On Saturday night, the Bored Ape Yacht Club brought Ethereum to a halt. Yuga Labs published a new NFT collection on Saturday as part of the upcoming Bored Ape metaverse Otherside, which includes 100,000 land deeds for the virtual realm.
The dip drew a huge amount of attention, which the Ethereum network couldn’t handle. Due to Ethereum’s inability to share the load, users were forced to spend hundreds of dollars in fees for unsuccessful transactions, and the platform was rendered unusable for hours.
Bored Ape Yacht Club’ take on the metaverse is called Otherside
It will be a virtual environment made up of 200,000 land plots that can be bought, sold, and exchanged as NFTs. Although the thought of land being sold as NFTs is perplexing, traders are hopeful that land in popular metaverses would prove quite valuable; image owning a building in the heart of a game like Fortnite and being able to do anything you want with it.
All of the land will be distributed in two waves: 100,000 on Saturday and another 100,000 in the coming months to individuals who “contribute to the development of Otherside.” (On Saturday, 70,000 plots were sold, with 30,000 plots airdropped for free to holders of Bored Ape and Mutant Ape Yacht Club NFTs.) There’s precedent for this: virtual land in metaverses like Decentraland and Sandbox has sold for millions of dollars.
With the Bored Ape Yacht Club being the most successful NFT collection to date (it costs around $370,000 to join the Club currently), many predicted that the Otherside land drop would be the largest in NFT history. And it was a colossal undertaking.
Each plot of land cost $5,846 (or 305 Ape Coin, Yuga’s metaverse’s cryptocurrency, which was valued at $19.17 per coin at the time of the sale). Otherside land deeds were quickly sold out, fetching Yuga $420 million. Virtual land investors were ecstatic: secondary market transactions on OpenSea, the largest NFT marketplace, are now starting at $23,000. (8.7 ether).
It was a big financial triumph for Yuga Labs, but not so much for the company’s reputation or for blockchain technology in general. The NFT launch was marred by problems, highlighting all of the inefficiencies associated with cryptocurrency trading.
Let’s start with gas prices
To deal on Ethereum, you must pay “gas,” which is essentially a transaction fee whose cost is determined by the amount of activity on the blockchain. Gas prices often range from $10 to $100. People minting Otherside land NFTs were dumping up to $7,000 in gas fees due to the tremendous demand — and because traders outbid one other by paying higher gas prices so their transactions go through faster (2.6 ether).
One bettor spent $44,000 on gas to purchase two plots of land, which was four times the cost of the NFTs.
People doing completely unrelated things like selling ether or trading altcoins would have to pay high fees and wait hours for their transactions to clear because the Otherside mint affects the entire blockchain. Someone shared a photo of them attempting to move $100 in cryptocurrency from one wallet to another, which revealed that the transaction cost $1,700 in gas fees.
Those whose Otherside transactions failed are in far worse shape
Because the number of persons attempting to purchase exceeded the number of Otherside NFTs available, not every effort was successful. Failure to complete a transaction usually costs roughly $30, which is excruciating enough. Due to the exorbitant price of gas, these botched trades cost some people thousands of dollars.
Gas alone cost more than $175 million. The deflationary mechanism on Ethereum’s blockchain burns most ether spent on gas, thus much of the $175 million is already gone.
Yuga Labs said in a Twitter statement that it would be refunding those failed transaction fees, and said it may develop a whole new blockchain to run its metaverse acitivities. Ethereum is a notoriously inefficient blockchain, with others like Solana and Tezos being much cheaper and less environmentally damaging. Others argued that the fault isn’t with Ethereum, but with the way Yuga labs set up the sale and the inefficiency of its smart contract.
“Needless to say tonight didn’t go how anyone wanted it to,” tweeted Greg Solano, one of Bored Ape Yacht Club’s founders. “I want to say sorry to the apes, and to everyone else who eagerly looked to join into the project.”
Despite the painful launch, and many angry tweeters, don’t expect Otherside to fail. At the time of writing over $123 million in Otherside land deeds have been sold on OpenSea — in just seven hours. “I’m keeping my land. Might even buy more,” one Bored Ape owner tweeted. “But this stinks to high heaven.”
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