Another success for Yuga Labs: all non-fungible tokens (NFTs) for its upcoming “Otherside” metaverse were sold in just 3 hours, generating over $318 million on the first sale. However, the Ethereum network (ETH) became congested, and buyers faced exorbitant transaction fees.
The colossal success of NFTs “Otherside
This weekend saw the sale of non-fungible tokens (NFTs) representing parcels of the future Bored Ape Yacht Club (BAYC) metaverse, “Otherside”.
As for all the projects of Yuga Labs (the creators of the BAYC) developed so far, the success was there. A total of 55,000 NFTs have been mined at a single price of 305 ApeCoin (APE). The price of the ApeCoin was about $19 at the time, so a parcel was worth about $5,800 when the sale began.
The buyers did not delay: all the plots were sold in just 3 hours.
It should be noted that in order to be eligible to purchase a parcel, prospective buyers were required to complete a “Know Your Customer” (KYC) process to verify their identity and get their portfolio approved.
The sale alone netted Yuga Labs a whopping $318.7 million. At the time of writing, the secondary market for this new collection has already generated over $328 million.
In other words, adding up the initial sale and secondary market sales, the deal has generated over $560 million over 24 hours.
Also, after the mint that took place this weekend, BAYC and Mutant Ape Yacht Club (MAYC) holders will be able to receive a parcel completely free of charge, 45,000 of the total 100,000. A reward in line with all those obtained in the past for all lucky BAYC holders: a loyalty and reward model that works.
A saturated Ethereum network and exploding fees
However, the sale of these plots has literally made the counters of transaction fees, already usually high, explode because of the number of transactions carried out simultaneously.
This phenomenon, called “gas war”, occurs on blockchains running on Proof of Work (PoW) consensus like Ethereum, when a sudden and considerable increase in the number of transactions occurs. Transaction fees increase mechanically as a result of the network overload.
The average price during long hours after the mint was above 6,000 gwei (gas name on Ethereum), which is 100 to 200 times higher than in normal times. Users reported having to pay extremely high transaction fees, sometimes up to $14,000.
In total, according to on-chain data, the sale of parcels in the Otherside metaverse would have cost more than 71,000 ETH in transaction fees alone, or nearly $200 million. That’s as many ETH that have been burned, and taken out of the network’s liquidity for good.
The reactions were not long in coming
Following these exorbitant transaction fees, many buyers complained about the situation. According to Will Papper, the co-founder of SyndicateDAO, a very large part of the transaction fees could have been saved with a few “simple” measures.
Some of the affected users complained about the high fees and the slow network during the sale, while others criticized the writing of the smart contract or the mint policy.
For Vitalik Buterin, the co-founder of Ethereum, a different writing of the contract would not have changed anything though:
“I don’t think optimizing the contract is useful. Whatever the details of the contract, the transaction fees increase until the listing price + the transaction fees = the market price. If gas consumption per purchase had decreased by 2x, the equilibrium gas price would have just been >12000 gwei instead of 6000.”
In any case, Yuga Labs acknowledged its mistake and said that the optimal solution for the project’s future would be to have its own blockchain:
“This is the largest mint of NFTs in history in many ways, yet the gas used during the mint shows that the demand far exceeded the wildest expectations. The scale of this mint was such that Etherscan crashed. It seems quite clear that ApeCoin will have to migrate to its own chain in order to scale properly. We would like to encourage DAO to start thinking in that direction.”
Without specifying how, the Yuga Labs team said that all transaction fees would be refunded to those impacted by this inconvenience.
