Over the past week, Twitter has been going bananas with speculation that Yuga Labs, the multi-billion dollar company behind the Bored Ape NFTs, was launching its metaverse called Otherside, at the end of April.
The Bored Ape Yacht Club is one of the most popular and arguably highly coveted NFT collections available since it launched in April 2021. The collection features 10,000 unique digital collectables that reside on the Ethereum blockchain and a single Bored Ape has a floor price of 152.4 Ethereum coins, or ETH (about $431,000).
The recent launch involved the sale of Bored Ape Yacht Club’s latest tokens that represented deeds to plots of land in their forthcoming multiplayer metaverse game known as Otherside. On Sunday 30th April, a total of 55,000 plots were sold, at a flat price of 305 ApeCoin (a currency created by Yuga), which is worth about $4,500 at current exchange rates.
However, it was not all smooth sailing for the Bored Ape Yacht Club and as users raced to become one of the lucky few to secure an “Otherdeed” (the deeds to land in Otherside), demand for the plots rose so high that it overwhelmed the Ethereum blockchain.
The Ethereum blockchain saw transaction fees on the network rise higher and higher until an individual NFT purchase cost more than £2,500 in fees alone. One user, who successfully secured two Otherdeeds, paid a transaction fee of over 5 ETH (£11,000) on top of the £9,000 to buy the land itself.
A total of more than $100 million was spent on transaction fees to buy Otherside NFTs and when the sale was over, the company apologised for the chaos it had caused. “We know that the Otherdeed mint was unprecedented in its size as a high-demand NFT collection, and that would bring with it unique challenges.”
In a more problematic twist, part of these transaction fees were incurred as losses by users who unsuccessfully tried to secure tokens while having insufficient funds. The deducted transaction fees were not refunded.
Business outside the Otherside NFT sale was also greatly affected as people incurred serious losses as pointed out by Molly White, a crypto expert running a site that is documenting the crypto sector.
Molly White tracked multiple examples over the day of NFT sales worth less than £500 being hit with transaction fees of more than £2,000 including a $25 NFT that attracted fees worth a whopping $3,300 transaction fee. On the most popular marketplace for NFTs, OpenSea, most sales were for Otherdeeds but such other sales were affected too.
“Gas fees, which increase based on network congestion, spiked to shocking levels as some people continued to buy and sell cheaper NFTs,” White wrote.
Molly White highlights a $25 NFT with a $3,300 fee.
While addressing the crash of Etherscan, the cryptocurrency analytics website for Ethereum, Yuga Labs emphasized that,
“This has been the largest NFT mint in history by several multiples, and yet the gas used during the mint shows that demand far exceeded anyone’s wildest expectations.” Adding that they were sorry for turning off the lights on Ethereum for a while.
In the short term, it looks like those who secured these Yuga tokens can wipe away the tears from the high transaction fees paid with all the paper from their resale earnings. Tokens that sold for £4,500 are already reselling for more than £9,000 while Yuga Labs took another $300 million in payments.