developed a particular taste for Bored Ape Yacht Club (BYAC) pieces. Recent clients of the concierge who have received apes through the service include DJ Khaled, Paris Hilton, Gwyneth Paltrow, and Diplo, to name but a few.

The latest blockbuster deal came with the sale of Bored Ape #1837 — a rare golden ape it splashed 569 ETH ($1.5 million) on. That ape was last sold for 420.69 ETH. Rumors flew on the day of the sale that it may land in the wallet of the master of crypto meme hype, Tesla CEO Elon Musk, but no buyer has been confirmed as yet. 

According to The Block’s calculations, across 27 transactions from its concierge wallet, MoonPay has on average ‘overpaid’ for apes it has handled by around 26%, relative to the collection’s floor price. (For this calculation we have excluded its rare gold Bored Ape purchase since it is such an outlier.) 

The payments service has also consistently paid considerably more than the last price paid for each item as well as the moving average for the last 1,000 apes sold on the secondary market (calculated by Dune Analytics). 

Bar the golden ape, the largest gap between the floor price and acquisition price in MoonPay’s dealings came with Bored Ape #8353, for which MoonPay forked out 200 ETH (around $520,000 at current prices). This represented a 112% premium on the collection’s floor price on the day of purchase.

The ape in question, which had never been sold on the secondary market before, wears a ‘rare’ BAYC black hat, which only 2% of the collection sport, as well as a black holes t-shirt and robot eyes, which are also considered to be rare traits. 

Other notable purchases included one made via its concierge service by heiress Paris Hilton. The ape, #1924, cost 119 ETH and was paraded on the Jimmy Fallon Show alongside Fallon’s own ape — #599 — which was also bought through MoonPay’s concierge, for 46.6 ETH.

Hilton and Fallon’s apes were bought at 32% and 41% above the floor price, respectively. Both also came at considerable premiums relative to their last sale price and the moving average for the 1,000 previous sales’ from the collection. 

What’s going on?

So, why is MoonPay overpaying so much for NFTs? When The Block posed this question to the firm, it responded by explaining that it gives its concierge clients the option to either “buy now” or negotiate over a period of time. 

Apparently, MoonPay’s celebrity clients are more apt to choose the more expensive “buy now” option. Perhaps because the price is not the point; owning a Bored Ape has become a status symbol. And as long as they are valued in the hundreds of thousands of dollars, they will likely continue to be. 

Indeed, the MoonPay premium is probably helping.

According to Yale University art economics academic Magnus Resch, it’s fair to compare MoonPay to a traditional art advisor — a specialist who advises clients on buying and selling art. Resch says consistently overpaying on the entry price for assets would be considered an unusual practice in the traditional art world.

“An art advisor has access — usually they can ask for a discount,” he says.

However, he adds, prices of art have “great signaling power” to an outside audience, so hyping up a price point can sometimes be a good marketing technique for gallerists and dealers. He calls this “manifesting the value of the artist or collection.”

For now, at least, it appears MoonPay is on to a winner sourcing Apes and Punks for its impatient celebrity clients – even if they have to pay a premium.