A Bored Ape was able to bring Ethereum to its knees
Yuga Labs, the founders of Bored Ape Yacht Club (and other spinoffs), purchased the IP rights to pioneering NFT project CryptoPunks in March, shaking the celebrity-studded world of “blue-chip” NFTs. Yuga introduced ApeCoin, a local cryptocurrency to fit with its booming ecosystem, after gaining ownership of three of the top five chart-topping NFT collections. This Thursday, it launched the first step of its most ambitious project to date: a local sale of NFT “deeds” to property in Yuga’s upcoming virtual world, Otherside, which will allow holders of a variety of NFT projects (Apes, Punks, Cool Cats, World of Women, and more) to utilize their NFTs as avatars. It is how it went down.
- Users raced to mint 55,000 parcels in the form of Ethereum-based NFTs called “Other deeds,” priced at 305 ApeCoin, or roughly $5,800 apiece, when the virtual land frenzy began on Saturday. Users hastily outbid each other hoping that the overburdened network would execute their transactions, and Ethereum costs immediately surged to unprecedented highs (in a so-called “gas war”). As a result, minting each NFT cost about $6,000 in ETH, more than tripling the price of a deed. Yuga Labs raised almost $320 million in ApeCoin by selling all 55,000 units in only a few hours.
- The “gas war” cost many would-be buyers a lot of money for transactions that eventually failed — and rendered accessing the Ethereum network for anything else momentarily impossible. (Etherscan, the most widely used tool for tracking ETH transactions, even crashed.) Vitalik Buterin, a co-founder of Ethereum, argued that Yuga Labs might have structured their NFT smart contract to reduce costs and enhance “fairness.” Yuga Labs has committed to reimburse everyone who paid for a canceled transaction due to traffic congestion.
- Many fortunate customers promptly listed their NFTs for sale on OpenSea, resulting in a record-breaking daily trading volume of $476 million. (ApeCoin is now accepted at OpenSea.) Not every parcel was sold to the general public, though. In addition to the 55,000 deeds sold in the immediate sale, another 45,000 went to Bored and Mutant Ape owners and project developers like Yuga Labs.
What difference does it make! Yuga apologized for “turning out the lights on Ethereum” after the sale and indicated that a separate ApeCoin blockchain could be required to reduce traffic. It’s challenging to grasp the whole scope of the Otherside sale if you don’t follow ETH regularly, but “burned” ETH is a decent statistic to look at. The bulk of gas fees is burnt due to a sophisticated change to the Ethereum protocol last year (or permanently removed from circulation). The Otherside mint’s gas war “burnt” more than $157 million in ETH in hours, which is even more impressive when considering that the most popular Ethereum application, OpenSea, had burned $630 million in ETH over nine months.