The Bored Ape Yacht Club crashed Ethereum on Saturday night. As part of the upcoming Bored Ape metaverse called Otherside, developers Yuga Labs on Saturday launched a new NFT collection which consists of 100,000 land deeds for the virtual world. Interest in the drop was immense — too much for the Ethereum blockchain to handle. Users ended up paying thousands of dollars in fees for failed transactions, and Ethereum proved unusable for hours due to its inability to distribute the load.
Otherside is Yuga Labs’ take on the metaverse. It’ll be a virtual world made up of 200,000 plots of land, which will be purchased, owned and traded as NFTs. Land being sold as NFTs is a confusing concept, but traders are hoping land in heavily frequented metaverses will prove ultra valuable; imagine owning a building in the center of a game like Fortnite and being able to do what you like with it.
All that land is being distributed in two waves: 100,000 on Saturday and another 100,000 rewarded to those who “contribute to the development of Otherside” over the coming months. (Saturday’s sale consisted of 70,000 plots, with 30,000 airdropped to holders of Bored Ape and Mutant Ape Yacht Club NFTs for free.) There’s already a precedent for this: Virtual land has sold for millions in metaverses like Decentraland and Sandbox.
With the Bored Ape Yacht Club being the most successful NFT collection yet — it costs about $370,000 to buy into the Club now — the Otherside land drop was earmarked by many to be the biggest in the history of NFTs. And boy was it big.
Each plot of land costed $5,846 (or 305 Ape Coin, a cryptocurrency Yuga created for its metaverse, which was valued at $19.17 per coin at the time of the sale). Otherside land deeds sold out immediately, netting Yuga about $420 million. Virtual land speculators hoping to flip a profit were grinning: Secondary market sales on OpenSea, the biggest NFT marketplace, now start at $23,000 (8.7 ether).
It was a huge success for Yuga Labs’ bottom line, but not necessarily for its reputation, or for blockchain technology in general. The NFT launch was riddled with issues that highlight all the inefficiencies entailed by cryptocurrency trading.
Start with gas fees. To transact on Ethereum, you need to pay for “gas” — essentially a transaction fee, the expense of which is determined by how much activity is occuring on the blockchain. Gas fees between $10 and $100 are typical. But because of the massive demand — and because traders outbid each other by paying higher gas fees so their transactions go through faster — people minting Otherside land NFTs were dropping up to $7,000 in gas fees (2.6 ether).
One punter spent $44,000 on gas to buy two plots of land, four times the amount spent on the NFTs themselves.
Because the Otherside mint impacts the whole blockchain, people doing completely unrelated things like selling ether or trading altcoins would also have to pay huge fees, and wait hours for their transactions to clear. Someone tweeted a picture of them trying to send $100 in crypto from one wallet to another, showing it required $1,700 in gas fees.
Worse are those whose Otherside transactions failed. Because the amount of people trying to buy was greater than the supply of Otherside NFTs, not every attempt was successful. Typically failed transactions cost around $30, which is painful enough. Because gas was so insanely high, these failed transactions ended up costing some people thousands of dollars.
Over $175 million was spent on gas alone. Ethereum’s blockchain has a deflationary protocol that burns most ether spent on gas — so much of that $175 million is now simply 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.”
Source : Read More